If you don't understand something, it's

not you. It's probably the policy.

POLITICAL
ECONOMY OF
BANGLADESH
Pore ki labh
 THEME 01

CLASSICAL ECONOMY AND MARXISM: A

COMPARATIVE OVERVIEW
Classical Economy: Free Market and Liberalization

As the mercantilist era drew to a close, scholars like Adam Smith and David Ricardo emerged
with new economic ideas. They argued that a state's economic growth is hindered by
protectionist policies and excessive regulation. According to them, for a nation to prosper, it
must adopt a free market economy domestically and pursue trade liberalization globally by
removing trade barriers.

PRINCIPLES OF THE FREE MARKET ECONOMY:

1. Balancing Supply and Demand: The economy self-regulates through the interaction of
supply and demand without the need for government intervention.
2. The Invisible Hand: Smith proposed that individual self-interest and competition
naturally guide economic resources to their most productive use, benefiting society as a
whole.

KEY FEATURES OF A MARKET-BASED ECONOMY:

1. Rationality: The pursuit of individual interests indirectly promotes the greater good of
society.
2. Market Predominance: The economy operates based on the invisible hand, minimizing
the need for government involvement.
3. Minimal State Intervention: Governments limit their role, allowing for privatization and
reducing restrictions on businesses.

Classical political economists advocate for trade liberalization and cooperation between
nations. They emphasize the Theory of Comparative Advantage (Ricardo), which suggests
countries should specialize in producing goods they can manufacture efficiently and trade for
goods they lack.

MARXISM AND CRITIQUE OF CAPITALISM

Following the Industrial Revolution, Karl Marx observed the growing inequality between two
social classes:

 The bourgeoisie (capitalist class) amassed wealth.

 The proletariat (working class) faced deteriorating living conditions.

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Marx identified capitalism—both domestic and global—as the root cause of this exploitation.
His analysis was based on two philosophical frameworks:

1. DIALECTICS

 Originally developed by Georg Wilhelm Friedrich Hegel, dialectics explains societal

change through contradictions.
 According to Marx, every societal system (thesis) contains inherent flaws (contradictions),
which lead to its opposition (antithesis). The clash of these forces gives rise to a new system
(synthesis).
 Marx believed that class struggles drive historical change, as stated in the Communist
Manifesto: “THE HISTORY OF ALL HITHERTO EXISTING SOCIETY IS THE HISTORY OF CLASS
STRUGGLES.”

2. HISTORICAL MATERIALISM

 Marx analyzed history through an economic lens, arguing that all historical events have
material (economic) causes.
 He believed that capitalism’s contradictions—such as its exploitative nature—must be
resolved to achieve a classless society.

Marx argued that the contradiction within capitalism lies in its exploitative nature. Capitalism
enriches the bourgeoisie by exploiting the proletariat. This relationship is maintained through
ideological and structural tools, which Marx termed the Base and Superstructure.

BASE AND SUPERSTRUCTURE:

 Base: The economic foundation of society, including production methods and relations.
 Superstructure: The political, legal, religious, and cultural institutions that reinforce the
economic base.

Marx famously likened religion to opium, suggesting it pacifies the working class by
promoting acceptance of suffering in hopes of a better afterlife. This diverts attention from the
true economic causes of their hardships.

CLASS CONSCIOUSNESS AND REVOLUTION:

Marx outlined two stages of class consciousness:

1. Class-in-Itself: Workers recognize their poor conditions but attribute their suffering to
personal failings.
2. Class-for-Itself: Workers realize their collective exploitation by the bourgeoisie and unite
to challenge the system.

Once class consciousness develops, workers resist exploitation. Marx believed that the state
functions as an instrument of the bourgeoisie to suppress proletarian uprisings. He argued that
the state was not created to protect individual wealth through social contracts but to enforce the
interests of capitalists. He traced its origins to the Westphalian system, which coincided with the
rise of capitalism during the Industrial Revolution.

