FE Report

Economic use of land would help Bangladesh pave the path to a double-digit growth over the next three decades while also protecting its farmlands from being lost, an expatriate economist said Wednesday.

Salim Rashid, a professor at the University of Illinois, said key foundations for a 10 per cent economic growth were higher rice production and promoting compact township-both help save lands.

"There can't be any more critical area than land to foster robust growth," Prof Rashid told a discussion in the city, sponsored by the Policy Research Institute (PRI).

His peers in the meeting agreed that 10 per cent growth was not a "utopian" idea but challenged his wisdom that only agriculture could salvage the economy, which managed to grow by average 6.0 per cent for year after year.

He said land was expected to be a binding constraint to Bangladesh's growth as the country is losing 1.0-2.0 per cent of land every year.

Economic Adviser to the Prime Minister Mashiur Rahman attended the discussion as the chief guest.

Mr Rahman said corruption in Bangladesh was exaggerated, even if there existed corruption in the country.

Prof Rashid was upbeat that Bangladesh could emerge as a rice-exporting nation in three years, backed by technology, input market liberalisation and expansion of high-yield varieties.

He said the country needed to produce about 5.0 million tonnes of rice in the next three years-or 20 per cent increase-to feed new mouths and become an exporter.

He insisted that it would be possible as Bangladesh had gone from 9.0 million tonnes to over 27 million tonnes in cereal production and practically attained self-sufficiency.

"Hybrid technology will provide 20 per cent more output than HYV and the only new input needed is education and the building of domestic capacity," he told the elite audience including academics, diplomats and donor representatives.

He advised the government to move toward free market for inputs, saying the appropriate use of inputs contributed about 75 per cent of the yield of HYV varieties.

He did not favour the government's policy to subsidise fertiliser and grains for only 15 per cent of the urban population, whose incomes are fixed and vulnerable. Some 30 per cent of Bangladesh's 162 million population are urban.

"Should the economic policy of 85 per cent be dictated by the needs of 15 per cent?" he asked.

Zahid Hossain, a senior economist at the World Bank, frowned on the notion of rice-based growth, saying except the case of New Zealand, no nations in the world grew relying on agriculture.

Sadiq Ahmed, PRI vice chairman, said the double-digit economic growth in Bangladesh was doable, given the fact that China did it while India was close to achieving that.

Mr Ahmed, who moderated the discussion, said that Bangladesh would have to look for new sources of growth beyond remittance and apparel exports as it sought to grow 10 per cent.

He also agreed with the views that land was going to be a binding constraint to Bangladesh's growth and supported the idea of compact township to avert misuse of lands.

Prof Rashid said Bangladesh was poised to grow higher but the greatest obstacle to achieving that goal was the "absence of a vision."

"Bangladesh is the least recognised case of development success," the Yale-trained economist said.

He said the country should utilise the power of land value taxation to generate revenue and simplify land acquisition.

He also urged the government to jack up the ceiling of profits in government contracts to at least 30 per cent to help unleash entrepreneurship.

Among others, FBCCI president Annisul Huq, chairman of PRI Zaidi Sattar, director general of Bangladesh Institute of Development Studies MK Mujeri, senior economist at the World Bank Zahid Hossain, executive director of PRI Ahsan H Mansur and managing partner of AT Capital Ifty Islam spoke at the discussion.