By Shah Mohammad Mahboob (Bangladesh)
Introduction
The article by Dani Rodrik has tried to focus upon the weaknesses of “one for all” reform strategies of the IFIs and the arguments can fairly be supported by a range of data. But, the developing countries “poor ability to decide and choose” can also be a major factor for the failure of reforms.
Historically, Bangladesh had been moderately submissive to the so called “prescriptions” from the IFIs, especially the World Bank and IMF. The country has taken a series of reforms and the results have not been very prosperous so far. It seems that, it was more of poor adoption of reforms than the features of reforms themselves, to make the situation worse.
Economic Policy Reforms
During the 1990s, Bangladesh’s structural adjustments started with privatization of public enterprises and opening of its markets through trade liberalization. Although the privatized enterprises started to make profit under private ownership at no time, they also created unemployment in the name of ‘right sizing’. Trade liberalization increased international trading, but imports surpassed exports by many times. This has given a rise in numbers of trading houses instead of manufacturers to eat out foreign reserves and also could not create employments. The domestic industries were kept insecure against import by withdrawing required tariff protection. Very shortly, government lost control of the prices of the commodities and an irregular trend of price hikes gave result to price inflation. These indicate the weaknesses of the policy makers in ‘customizing’ and taking right decisions. A recent survey has shown that, around 70% senior government officials have difficulties in understanding donor’s documents and 80.33% of them believe that lack of political commitment is giving the donors superiority over the government.
Development Policy Reforms
During 2000 onwards, Bangladesh started to prepare its “Poverty Reduction Strategy Paper (PRSP)” by replacing traditional “Five Year Plans” in response to one of the Augmented Washington Consensus. Although the donors in the name of ‘Local Consultative Groups’ was in supporting role, it was mainly the local consultants who helped the government to prepare the PRSP. Later it came to realization that, most of the government officers could not understand the document’s function, private sector mostly kept their silence and the common people never knew about it. As the ultimate result the document was hardly utilized and the country had been practically running without any plans. The case might be similar for many developing countries. It was a big blow that may require many years to recover. Including the PRSP into the traditional Five Year Plan could save the face. But the policy makers are yet to take any decision regarding this.
Importance of Specialization
China and India have followed heterodoxy ideologies for their taking off. Both the countries are well known for their scrutiny and general reluctance to donors. Sincere analysis, thinking and leadership from the government supported this idea. In addition, both the countries had some creative “specialization” which helped their stances. China has specialized on cost cutting and thereby increasing export whereas keeping a control over import. On the other hand, India had a ‘Made in India’ campaign among the citizens to prefer domestic products over the imported one. Being the second biggest market in the world, their production easily achieved the required selling target. Their customization of reforms helped their purposes. So, the developing countries really have to think of some specialization to boost the country power.
Conclusion
Even though IFIs were partly wrong in their drafting one unique plan for all countries, it was also the developing country’s primary responsibility to check the adaptability of the reforms to their situation and control the degree of implementation. If the countries cannot develop their own decision making ability, the ‘removing the bottleneck’ procedure, as was suggested by the author may as well be unsuccessful for them. They really have to learn to choose the best for them from a complex mesh of options.
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