Time for economic policy for inclusive growth – New Age BD

Economic Reform in Bangladesh: A Sustainable Development Goals Perspective

Assessment of the Current Economic Model

After five decades of growth, the economic model of Bangladesh is exhibiting significant challenges that impede progress towards the Sustainable Development Goals (SDGs). The model, historically reliant on export-oriented manufacturing, remittances, and public investment, has led to outcomes misaligned with key SDG principles. Key issues identified include:

• Rising inequality and persistent unemployment.
• Sluggish private investment and low productivity.
• Over-reliance on sectors such as apparel and construction.
• A fiscal structure that promotes wealth concentration.

Challenges to SDG 10: Reduced Inequalities

The current economic trajectory directly challenges the achievement of SDG 10. Evidence indicates a substantial increase in income inequality.

• The Gini co-efficient reached 0.499 in 2022, signifying a widening gap between the affluent and the majority.
• Wealth is highly concentrated, with the top 10 percent of the population controlling a majority share, while the bottom 50 percent hold a minimal portion.
• This uneven growth pattern fails to convert economic expansion into tangible opportunities for all citizens, particularly impacting real income for the majority and hindering progress on SDG 1 (No Poverty).

Implications for SDG 8: Decent Work and Economic Growth

The economic model’s structural weaknesses undermine the objectives of SDG 8. A comprehensive reform agenda is necessary to foster inclusive and sustainable economic growth, full and productive employment, and decent work for all.

• A steady decline in private sector credit flow during July–December 2024 indicates a stagnant business environment, which is critical given the private sector employs approximately 90 percent of the workforce.
• Strengthening micro, cottage, and small industries is an essential strategy for job creation. Particular focus on enterprises led by women and youth is a social and economic necessity, aligning with both SDG 8 and SDG 5 (Gender Equality).

Imperatives for SDG 9: Industry, Innovation, and Infrastructure

To build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation, Bangladesh must move beyond its current industrial strategy. The singular reliance on the apparel sector presents a significant risk to long-term economic resilience.

1. The export strategy must diversify from labour-intensive industries towards higher-value, innovation-driven sectors.
2. This shift is crucial for enhancing global competitiveness and ensuring sustainable industrial development as outlined in SDG 9.

Advancing SDG 12, 13, and 16

Long-term sustainability requires a multi-faceted approach that integrates environmental considerations and strengthens institutional frameworks.

• SDG 12 & 13: Given the nation’s climate vulnerabilities, a transition to a green, knowledge-based, and circular economy is essential for achieving SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action).
• SDG 16: Weak governance, policy inconsistency, and a culture of rent-seeking are significant deterrents to investment and inclusive development. Addressing these issues is fundamental to achieving SDG 16 (Peace, Justice and Strong Institutions), which underpins all other development goals.

Recommendations for a Reform Agenda

A comprehensive reform agenda is required, moving beyond short-term stimulus packages and cosmetic initiatives. The government must prioritize structural changes to align the national economic model with the SDGs.

1. Develop a new economic model that prioritizes employment opportunities for the large youth population entering the workforce, directly targeting SDG 8.
2. Focus policy on significant export diversification to build a resilient and innovative industrial base in line with SDG 9.
3. Ensure the implementation of good governance and institutional accountability at all levels to create a transparent and competitive environment, fulfilling the mandate of SDG 16.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 8: Decent Work and Economic Growth

The article extensively discusses economic growth, the need for a new economic model, persistent unemployment, job creation for youth, and the importance of the private sector and small and medium-sized enterprises (SMEs). These are central themes of SDG 8, which aims to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.

SDG 9: Industry, Innovation and Infrastructure

The call to diversify the economy and move “beyond labour-intensive industries towards higher-value, innovation-driven sectors” directly relates to SDG 9. This goal focuses on building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation. The article’s emphasis on strengthening SMEs and addressing sluggish private investment also aligns with this goal.

