The observation came in the wake of the country's accelerated export growth and per capita income, which he claimed to be one of the highest in the developing world, as well as improvement in human development, next only to China.

"How does one reconcile the country's poor image of governance with such remarkable achievements in economic and social development?" Prof Mahmud told a recent workshop on the prospects of foreign investment in Bangladesh held in Mumbai, India.

He said Bangladesh recorded the achievement since early 1990s despite international agencies' poor ratings in terms of its quality of governance, corruption, economic competitiveness and the general climate for doing business.

Tata Group of India organised the workshop attended by academics and business experts from India and abroad, according to a message received here on Wednesday.

The topics discussed in the workshop included business environment in Bangladesh in an international perspective, the country's economic growth prospects, investment risks, and the bureaucratic culture of getting things done.

Prof Mahmud said the politics of confrontation and the mutual 'blame game' between the two major political parties create or exaggerate an external perception of economic and political fragility of Bangladesh.

"The political exploitation of the populist appeals of religion and the 'India factor' also creates wrong impressions about the actual policy agenda of the two major parties, neither of which actually favours religious fundamentalism or fails to see the benefits of cooperation with India."

He continued: "True, there are serious problems regarding corruption and bureaucratic hurdles, ports and infrastructures, hartals and the like. There needs to be improvements in all these areas.

"Yet, private investment has shown considerable dynamism, rising from around 10 percent of GDP to the current level of 17 to 18 percent during the past decade or so."

This is indicative of the presence of strong entrepreneurship that is able to overcome the existing hurdles," said the economist. He added that the risk assessment by potential foreign investors depends on their familiarity of the business environment of a country and their capability of working in such an environment.

The policy regime regarding foreign investment in Bangladesh is one of the most liberal in this region, he told the workshop.

But the response of FDI has been rather limited and the investments that have taken place were confined to a limited number of sectors like gas exploration, electricity generation, telecommunications and garment production in the EPZs, he said.

Showing some prospective sectors for investment, he said manufacturing growth has been predominantly led by the export-oriented readymade garment sector, but there is potential for growth in other exports including horticultural products, leather goods, ceramics, pharmaceuticals and light engineering products.

He said Bangladesh should be able to take advantage of the provisions of EU, Canada, Australia and other industrialised countries for allowing duty-free access of exports form the least developed countries.