Ills of skewed policy supports

EDITORIAL

The observation made in this year's UNCTAD report on the least developed countries (LDCs) that policies in poor developing countries being biased towards some specific sectors create barriers to structural transformation and sustainable development of their economies is applicable to Bangladesh.  It is no secret that successive governments have been patronising some selected sectors, including readymade garments, textiles, plastics, food processing, through policy supports for more than three decades. Such supports were undeniably necessary to help these sectors make a place in the global market and earn substantial amount of foreign currency.

The policymakers have not, however, been equally mindful about locating some other potential and prospective sectors of the economy that deserve genuine policy supports. Despite strong pleas from the entrepreneurs, the government has not come forward to provide necessary support for the development of those sectors. Under such a skewed system of public policy supports, entrepreneurship development and structural transformation have suffered.

The negative implications of a biased policy of patronisation are quite evident. The country has become largely dependent on a very small number of items for its export earnings. Such dependence is unhealthy for the economy of the country. That is why the issue of diversification in export basket has been highlighted time and again by economists, and all domestic as well as multilateral stakeholders. The growth of other potential sectors is necessary not just to boost exports, but also to create new employment opportunities in the formal manufacturing sectors.

The UNCTAD (United Nations Conference on Trade and Development) report has also noted with concern that growth of smaller and younger firms in poor developing countries, including Bangladesh, face hurdles because of the absence of competitive policies. Similarly, higher startup costs and lack of access to formal sources of financing are thwarting the entry of small enterprises and informal firms into the market. Besides, factors such as higher tax rates, corruption and fear of harassment in the name of inspection do discourage entrepreneurs to get registered in LDCs.

It is a truism that unhindered growth of small enterprises in viable sectors is essential for economy and employment generation. This is an area where the government needs to extend adequate policy support. No matter what the official statistics say, the rate of unemployment in the country is very high. The actual number of unemployed people remains hidden under the term 'self employed'. Many vocations that unemployed people choose to make a living are not at all rewarding, financially, and dignified, socially. 

Bangladesh is poised to acquire the status of a middle income country soon, but there is no sign yet that hurdles to the development of entrepreneurship and enterprises, particularly the smaller ones, would be removed any time soon. But the fact remains that small enterprises hold the key to country's development and employment generation. It, thus, remains an important job for the government to devise appropriate policies that would ensure proper growth of small enterprises. Hopefully, the policymakers would not shy away from that task.

• Courtesy: The Financial Express /Nov 25, 2018