THE PATH TO COMMUNISM:

Marx envisioned a revolution where the proletariat would seize control of production. This
phase, known as the Dictatorship of the Proletariat, would dismantle capitalism. Eventually,
the goal was to create a classless society where private property and the state would dissolve.

Key Differences:

 Classical Economists (Smith, Ricardo) championed free markets, individual liberty, and
minimal state intervention to drive economic growth and prosperity.
 Marxism critiques capitalism, emphasizing the need to dismantle exploitative structures
through collective action and class struggle to achieve economic equality.

Both schools of thought have significantly influenced political and economic policies, shaping
modern understandings of development, inequality, and governance.

Marxism has two sections- Socialism and Communism.

NEOLIBERALISM AND GLOBALIZATION

Neoliberalism is a modern adaptation of classical economic liberalism. It emerged in response to
the perceived failures of Keynesian economic policies in the mid-20th century.

During the post-World War II era, many Western economies adopted Keynesian principles, which
emphasized state intervention to manage______

economic cycles and

mitigate unemployment.

However, by the 1970s, rising inflation, stagnation, and growing public sector inefficiencies led to a
reassessment of these policies.

Neoliberalism, championed by figures like Margaret Thatcher and Ronald Reagan, advocated
for rolling back the state’s role in economic affairs.

The core tenets of neoliberalism include

 Free market economy

 privatization of public enterprises,
 deregulation of industries,
 reduction of social welfare programs,

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  and an emphasis on individual entrepreneurship.

This shift marked a return to the classical belief that markets function best when left to their own
devices, free from government interference.

A crucial aspect of neoliberalism is its emphasis on economic efficiency and competition as

drivers of innovation and growth. Neoliberals argue that state involvement distorts market signals,
leading to inefficiencies and rent-seeking behavior. By contrast, a deregulated market allows
businesses and individuals to compete, innovate, and allocate resources in a way that maximizes
productivity and economic output.

This belief is rooted in Adam Smith’s idea of the “invisible hand,” which posits that
individuals pursuing their own interests inadvertently contribute to the collective welfare
of society. Neoliberals contend that this process fosters wealth creation and broad-based
prosperity, reducing poverty through economic growth rather than redistributive policies.

GLOB AL IZ A TIO N : A P R O D UC T A N D A F AC ILI T AT OR OF NE OL I BE R AL EC ON O MIC

POLI C I ES

Globalization serves as both a product and a facilitator of neoliberal economic policies. At its core,
globalization reflects the increasing interconnectedness of national economies through trade,
investment, and the movement of goods, services, and capital across borders. Neoliberals argue that
globalization extends the benefits of free markets on a global scale, creating opportunities for
specialization and efficiency gains through comparative advantage. By allowing countries to focus
on producing goods and services in which they excel, globalization enhances productivity and
drives economic growth worldwide.

This process aligns with David Ricardo’s theory of comparative advantage, which posits that
even if one nation is more efficient in producing all goods, trade can still be mutually beneficial if
each country specializes in areas where it has relative efficiency.

From a neoliberal perspective,

globalization is seen as a means to foster international cooperation and economic

interdependence. By reducing trade barriers, tariffs, and regulatory constraints, nations can
engage in more fluid economic exchanges, creating wealth and fostering peace through
mutual interests. Multinational corporations play a pivotal role in this framework, driving
foreign investment and technological diffusion. Neoliberals argue that global markets,
driven by private enterprise and free competition, lead to higher standards of living,
innovation, and economic dynamism.

However, critics highlight the uneven distribution of globalization’s benefits, noting that
while some nations experience rapid growth, others may face economic dislocation, job
losses, and environmental degradation.

Despite its emphasis on minimal state interference, neoliberalism acknowledges the need for a
foundational legal and institutional framework to ensure the smooth functioning of markets.
This includes

 protecting property rights,

 enforcing contracts,
 and preventing monopolistic practices that undermine competition.

Neoliberals accept that limited state intervention may be necessary to correct market failures, such
as externalities or information asymmetries. However, they caution against expansive government
involvement, warning that excessive regulation can stifle innovation and entrepreneurial activity.
The balance between state oversight and market freedom remains a central point of debate within
neoliberal thought.

