I had a doctor's appointment a few days ago. The nurse found my blood pressure slightly higher than usual and my doctor termed it the “white coat syndrome”—a phenomenon in which patients exhibit blood pressure levels above the normal range in a clinical setting where doctors appear in white coats. The economy too suffers from a similar ballot box syndrome in the pre-election period, hampering investment and employment. There are, nevertheless, numerous ways to mitigate the instability for the sake of maintaining a healthy economic momentum.
Announcing the 300 nominations from all major parties soon is the first way to effectively reduce speculations and uncertainty about the economy. The election is only a year away and nominated candidates should be given enough time to work for local development rather than be held back in Dhaka where they will remain busy in “expensive” lobbying until they can manage to get the party ticket. This is the time for all constituencies to get some developmental services from the nominated candidates who will have enough incentive to remain janodarodi—kind to the public—until they hit the election. And it would be wise to use this sentiment and situation in favour of the economy. As economist Gregory Mankiw argues, incentives are one of the ten principles of economics that induce us to work positively.
Despite all rules and regulations, candidates will pour in their money in their areas anyway. This has become more so in recent years as businessmen are now occupying almost 70 percent of all parliamentary seats—a number that has risen remarkably from around 10 percent in the post-independence era. To make the best of this, it would be prudent to let the businessman-turned-politician spend his money for the good of the public. While economists will accept it as a “trickle down effect,” social activists will see it as an equaliser. The candidates will have some to time to show some tangible acts of development if the preparatory timespan is at least a year. Otherwise, a sudden rush of money— when nominations are announced just before the election—will promote voter bribery, cash dumping, thuggery, and bullying. Once the ruling party finalises their nominations, other parties will follow suite.
Candidates are usually judged based on their past records which should span at least a decade. Then what is the point of waiting and creating more uncertainties as to announcing the nominations? The quicker the centre can decide on nominations the earlier the candidates can go to their constituencies and start doing some work. This will give the party command enough time to resolve local internal disputes which are rampant, creating a win-win situation for the economy. Having a speed of seven-percent growth, the economy cannot afford to slow down due to avoidable political uncertainties. A speedy train finds it expensive to have frequent local stops. The same dynamics is true for an emerging economy like ours. And that is why the major parties should devise some ways to keep the economy running without vital disruptions owing to the election.
Historically, almost all elections took a toll on our economic growth. In 1990, growth rose to 5.6 percent, but went down to 3.5 percent following the general election. In 1995, growth edged up to 5.12 percent, and it slowed down to 4.5 percent in 1996. Output growth of 5.1 percent in 2001 dropped down to as low as 3.8 percent in 2002 in the wake of the parliamentary election. Growth again peaked in 2007 at 7.06 percent and it decreased to 5.05 percent in 2009 following the last caretaker government-led election at the end of 2008. Only the 2014 election couldn't reduce growth from 6 percent, and people knew that the regime would remain in power since the main opposition didn't join the election. Otherwise, the ballot paper syndrome has been a common phenomenon in our national life, and we need to treat this disease for the greater interest of the economy. Of course, global factors such as the post-nine-eleven gloom and the global financial crisis aggravated the decline in growth in 2002 and 2009, respectively. But the election and the ensuing uncertainty impacted investment greatly, causing dwindling in output and growth.
We can reduce this kind of political setback on the economy only by channelling the political exuberance in a positive way. Whatever control the election commission brings on the size of the spending by candidates, the political nominees will spend the most anyway. Some of them saved that money over ages, and they need to spend it. The optimal model would be to let them spend as long as they spend it for the public good: schools, computers, libraries, women's employment, vocational training centres, and sports facilities for the youth. All these will empower our growth in the long run by augmenting human capital and social welfare.
Our politics has become very much Dhaka-centric. This is the only time, before the election, that we can make politicians get engaged in local areas, villages, and in the rural milieu. And that can be ascertained by making all nominations final as soon as possible. Why don't we try this model this year and see what perceptible changes we can see in the rural economy? The mixing of the nominated candidates with the local public will deliver ample opportunities of healthy interaction and improve our public's understanding of what politics mean—what good politics can do for the economy.
Biru Paksha Paul is associate professor of economics at SUNY Cortland.