SDG 10: Reduced Inequalities

The article opens by highlighting “rising inequality” as a major issue, substantiated by the Centre for Policy Dialogue’s report on a rising Gini co-efficient. It points out the significant wealth concentration where the “top 10 per cent controlling most of the wealth, while the bottom 50 per cent hold a very small share.” This directly addresses the core objective of SDG 10, which is to reduce inequality within and among countries.

SDG 12: Responsible Consumption and Production

The recommendation for a “green, knowledge-based and circular economy” for long-term sustainability connects to SDG 12. This goal is about ensuring sustainable consumption and production patterns, which includes the principles of a circular economy to manage resources efficiently.

SDG 16: Peace, Justice and Strong Institutions

The article identifies “weak governance, policy inconsistency and a culture of rent-seeking” as factors that “deter investment, innovation and inclusive economic development.” The call for “transparency, accountability,” “good governance and institutional accountability at all levels” is a direct link to SDG 16, which aims to promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable, and inclusive institutions at all levels.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 8: Decent Work and Economic Growth

   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article explicitly calls for the export strategy to “move beyond labour-intensive industries towards higher-value, innovation-driven sectors to ensure resilience and competitiveness.”
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises (SMEs). The article stresses that “Strengthening micro, cottage and small industries, particularly those led by women and youth, is not only an employment strategy but also an economic and social necessity.”
   • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people. This is linked to the article’s concern about “persistent unemployment” and the need for “tangible opportunities for all, especially for the millions of young people entering the work force each year.”

2. SDG 9: Industry, Innovation and Infrastructure

   • Target 9.2: Promote inclusive and sustainable industrialization. The article’s argument against “over-reliance on a few sectors such as apparel and construction” and for diversification into “innovation-driven sectors” supports this target.
   • Target 9.3: Increase the access of small-scale industrial and other enterprises to financial services, including affordable credit. The article’s concern over the “steady decline” in “private sector credit flow” directly relates to the financial access needed for SMEs, which employ “about 90 per cent of the work force.”

3. SDG 10: Reduced Inequalities

   • Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. The article highlights the failure to achieve this by noting that the current fiscal structure “benefits a few while the majority struggle with stagnating real income” and that the bottom 50% hold a very small share of wealth.

4. SDG 12: Responsible Consumption and Production

   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. The call for a “circular economy” is a direct strategy to achieve this target by minimizing waste and making the most of resources.

5. SDG 16: Peace, Justice and Strong Institutions

   • Target 16.5: Substantially reduce corruption and bribery in all their forms. The article’s mention of a “culture of rent-seeking” directly points to corrupt practices that this target aims to eliminate.
   • Target 16.6: Develop effective, accountable and transparent institutions at all levels. The article’s conclusion explicitly calls for the government to “ensure good governance and institutional accountability at all levels” and emphasizes the need for “transparency, accountability and competitiveness.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Gini Co-efficient

  The article explicitly mentions that “income inequality has increased, as shown by a rising Gini co-efficient that reached 0.499 in 2022.” The Gini coefficient is a primary statistical measure used globally to gauge income or wealth inequality, directly serving as an indicator for progress towards SDG 10.

• Unemployment Rate

  The mention of “persistent unemployment” implies the unemployment rate, particularly the youth unemployment rate, as a key indicator. This would measure progress towards Target 8.5 (full and productive employment).

• Private Sector Credit Flow

  The article states that “private sector credit flow saw a steady decline, indicating a stagnant business environment.” This metric can serve as an indicator for Target 9.3, measuring the financial health and access to credit for businesses, especially SMEs.

• Export Diversification

  The article’s critique of “singular reliance on the apparel sector” implies that the concentration of exports in one sector is a negative indicator. Therefore, measuring the share of different sectors (especially high-value, innovation-driven ones) in total exports would be an indicator for Target 8.2.

• Share of SMEs in the Economy

  The article provides statistics that SMEs account for “around 25–30 per cent of the gross domestic product and engaging nearly 80–90 per cent of the work force.” These figures can be used as baseline indicators to track the growth and health of the SME sector, relevant to Target 8.3.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

Source: newagebd.net