In summary, neoliberalism and globalization reflect a belief in the transformative power of free
markets and international trade. Neoliberal policies prioritize market-driven growth, while
globalization extends these principles across national borders, promoting economic
interdependence and specialization. While both frameworks have generated significant economic
growth, they continue to provoke debate regarding issues of inequality, national sovereignty, and
the environmental impact of unchecked market expansion. Nonetheless, neoliberals maintain that
the pathway to sustained prosperity lies in expanding market freedoms and fostering a globally
integrated economy.

DEFINING GLOBALIZATION

Globalization is a multifaceted process that links societies, economies, and political systems across
vast distances. It involves the increasing interconnectedness of the world, resulting in profound
transformations in the way human affairs are organized on local, national, and global levels.

Roland Robertson, a professor of sociology, defines globalization as “the compression of

the world and the intensification of the consciousness of the world as a whole.” His
focus is on the shrinking of distances and the growing awareness of global interconnectivity.

Sociologists Martin Albrow and Elizabeth King also emphasize the comprehensive nature of
globalization, describing it as “all those processes by which the people of the world are
incorporated into a single world society.” These definitions underscore the vast reach and
depth of global interconnectedness that transcends national boundaries.

Anthony Giddens, in his seminal work *The Consequences of Modernity*, defines

globalization as “the intensification of worldwide social relations which link distant
localities in such a way that local happenings are shaped by events occurring many miles
away and vice versa.” Giddens highlights the reciprocal relationship between local and
global events, emphasizing the ways in which distant occurrences impact each other and
foster a sense of global dependency.

Similarly, David Held and his co-authors, in *Global Transformations*, propose a more
expansive definition of globalization, focusing on the spatial-temporal processes that

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 reshape human interactions across regions and continents. They argue that globalization
involves "extensity (stretching), intensity, velocity, and impact"—concepts that capture the
dynamic nature of this phenomenon. These elements refer to the increasing breadth of
global interactions, the intensity of connections, the speed at which information and goods
travel, and the far-reaching consequences on local and global systems.

In summary, globalization can be understood as a process of spatial transformation and expansion,

wherein human affairs shift from local or national to regional and global levels. It incorporates the
cross-border movement of ideas, values, goods, services, and investments, driven by the
convergence of social, cultural, political, and economic systems. As globalization deepens, it creates
a more interconnected and interdependent world, where local happenings are often shaped by
distant events, further blurring the boundaries between domestic and international affairs.

DIMENSIONS OF GLOBALIZATION

Globalization has been seen by many scholars as one big phenomenon that consists of various
dimensions. David Held's book Global Transformations is organized around three dimensions. They
are-

❑Political: It refers to the growth of the worldwide political system, both in size and
complexity which includes national governments, their governmental and
intergovernmental organizations as well as government-independent elements of global
civil society such as international non-governmental organizations and social movement
organizations. It involves an increasing trend toward multilateralism in which the United
Nations and other regional organizations play a key role, national non-governmental
organizations act as watchdogs over governments, and international NGOs increase their
activities and influence over the state.

❑ Economic: Economic dimension of globalization is the increasing economic

interdependence of national economies across the world through a rapid increase in cross-
border movement of goods, services, technology, and capital. convergence of three different
factors. It is best characterized as the convergence of three different factors. The first
characteristic is the increasing movement of capital around the world, in and out of a
country, through information and technology. The second characteristic is the existence of
supra national bodies such as the WTO, the World Bank, and the IMF. These organizations
have been in the role of facilitating capital flows in a global free-market scenario. They come
with conditions and to some developing countries, the conditions can be very burdening.
The last characteristic is the increased influence of transnational companies (TNCs). Let us
take Mitsubishi as an example.

