Promoting economic literacy

Dhaka,  Tue,  26 September 2017
Published : 04 Jul 2017, 19:04:31
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Promoting economic literacy

Promoting economic literacy
Asjadul Kibria
Bangladesh economy is growing at a faster rate than in the past. Policymakers claim that growth of the economy is now becoming inclusive. For the people in general to understand what it takes an economy to be inclusive they would need at least a modicum of economic literacy. Only then they can make an informed judgement and either accept or reject the claim of the policymakers. 

Without economic literacy, people of the country can't ensure their greater economic security in the long run. They will also not understand the dimension of economic growth. True, people are acquiring knowledge in different areas of economics through their own means along with their own experiences. That's why, many of them are doing good while running small business, maintaining bank accounts and operating some financial services. 

But, this kind of embryonic understanding on economy and finance is not sufficient to deal with the complex dynamics of economic development. Rather, lack of economic literacy cerates risk of deprivation and financial fraud. The bubble and bust of the stock market in 2010 is a clear example. People rushed to the stock market for making quick profit without any understanding of the fundamentals of the market. So it became easier for the scamsters to manipulate the prices of different securities and artificially inflate the market. At one stage, the bubble busted, as it was likely, making investments of thousands of people worthless. As almost all of them were financially illiterate, they didn't even know the basic rules of capital market and entirely relied on gossip and speculation. With some financial literacy they could have minimised the losses, the least. 

To put is simply, economic literacy is the knowledge and understanding of basic economics, finance and trade. An economically literate person has some basic understanding of the core concepts of micro and macro economics along with a modest degree of knowledge about different economic theories.  In fact, economic literacy is a broader term which includes financial literacy, fiscal literacy and trade literacy. 

Financial literacy makes a man literate about overall financial market and monetary policy provides basic knowledge of tax and public finance-related matters. Again, trade literacy focuses on export-import procedures and tariff-related issues. These are inter-linked and provide broader foundation for economic literacy where the basic knowledge of Gross Domestic Product (GDP), inflation, savings, investment, demand, supply and other concepts get priority.   

There are two aspects of economic literacy. One is conceptual literacy, and the other, factual literacy. Conceptual literacy means understanding of basic concepts of economy, finance or trade. Factual literacy means knowledge of real facts of the different areas of economy. Both are important for the better economic literacy. For instance, one may know the latest export and import figures but may not understand the way trade takes place. 

In Bangladesh, as well as across the South Asia, the situation of economic literacy is appalling. A survey conducted by Standard and Poor's Ratings Services, along with Gallup, Inc., the World Bank Development Research Group, and the Global Financial Literacy Excellence Centre at the George Washington University, unveiled the shocking picture. Known as S&P Global Financial Literacy Survey, the most comprehensive global measurement of financial literacy, it showed that only 19 per cent of the adults in Bangladesh were financially literate in 2014.  

Thus, there is an urgent need to improve the financial as well as economic literacy of the people. Academicians should devise ways how to impart elementary knowledge on economic and financial matters to students even at the school level. 

Again, millions of people engaged in small and medium businesses, and employed in different formal and informal jobs also don't have any economic literacy. But they are, in a way or another, dealing with economy or finance. Some small training on economic literacy can make their life easier. 

Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC) have taken some initiatives to spread financial literacy across the country. National Board of Revenue (NBR) has also taken some scattered moves to spread fiscal literacy. But, such unplanned and uncoordinated move may not bring the desired results.   What is needed is a comprehensive planning and coordinated move. 

A public-private partnership for spreading the economic literacy can be a good option. All the regulators of the financial market can join hands with banks, trade bodies and educational institutions in this regard. They can promote economic literacy in two ways. First, they can support the educational institutions. Second, they can prepare and disseminate simple booklets on economic literacy to ordinary people along with organising some workshops. In this regard, they can involve the public libraries across the country. 

In India, the Reserve Bank of India has developed a model for promoting financial literacy. Many other countries are also working on economic literacy. Organisation of Economic Co-operation and Development (OECD) is supporting different international surveys on economic and financial literacy. 

Economic literacy has a wider impact on society. It is not only that people with economics literacy will manage their personal finance in a better way, but also they will understand the movement of economy in a better way. 

asjadulk@gmail.com

 
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