The economic growth of the country may falter in the coming days for the failure to improve governance, economists have warned.
The caution comes after Bangladesh's economy has grown by more than five percent per year in the last two decades, drawing attention of many thinkers as to how a country with a relatively poor governance can maintain growth in GDP and in per capita income.
Unveiling a joint study at a discussion, economist Prof Wahiduddin Mahmud yesterday said rise in small entrepreneurship, garment exports, remittance earnings and increase in farm production has contributed much to the country's past economic expansion.
An improvement in governance during the 1990s after transition to democracy from military rule also supported the growth.
But the country's governance score has been dropping almost constantly since 2004, with its rank falling near the bottom quartile of the developing countries, said the study citing World Governance Indicators Index.
Wahiduddin, also the lead writer of the study, said good governance acts as a positive ingredient for economic boost.
"Our case may be exceptional so far. But we're entering a period when the absence of good governance may be a constraint for growth," he said while sharing the findings of the study titled "Governance and Growth: Is Bangladesh an Outlier".
Economic Research Group (ERG) and International Growth Centre (IGC) jointly organised the event at Sonargaon Hotel in the capital.
The study, co-authored by Niaz Asadullah of University of Reading and Antonio Savoia of University of Manchester, concluded that institutional weaknesses may be reaching the tipping point beyond which they become binding growth constraints.
Addressing the discussion, Food Minister Abdur Razzaque said governance in the farm sector such as making fertiliser available at farmers' doorstep contributed to growth in agriculture.
He said economic reforms, particularly trade liberalisation and improvement in governance under democratic rule, also supported the expansion of the economy and brought about improvement in social and human development indicators.
Hossain Zillur Rahman, former adviser to caretaker government, said improvement in governance is vital as Bangladesh aims to become a middle-income country. "Bangladesh needs to wake up."
Zillur, also an economist, said autonomy of economic governance is important to make that happen and that political interference affects economic governance. "There is a particular point of concern here."
Bangladesh Bank (BB) Governor Atiur Rahman said accountability and transparency are important for ensuring good governance. He said the level of accountability increases over time due to technological intervention and activities of NGOs.
"The most effective way to improve governance is automation," said the BB chief, who also underscored that democracy is a key in ensuring accountability.
"There is accountability as democracy is there," he said, "Mass media gives a strong support to ensuring accountability."
He said the BB has taken many steps to ensure transparency and accountability.
It includes consulting experts and businessmen before formulating monetary policy, making the credit information online, formatting of Consumer Interest Protection Centre and opening of one crore bank accounts of farmers at Tk 10.
Policy Research Institute Executive Director Ahsan Mansur said automation of tax administration has helped India increase revenue collection. Bangladesh can replicate it, he added.