❑Cultural: Cultural globalization refers to the transmission of ideas, meanings, and values
around the world in such a way as to extend and intensify social relations. This process is
marked by the common consumption of cultures that have been diffused by the Internet,
popular culture media, and international travel. Cultural globalization has increased cross-
cultural contacts, but may be accompanied by a decrease in the uniqueness of once-isolated
communities. For example, sushi is available in Germany as well as Japan, but Euro-Disney
outdraws the city of Paris, potentially reducing demand for "authentic" French pastry.
Rather, it involves the formation of shared norms and knowledge with which people
 associate their individual and collective cultural identities. It brings increasing
interconnectedness among different populations and cultures.

ADVANTAGES OF GLOBALIZATION

I. Promotion of Global Civics: Globalization fosters a sense of shared responsibility for

addressing global challenges such as climate change, pandemics, and poverty. For example,
the international response to the COVID-19 pandemic demonstrated how countries, despite
their differences, collaborated on vaccine development, distribution, and health policy. This
sense of global civics emphasizes the need for collective action to solve problems that
transcend national borders. Organizations like the United Nations (UN) and the World
Health Organization (WHO) play key roles in promoting global cooperation on such issues.

II. Cosmopolitanism: Globalization promotes cosmopolitanism, the idea that individuals

should see themselves as global citizens with shared human values rather than just as
citizens of a single nation. This mindset is fostered through the widespread exchange of
ideas, cultural products, and technologies. An example is the global popularity of
international cultural events, such as the Olympics or the FIFA World Cup, which bring
together people from different nationalities and cultural backgrounds, promoting mutual
understanding and acceptance.
III. Mutual Cooperation and Interdependence
Countries increasingly depend on one another economically and politically. Globalization
has expanded international trade and led to interdependent supply chains, with raw
materials sourced from one region, production taking place in another, and final products
being consumed globally. For instance, the manufacturing of electronic goods like
smartphones involves parts and resources from multiple countries, illustrating the
**interconnectedness of global economies**. This mutual dependence has also encouraged
diplomatic cooperation, as countries work together to secure their mutual interests and
maintain peace.

IV. Economic Growth

Globalization has driven significant economic growth by opening up markets, encouraging
foreign investments, and facilitating technological advancements. For instance, countries
like China and India have experienced rapid economic growth by integrating into the global
economy through export-oriented industries, leading to improved standards of living for
millions of people. Additionally, companies like Apple and Samsung have expanded their
production networks worldwide, increasing their profits while providing jobs across
different countries. Globalization has also contributed to poverty reduction in many regions,
especially in Asia.

DISADVANTAGES OF GLOBALIZATION

Noted by Momin Sagor

 I. Disproportionate Growth and Underdevelopment: While some countries benefit from
globalization, others remain underdeveloped, unable to compete in the global market due to
a lack of infrastructure and resources. For example, many African countries remain reliant
on exporting raw materials, such as minerals and agricultural products, while developed
countries export high-value goods and services. This imbalance perpetuates economic
dependency and hampers long-term development in these regions, leading to persistent
poverty and underdevelopment.

II. Growing Social Inequality: Globalization has contributed to *increased social inequality,
as the benefits of economic growth are often unevenly distributed. In both developed and
developing countries, wealth tends to concentrate among a small elite, while large sections
of the population may experience stagnating wages and job insecurity. For example, the
outsourcing of manufacturing jobs to lower-cost countries has resulted in job losses and
declining wages in certain sectors in the United States and Europe, while workers in
developing countries may face poor working conditions and low pay, as seen in industries
like fast fashion.

III. Environmental Degradation : Globalization has led to environmental degradation, as

increased industrial activity and global transportation have contributed to pollution,
deforestation, and climate change. For instance, the demand for palm oil, which is used in
various consumer products worldwide, has driven large-scale deforestation in countries
like Indonesia and Malaysia. This not only threatens biodiversity but also contributes to
global warming through increased carbon emissions. Additionally, the rise in global
transportation networks, such as shipping and air travel, has significantly increased carbon
footprints.

