How Bangladesh benefitted from ‘elite bargain’

The political elite— those with power and influence— often tend to determine how the state is usually run. Dr Stefan Dercon, Professor of Economic Policy at the Blavatnik School of Government and the Economics Department at the University of Oxford, refers to this as "elite bargaining".

According to Professor Dercon, growth and development occurs when the elite bargaining is centred around a commitment to growth.

Dercon, who has also served as the Chief Economist at the Department of International Development (DFID) from 2011 to 2017, was speaking during the first episode of the second season of Youth Policy Forum's flagship dialogue series "Talking Policies with Dr. Akhtar Mahmood".

To achieve such growth, the state has to have a commitment to peace and stability, be self-aware— be realistic of its resources and abilities, and lastly be willing to learn and to make itself better.

He refers to this bargain centred around growth and development as a developmental bargain.

Bangladesh is an example of a country that benefited from the "elite bargain" model. The country has gone from being a "basket case" to doing extremely well in terms of having sustained growth in the last 20 to 30 years.

The professor's recently published book "Gambling on Development: Why some countries win and others lose," explores why some countries are able to settle on elite bargains fostering growth and developments, while others are not.

Such a developmental model is not always dependent on the political system or the condition of the institution per se, but depends largely on the ability to pragmatically adopt and use these institutions and systems for better development.

This is why the developmental bargain often differs from place to place, as countries vary widely in their political systems and institutions.

According to him, countries often tend to achieve economic development despite implementing policies which appear to be imperfect on paper, while other countries with seemingly perfect plans are often unable to achieve development.

This made him realise that it was not only important to focus on what was being done to achieve development, but also how and why it was being done.

He further discussed the different indicators which tells us when an elite bargain is being struck. He then explained why there is often a gamble involved with such a bargain, as there are often risks and uncertainties involved. It is evident that not all growth oriented policies will be equally fruitful, which is why there is a gamble and some groups may have to lose out in such a bargain.

According to Professor Dercon, the self-awareness of the Bangladesh state allowed organisations like Brac to fill the void for the required social services. He also highlighted the significant role of the garment sector, among other things.

He emphasised on the pragmatism of the government as one of the key factors which allowed for growth and development of the country as he said, "Which country in the world would allow an organisation like Brac to become so big? There is no country in the world that would allow it; India wouldn't allow it; Pakistan wouldn't have allowed it; no African country I know would allow it. That's really striking how the pragmatism of the state and those governing it was remarkable."

Professor Dercon's book emphasised on garments, remittance and NGOs as the key drivers of Bangladesh's development. Alongside, agricultural transformation has also been an important driver, which has benefited not only from the liberalisation policies of the government but also from active programmes such as rural road development and public investment in agricultural research.

He then talked briefly about the views of different prominent developmental economists in academia, and contrasted them with his own views.

Following this, the floor was opened for questions from the audience. He addressed questions on issues such as the obstacles that lie ahead for the development of Bangladesh and whether the crumbling of crucial state institutions in Bangladesh can justify the development.

The Business Standard was the media partner for the event.

 Hrishik Roy is the Lead of Foreign Policy Network at YPF