Theory vs practicality

Dhaka,  Tue,  26 September 2017
Published : 24 Aug 2017, 18:41:08

Theory vs practicality

Mahmudur Rahman
Drawing from scientific thought that a theory is only as good as it being proven, maybe it's time for several theories to be recast. Either that or the 'proof' has to be universally accepted. Such is the case with economic and political theory. Professor Joseph Stieglitz, a strong proponent of tackling stagnation through job creation rather than tackling inflation, must be pleased at the way the US and the UK have gone about adding the number of jobs. Barring Germany, the rest of Europe has failed miserably due to slump in consumption, arising from lack of confidence and policies ranging from business-unfriendly to stubborn labour unions. New leadership in France has raised optimism that the stalemate might be broken but that's an island in the sun.

The Germans, habituated to self-austerity, practice thrift so much so that their reserves are in massive surplus and economists would like them to spend much more. The UK has an opposite scenario. Record low unemployment  figures are sobered up by the fact that wage growth is behind inflation and therefore, real wages are down over some years ago. That would mean more austerity even though seven years of it has hurt and a caregiving nurse is frank in saying 'we have to compromise between heating and an extra meal'. And this in a country that was essentially self-reliant, till they began to look at cheaper options for greater equitable spread of wealth. Pay caps of 1.0 per cent a year sounds more of a communist prescription than a democratic one totally at odds with a free-market economy.

It's sobering to find out that the self-reliance in food grain claim for Bangladesh has worn thin. With the government scrambling to buy and import rice and further slash import duty from 10 per cent to 2.0 per cent it is a stark reminder. If one flood can bring about such a situation, perhaps a new definition is required somewhat along the lines of three month's import levels of foreign reserve being acceptable as safe reserve. The dip in remittance and low growth of exports re-emphasises the need for further rise in domestic manufacturing output and more local investment in industry as means to export substitution. 

One-sided views of not supporting industries planning to invest abroad border on myopia. With proper controls profits can be remitted through proper channels. Arguing that such investments should be made locally hold water only if a business case can be presented in support. Creaking under infrastructure issues (or so local businesses say), very few new enterprises are opening up though the odd story of foreign direct investments (FDIs) emerge now and then. There's been little follow-up to the Prime Minister's repeated pleas to wealthy expatriates to invest in the country. Guidelines and rules that are friendly and attractive, clearly and simply communicated and face-to-face meetings can clear up confusion and clarifications. The Board of Investment looks forward to trips abroad to present the Bangladesh case. Why they can't foot the bill for successful expatriates to convene in Dhaka or better still, in an identified Economic Zone against a fixed agenda with a clear follow-up strategy is beyond comprehension. We've heard of 100 economic zones being set up with a stream of companies eager to get involved in development of the same, but the stream of interested investors seems dry to say the least. Diverting money essentially wasted on observing 'Days' and 'occasions' to crisp communications achieves a lot more than one can guess.
Editor : A.H.M Moazzem Hossain
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