IV. Cultural Aggression : Globalization often results in the dominance of certain cultures,
particularly Western culture, over others, leading to **cultural homogenization**. For
example, the global influence of Hollywood movies, fast-food chains like McDonald's, and
popular Western brands can overshadow local traditions and languages, leading to the loss
of cultural diversity. In countries like India and Japan, the rising popularity of Western
lifestyles and consumerism has raised concerns about the erosion of traditional values,
practices, and cultural identities. This "cultural imperialism" can provoke resistance and
lead to tensions within societies as they struggle to maintain their cultural heritage.

GLOBALIZATION AND CHANGING ROLE OF THE STATE

There is a controversial debate regarding the predominance of globalization that may result a
changing role of the state as the supreme political entity.
On one hand, proponents of the minimalist state argue that globalization has diminished the power and
autonomy of nation-states. As markets expand beyond borders and supranational institutions (such as the
WTO, IMF, and World Bank) grow in influence, states are increasingly constrained by global economic
forces. Multinational corporations (MNCs) and transnational corporations (TNCs) operate across
jurisdictions, often shaping domestic policies through their economic clout and lobbying power. In this
view, the state's primary role has shifted towards maintaining law and order, facilitating market
operations, and protecting property rights—functions essential for sustaining a globalized economy.
Welfare functions, once central to state agendas, are perceived as secondary to fostering competitiveness
and attracting foreign investment. Consequently, critics argue that globalization erodes national
sovereignty, making states more reactive to market dynamics rather than proactive architects of social and
economic welfare.

Conversely, other scholars assert that globalization has not supplanted the state but rather redefined its
role. They argue that states remain the ultimate arbiters of political authority, capable of regulating
markets, negotiating international agreements, and enforcing laws. Even as economic power becomes
more dispersed, the state retains control over key functions such as defense, border security, and the legal
system. Moreover, in the face of global economic competition, states are compelled to adopt more
dynamic and strategic policies to protect national interests. This includes fostering domestic industries,
negotiating favorable trade deals, and regulating the activities of MNCs to ensure alignment with national
development goals. The COVID-19 pandemic exemplifies this perspective, as states asserted significant
authority by imposing travel restrictions, managing public health responses, and controlling economic
relief efforts—demonstrating that in times of crisis, the state’s role as a protector of its citizens and
economy is paramount.

Ultimately, the debate reflects the dual nature of globalization’s impact. While economic integration may
challenge certain aspects of state sovereignty, it simultaneously demands greater state intervention to
navigate the complexities of global interdependence. The evolving role of the state thus lies not in its
disappearance but in its adaptation to the realities of a globalized world.

DIMINISHING ROLES OF THE STATE

I. Mutual Interdependence and Economic Integration: Globalization has resulted in

significant mutual interdependence among nations, particularly through economic
integration. Countries now rely on each other for goods, services, and resources, creating
complex global supply chains. For instance, the automotive industry exemplifies this
interdependence: a car manufactured in the United States may include components sourced
from Japan, Germany, and South Korea. This intricate web of trade means that national
economies are increasingly vulnerable to disruptions elsewhere. For example, the COVID-19
pandemic revealed how supply chain disruptions in one region could halt production
globally, leading to economic repercussions across multiple countries. This
interdependence often constrains national governments' ability to act independently, as
decisions made in one nation can have cascading effects on others.

II. Predominance of MNCs/TNCs : The rise of **multinational and transnational corporations

(MNCs/TNCs) has further diminished the role of the state by shifting power dynamics.
These corporations operate across borders and often wield significant economic influence
that can rival that of some governments. For example, companies like Google and Amazon

Noted by Momin Sagor

 not only shape global markets but also have substantial lobbying power, affecting
regulatory frameworks in countries where they operate. This can lead to a situation where
the interests of MNCs may supersede those of the state, as seen in instances where
governments relax regulations to attract foreign investment, potentially compromising
public welfare and environmental standards.

