This chapter identifies areas where in-depth research can find out institutional challenges that are most critical to Bangladeshs economic development. Two approaches are employed. The first approach uses a variety of institutional measures available in international databases to examine how a country, in this case, Bangladesh, differs from a set of comparators. It is largely based on these indicators that the idea of a Bangladesh paradox was formed: Bangladesh appears as a country with impressive economic growth performance but weak institutional performance. However, there can be some doubt about the reliability of institutional indicators in global rankings. Therefore, the second approach is undertaken where a questionnaire survey of various types of decision-makers and academics is used. The survey respondents identify several institutional weaknesses which include ubiquitous corruption (electoral, business, and recruitment to the civil service); executive control over legal bodies, the media, the judiciary, and the banking sector; inadequate coverage of public services; the number and intensity of land conflicts; and gender discrimination.

This chapter elaborates on the general approach pursued in this volume to identify institutional weaknesses that may be preventing growth in Bangladesh from being faster and more inclusive today and that may cause it to slow down in the future. It also provides a brief overview of the political history of the country, without which it is difficult to understand its development achievement, as well as the present political economy context. Finally, in the light of that historical sketch, some reflections are offered on the specificity of the institutional link between business and politics in Bangladesh, a link that very much frames its development and that are often referred to throughout this volume.

This chapter provides a narrative analysis of the process through which involuntary land dispossession takes place in the particular socio-economic and historical context of Bangladesh, and the relative inability of the judiciary to resolve such cases. It also provides information about the way the judiciary works in general – another aspect of state capacity where Bangladesh appears relatively weak, for both logistical and institutional reasons. Logistical reasons relate to a lack of resources, whereas institutional reasons relate to the way the judiciary is influenced by both political and economic interests, as well as the fact that most actors in the judiciary extract rents from the system and act, almost collusively, to maintain its dysfunctionality. Consequently, this chapter scrutinises the interrelation between economic assets, human actions, and state institutions and its possible impact on the overall trajectory of long-term development. Finally, this chapter identifies potential reform measures and agendas in relation to land dispossession litigation in Bangladesh.

The chapter considers the different levels of power, starting with the family and the extended family (the clan) and the local articulations of the state (communes, provinces, regions). The federalist state (a lively tradition in Italy, since Cattaneo) is opposed to the centralist state (the French Napoleonic model). In the globalized economy, multinational enterprises play an important role, occasionally up to the point of conditioning statal policies; the attitude towards them changes over time. State confederations, such as the European Union, and alliances, such as NATO, are also important. Political confrontations in the international arena involve different elements, from the traditional East–West opposition to the so-called clash of civilizations (i.e. religions). Migrations are also considered. The evolution of the international monetary system and the growing role of the European Union are also illustrated.

This chapter explores the institutional challenges of export diversification in Bangladesh in the context of the dominant RMG sector. It evaluates the features of the ‘RMG model’ of export success, explores the dynamics of the institutional space around the RMG sector in Bangladesh, and analyses the sustainability of the ‘RMG-centric’ export model. The evidence suggests that the very same institutional features which enabled the growth of the RMG sector are missing in other sectors – that there is not the same organisational capacity for industry leaders to participate in collective bargaining with the state, whilst key policy instruments are biased in favour of RMG and against other sectors, which has not been used to help industrial diversification. However, as the RMG sector has been, and to a large extent still is, the strength of Bangladeshs development, it might become the country’s ‘Achilles hell’ in the future, if it weakens and prevents other manufacturing exports from developing. Therefore, there is a need for a well-designed and effective industrial policy targeting the emerging dynamic export sectors.

This chapter identifies and evaluates the institutional causes of the failures of the tax system in Bangladesh. At less than 9%, Bangladesh is among the countries with the lowest overall average ratio of tax revenue to GDP. It follows that its fiscal space, that is the capacity to spend on public goods and correct rising income inequality, is extremely limited. The low average tax ratio results from both low nominal tax rates and a low rate of tax collection, itself due to pervasive tax evasion (often with the paid support of tax collection personnel) or to tax exemptions generously granted by the Government to its supporters. In addition, albeit in a limited way, taxation distorts economic incentives, either directly through non-uniform tax rates that favour some sectors or firms and penalise others, or indirectly through exemptions and evasion. This chapter also explores the reasons behind the difficulties that have surrounded previous attempts at tax reforms, and the underlying political economy factors. It, finally, lists the most attractive reforms in terms of increasing tax revenues, the effectiveness of tax collection, and the redistributive impact of the tax system.

