Why Bangladesh’s economy badly needs fair elections
Democracy matters less as a label and more as a practice. Bangladesh’s economic journey shows that growth without real democracy risks becoming a hollow success story
Bangladesh's economic journey has never been a straight line. Over five decades, the country has shifted between fragile democracy, outright autocracy and, in recent years, a hybrid system that looks democratic in form, but with deeply flawed elections and institutions.
Each turn has left its mark on the economy. The question is not only whether democracy is good for the economy, but what kind of democracy, and whether it builds the right institutions.
The early years after 1971 were turbulent. A devastated economy struggled under state-led socialism and political violence. Growth was meagre, famine struck in 1974, and the promise of democracy felt hollow.
Military regimes that followed in the late 1970s and 1980s moved away from central planning and encouraged private enterprise. Stability returned, and GDP growth steadied around 4-5%. But this was not broad-based inclusion. Decisions were taken by a narrow circle of generals and bureaucrats.
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When parliamentary democracy was restored in 1991, the economy began to open up in earnest. The ready-made garments industry exploded, remittances surged, and Bangladesh became a textbook case of how low-income nations could integrate into global markets.
Growth averaged 5-6% through the 1990s and early 2000s. The gains were uneven, but the economy began to feel the pull of inclusive participation.
The decisive shift came under Sheikh Hasina's long incumbency after 2009. The government presided over a decade of remarkable expansion. Annual GDP growth reached 6-8%, outpacing many neighbours. Poverty fell dramatically. Infrastructure megaprojects such as the Padma Bridge and metro rail altered the country's landscape.
At first glance, this looks like a resounding case for the economic value of political stability, even if democracy itself was weakening.
Yet behind the impressive numbers lies a troubling pattern. Reports of large-scale money laundering became commonplace. The per capita share of external debt rose steeply. Banking scandals proliferated, as politically connected firms defaulted with little consequence.
Corruption also rose to alarming levels. These are not isolated failings. They are symptoms of institutions that serve elites rather than citizens.
Sharmind Neelormi, a professor of Economics at Jahangirnagar University, argued that Bangladesh has long struggled with this pattern.
"Almost every regime, which lacked democratic political legitimacy, sought to generate development legitimacy through the construction of mega infrastructural and energy projects, largely financed by external borrowing," she said.
Even governments that did not lack electoral legitimacy, she noted, became mired in "crony capitalism, state corruption and capture by a segment of political elites." The problem worsened under the last regime, where three consecutive sham elections eroded legitimacy and fueled discontent.
Daron Acemoglu and James Robinson, in their influential book 'Why Nations Fail', warned that "The growth generated by extractive institutions is very different in nature from growth created under inclusive institutions, and most importantly, it is not sustainable."
They show how authoritarian regimes or hybrid systems can engineer bursts of growth, often by mobilising resources or suppressing opposition. But such growth eventually runs out of steam, because it does not encourage innovation, accountability, or fair distribution.
We need a fair election and a government with whom we can engage in dialogue, conduct trade and exchange views. While an interim government may function to a certain level, beyond that, they cannot operate. We need a stable government that has the mandate.
Bangladesh today mirrors this tension. The garments sector remains globally competitive, but it relies on low wages rather than technological upgrading. The banking system is fragile. When wealth is siphoned abroad through illicit channels, the domestic economy is deprived of capital that could have supported long-term industrialisation.
As 'Why Nations Fail' argues, extractive political and economic institutions "introduce a strong feedback loop" where elites design rules to enrich themselves, and use that wealth to reinforce their grip on power.
This is the paradox of Bangladesh's recent experience. The numbers suggest prosperity, but the foundations are shaky. A government dominant enough to push through megaprojects is also dominant enough to undermine regulatory institutions. Citizens may enjoy new roads and power plants, but they also bear the cost of rising inequality, high loan burdens, and a banking sector tilted toward cronies.
And business leaders agree.
Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russel recently told TBS, "We need a fair election and a government with whom we can engage in dialogue, conduct trade and exchange views."
He added that while an interim government may function to a certain level, but beyond that, they cannot operate. "We need a stable government that has the mandate."
President of Bangladesh Employers' Federation Fazlee Shamim Ehsan also echoed the sentiment. "If politics does not return to a fair process, if we do not have an elected government, and if political stability does not return, then we businessmen are directly affected," he said.
According to him, instability immediately disrupts the business climate. "Political unrest disrupts the environment required for smooth business. It breaks supply chains, makes delivery to retailers difficult, and complicates the import of raw materials. Costs rise across the board, and obstacles appear at every stage of production and trade."
Ehsan also highlighted how instability undermines international trust. "Buyers hesitate to come. They are afraid to even place orders, worrying whether their supply chain will be broken due to unrest, and whether they will receive their goods on time. As a result, they turn to other countries, even if it means paying a higher price."
Professor Neelormi reminded that Bangladesh has seen glimpses of real accountability in its democratic phases. "Democratic practices made the elected governments accountable, and there were examples where a minister had to resign," she recalled, citing the resignation of the agriculture minister in 1994.
By contrast, in the last Awami League regime, "they hardly bothered to respond to people's demands," ignoring allegations of corruption even when universities erupted in protest.
But does democracy guarantee better outcomes? Not automatically.
If politics does not return to a fair process, if we do not have an elected government, and if political stability does not return, then we businessmen are directly affected. Political unrest disrupts the environment required for smooth business.
Bangladesh's democratic governments of the 1990s were riven by partisanship and street protests. But they also allowed competitive politics, free media, and some institutional checks. That space enabled the garment sector to take root and remittances to be managed more transparently.
Acemoglu and Robinson noted that inclusive institutions emerge when pluralism is real, when elites are forced to share power. Without that, the economy may appear to advance, but the gains are vulnerable.
Professor Neelormi said that the country's democratic regimes, even when electorally credible, "hardly tried to make the institutional environment more consistent with economic freedom, which would enhance long-run growth."
Instead, she argued, they too often "generated elites who could extract economic rent and restrict policies that would threaten their rent-seeking behaviour."
"With increasing corruption, democracy cannot bring good to anybody."
And yet, she offered a way forward. During the period of credible elections between 1990 and 2009, "no single party could win consecutively for a second term. It is indicative of the fact that people observe, value good practices, and respect them."
That cycle of alternation showed that voters will reward governments that keep their commitments, and punish those that fail them. "If one credibly elected government could continue with the pro-people commitments, they would exhibit a continued and sustained economic growth trajectory, which must be inclusive, devoid of elite captures," Professor Neelormi concluded.