III. Market Orientation and Minimalist State ; Globalization has encouraged a shift towards a
**market-oriented** approach, promoting the idea of a **minimalist state** that prioritizes
free-market policies over state intervention. Governments are often pressured to reduce
regulations, privatize public services, and limit welfare provisions in favor of fostering an
environment conducive to business. For instance, the neoliberal policies implemented in
countries like the United Kingdom during the 1980s led to significant reductions in
government spending on public services. Critics argue that this shift has left vulnerable
populations without adequate support, highlighting the limitations of a minimalist state
approach.
IV. Growing Westernization: The cultural dimension of globalization has led to **growing
Westernization**, where Western values, norms, and consumer practices increasingly
dominate global culture. This trend can undermine local traditions and cultural identities.
For example, the proliferation of Western fast-food chains and entertainment options often
leads to the erosion of traditional diets and local customs, particularly in developing
countries. In India, the rapid spread of Western-style fast food has contributed to rising
obesity rates and changing dietary habits, raising concerns about public health and cultural
loss. This cultural shift can diminish the state’s role in preserving national identity and
promoting local cultures.

INCREASING OR UNCHANGED ROLE OF THE STATE

I. State as the Main Actor in the Global Arena : Despite the challenges posed by
globalization, the **state remains the primary actor** in international relations. States
continue to negotiate treaties, engage in diplomacy, and participate in global governance.
For instance, during international climate negotiations, such as the Paris Agreement, it is
the states that commit to emission reduction targets and set national policies to address
climate change. While global cooperation is essential, the state retains ultimate authority
over domestic policy and the implementation of international agreements.

II. State’s Authority to Use Force and Make Laws: The state continues to hold the
**legitimate authority to use force** and enforce laws. This monopoly on violence is a
defining characteristic of modern governance. For instance, states maintain armed forces
and police forces to ensure national security and uphold law and order. The ability to
enforce laws, regulate behavior, and maintain public order remains a core function of the
state. This is evident in countries like Australia, where the government implemented strict
measures during the pandemic, including lockdowns and border controls, to protect public
health—actions that underscore the state's authority in times of crisis.
III. State’s Role in Protecting National Interests: Globalization has often compelled states to
take a more **vibrant role** in protecting their national interests. As globalization exposes
countries to external economic pressures and security threats, states have become more
proactive in crafting policies that defend their sovereignty. For example, in response to
trade imbalances and foreign competition, countries like the United States have adopted
protectionist measures, such as tariffs on imported goods, to safeguard domestic industries.
These actions illustrate how states can adapt to globalization's challenges by reinforcing
their role in economic and social governance.

In conclusion, while globalization has led to diminishing roles for the state in certain areas,
particularly regarding economic interdependence and the influence of MNCs/TNCs, the state
remains a crucial player in the global arena. The ability to legislate, enforce laws, and protect
national interests underscores the enduring significance of the state in a rapidly changing world.
Balancing these dynamics is essential for ensuring that globalization benefits all while maintaining
the soverei

MODERNIZATION AND DEPENDENCY

THEORY
Modernization and Dependency theories were developed in the 1950s and '60s. During that period,
there was a rise of various political and economic theories all around the world. Due to the
differences in the characteristics of the countries, they were divided into two categories. Developed
and Underdeveloped countries. (The other categories we see now were not established at the time.)

From the industrialization period to the 1950s, many political and economic models were
implemented in the society. But those, alongside Keynesian political economy and Marxism, failed
to create a Just economy.

To address the problems of the imbalance between Developed and Underdeveloped countries the
Modernization and Dependency theory. Modernization theory focuses on the Rostovian model.
Although, before him, there were many other modernization theorists like Seymour Martin Lipset,
who focused on the aspect of political development rather than discussing modernization as a
process. Max Weber in his writing "The Protestant Ethic and the Spirit of Capitalism" claimed that
Modernization depends on rationality and irrationality.

Many people came up with different concepts about modernization. However, W.W. Rostow
was the first one to provide a stage-based model of modernization. Western scholars like
Gabriel Almond, Seymour Lipset, Rostow, and Francis Foucault talked about modernization.

Noted by Momin Sagor

 The end of history says that Capitalism is and will remain the final political and economic
ideology in this world.