After evaluating the different elements explaining the power structure, the final chapters of the book are devoted to policy strategies. As an introduction to these, the chapter considers ethical issues: the individual-society opposition, the notion of the common good, the debate concerning the notion of justice (deontological versus consequentialist conceptions, meritocratic versus equalitarian views, equality of starting points versus equality of points of arrival), the different notions of freedom (such as positive versus negative freedom. Rossellis liberal socialism is illustrated, together with Croces criticism. Finally, a distinction is drawn between fanciful and realistic utopias.

The scarcity of land and resulting high prices have important implications for the prospect of industrialisation in Bangladesh. The situation is yet more complicated due to the weak land management system, which perpetuates land grabbing, high rent generation, and ineffective property rights. This chapter analyses the importance of a well-functioning land management in Bangladesh. It elaborates on the history of the policy reforms and the evolution of rules and regulations related to land administrative and management in Bangladesh and analyses institutional complexities in the current system of land management. It also explores how the SEZs initiative has emerged as an alternative management system and the complexities related to the acquisition of land for SEZs. This chapter shows that the institutional mechanisms of land acquisition and compensation are subject to a range of corrupt practices, which in turn create vested interests that resist change and a bias towards politically connected purchasers, or towards those willing and able to pay bribes. Such an environment is inimical to a good business climate and undermines the strategic economic purpose of the SEZs.

This chapter provides an analysis of the structure of the banking sector in Bangladesh, different performance indicators of the banking sector, the trend in NPLs, and efficiency levels of private banks. It also explores the politics of the banking sector and avenues of governance failures in relation to private commercial banks in Bangladesh. This poor performance of the banking sector is related to the low quality of the sector’s lending operations. Through regulatory and policy capture, political patronage often leads to unproductive loans, or simply loans that bankers know will never be repaid. Also, cases of embezzlement through legal insider lending – that is to the bank’s owners or their family – have been reported. NPLs, and the frequent need for monetary injection in state-owned banks or bailouts of private banks, are the manifestation of these governance failures of the whole sector. This chapter emphasises key reforms needed in the governance of the sector which include autonomy of the central bank, modification of the Banking Companies Act and strict adherence to it, and political commitment to penalise loan defaulters.

Positive and negative aspects of meritocracy are evaluated, together with the difficulties of realizing it in practice. The notion and the theory of networks are recalled. White (fully legal, socially useful), gray (legal, but morally doubtful) and black (illegal) networks are distinguished. Various examples of networks are considered: the family, associations (cultural, religious, political, sports etc.), mason lodges (among the grey networks) including a deviant secret lodge as the P2 in Italy (the nature of which is illustrated), criminal clans and mafia-type associations (a synthetic history of the mafia is provided).

Smiths analysis of the relationship between division of labour and the wealth of nations interpreted as per capita income is illustrated, through their connection with productivity. The division of labour also explains the existence and characteristics of social stratification and alienation. The classical tripartition in social classes – capitalists, landlords and workers – is discussed, considering both its explanatory value and its limits. Division of labour evolves through time: Babbages laws, Taylorism, the production chain, mechanization. The international division of labour and international value chains are considered. Marxs communist utopia with the disappearance of compulsory labour is recalled and confronted with less unrealistic utopias concerning the command structure within the firm or Ernesto Rossis labour army.

This chapter provides an analysis of the structure of the banking sector in Bangladesh, different performance indicators of the banking sector, the trend in NPLs, and efficiency levels of private banks. It also explores the politics of the banking sector and avenues of governance failures in relation to private commercial banks in Bangladesh. This poor performance of the banking sector is related to the low quality of the sector’s lending operations. Through regulatory and policy capture, political patronage often leads to unproductive loans, or simply loans that bankers know will never be repaid. Also, cases of embezzlement through legal insider lending – that is to the bank’s owners or their family – have been reported. NPLs, and the frequent need for monetary injection in state-owned banks or bailouts of private banks, are the manifestation of these governance failures of the whole sector. This chapter emphasises key reforms needed in the governance of the sector which include autonomy of the central bank, modification of the Banking Companies Act and strict adherence to it, and political commitment to penalise loan defaulters.

This brief chapter illustrates the object of the book: to analyse the various dimensions of the notion of power (economic, political, cultural etc.). It also outlines the contents of the book and its political objective, the strategy of structural reforms aimed at reducing inequalities in the social distribution of power.