To simplify, Modernization is a Socio-economic, political, and cultural transformation of the society.

Transformation of traditional society to modern society.

Traditional society Modern society.

Subsistence agriculture Industry
Primitive technology Modern Technology
Feudal Society Democratic Society
Subjective Orientation Objective Orientation

The perspective of traditional society:

It was an agrarian society based on pre-newtonian technology and subsystem agriculture.

Subsystem implies that the members of the society would produce only the amount they need to
survive. There was almost no use of technology and the technologies they did use were primitive
(i.e.: Making fire by rubbing wood) The society was rural.

o Political perspective: This society was feudal. There was agriculture-based land lordship in
this society.
o Cultural perspective: Traditional social culture was based on prejudice and subjective
orientation.

[Subjective: Based on emotions and ideological values. Objective: Based on facts and reality.]

The essence of modernization theory

Only by bringing changes in all these spheres can facilitate modernization. Rationality has to be
prioritized in the cultural value system. Individual behavior must not be directed or defined by
primordial sentiment or emotional attachments.

Secular orientation has to be embraced.

A shift towards industrialization has to be made through the use of new technologies. Following the
industrialization, the society will gradually transform into an urban society. The feudal system will
ultimately be replaced by a democratic system. Everyone will be equally treated as individuals.
When all these changes will be successfully implemented, the traditional society will have
transitioned into a modern one.

THE ROSTOVIAN MODEL

W.W. Rostow provided a model that suggests that the modernization process is implemented
through five stages of transformation.

The modernization theory came as a reaction to the communist manifesto. In his book named "The
Stages of Economic Growth: A Non-Communist Manifesto", he tried to say that communism does
not help to aid underdevelopment. It has to be dealt with through a process that he proposed in the
form of the Rostovian model.

Stage 1: Traditional Society

In this stage, society is primarily agrarian, focused on producing only enough to sustain itself. It
depends on subsistence agriculture with minimal technological advancements. The value system
is often irrational, shaped by prejudice. Feudal agricultural practices prevail, and the society is
predominantly rural.

Stage 2: Pre-Takeoff

In this stage, society is on the verge of significant change. The spread of science and technology
begins, and people become more drawn to modern innovations. As they adopt these technologies
and develop new skills, education levels rise, and the society becomes increasingly modern. The
use of modern technology in agriculture boosts production, and people begin to aim for more
than mere survival. Economic transactions increase, leading to the formation of capital. The
society also witnesses the emergence of small-scale industries. (For example, ready-made
garments were one of the first industries to industrialize.)

Stage 3: Takeoff

Feudalism still exists, but the society is preparing for a transformation. Investments made with
newly generated capital spur rapid industrialization, which, in turn, encourages urbanization.
Efforts are made to diversify manufacturing processes and ensure sustainability. These changes
lead to political shifts, including the formation of political parties, the reduction of monarchical
power, the establishment of parliament, and the creation of laws and regulations. The society
begins to mature due to the rapid industrialization and investment.

Stage 4: Drive to Maturity

As society establishes a high number of manufacturing industries, living standards gradually

improve. A mass-based economy, based on production and consumption, emerges. The economy
becomes divided into three sectors: primary, secondary, and tertiary.

Stage 5: Age of Mass Consumption

As consumption rises, the society becomes service-oriented. The focus shifts beyond survival
and capital accumulation, with the aim of ensuring better welfare and services for the population.
This includes strengthening sectors such as education, health, and technology.

Noted by Momin Sagor

 Criticisms of the modernization theory:

1. Not applicable for every state. This theory is more westernized. The theory did not yield
homogenous result in every state that tried to implement it. Example: Africa.
2. Industrialization causes environmental degradation, which is not addressed in the theory.
3. Development is not always uniform and the stages of the theory may not show in the
correct order or form.
4. Neglected the political, social and cultural dimensions of development.
5. Neglected global inequality and power relations.
6. Limited focus on internal factors.
7. Neglected political instability.

DEPENDENCY THEORY
Dependency theory arose as a response to modernization theory, arguing that
underdevelopment is not simply an absence of development but a consequences of
exploitative global economic relationships. It is developed in the 1960s and 70s by
scholars like Hans Singer and Raul preebisch, dependency theory contends that the
global economy is structured to benefit wealthy nations (core countries) while
keeping the poorer nations (periphery" countries) in a cycle of dependency and
subordination.

v
core

Central to dependency theory is the idea of a global division of labore. Core

countries produce high-value goods and technology, while periphery nations are
restricted to exploring raw materials and cheap labor. This economic imbalance is
reinforced by MNCS, International corporations like the IMF and WB, and local
elites known as the "Comprador" class. These actors support foreign interests and
hinder local industrial growth, thereby maintaining the cone- periphery
relationship.

The concepts of undevelopment and underdevelopment represent distinct stages in the economic
and social trajectories of societies. Undevelopment refers to the state of traditional societies where
development efforts have not yet commenced. In these societies, there is no inherent movement
toward progress or modernization.

Underdevelopment, by contrast, arises from systemic exploitation and global inequality. Scholars
such as Hans Singer and Raul Prebisch argue that underdevelopment is not the result of a society’s
failure to transition from tradition to modernity. Instead, it is a consequence of the global division
of labor, which reflects structural imbalances in the world economy.

In a profit-driven global system, capital accumulation relies heavily on labor. However, as

industrialized nations strive for greater profit, they seek to avoid exploiting their own populations,
focusing instead on ensuring domestic welfare and development, often by expanding service
sectors. To maintain profitability, they channel investments into foreign countries, capitalizing on
cheaper labor and resources. This dynamic is evident in the operations of multinational
corporations (MNCs) and transnational corporations (TNCs), such as Telenor and Coca-Cola.

Theories like globalization, liberalization, and free-market economies are promoted to justify and
sustain this system. A key component is the division of labor, where developed and underdeveloped
nations are assigned specific roles in global production. Underdeveloped countries typically export
raw materials and cheap labor, while developed nations export machinery, advanced technology,
luxury goods, and arms.

Artificial mechanisms, including mass media, international policies, and organizational frameworks
like the United Nations (UN), International Monetary Fund (IMF), and World Bank, reinforce this
division. These structures ensure that wealthier nations continue to thrive while poorer nations
remain trapped in cycles of poverty and dependency.

A crucial question arises: how do foreign developed nations impose exploitative policies on the
domestic economies of underdeveloped countries? Marxist theory highlights the role of the
lumpenproletariat, or in this context, the comprador class. This comprador class acts as an
intermediary between the global bourgeoisie and the domestic working class. Compradors occupy
influential positions within the political and economic systems of underdeveloped nations, serving
as enablers of global capitalism.

Rather than fostering local development, the comprador class reinforces the interests of foreign
corporations and global elites. By collecting rents and commissions, they secure personal wealth
while obstructing policies or initiatives that threaten the monopolies of international capital.
Consequently, they undermine local entrepreneurs and perpetuate economic dependency.

In essence, underdevelopment is not an accidental byproduct of history but a deliberate outcome of

global economic structures that favor developed nations at the expense of underdeveloped ones.
Addressing this imbalance requires not only confronting external forces but also dismantling the
internal mechanisms that facilitate exploitation.

Addressing Underdevelopment: Dependency Theory’s Prescriptions

Dependency theorists propose several strategies to address underdevelopment by challenging the

structures of global economic inequality. Key recommendations include:

1. De-linking from the Global Economy

o Radical theorists like Andre Gunder Frank and Samir Amin advocate for severing
economic ties with the capitalist world market. This process, known as delinking,
involves reducing reliance on Western economies and fostering domestic growth

Noted by Momin Sagor

 through internal resources. By prioritizing local development and fostering
regional cooperation, underdeveloped nations can break free from exploitative
global systems and establish more equitable economic frameworks.
2. Protectionist Policies
o Developing nations are encouraged to adopt protectionist measures to shield
domestic industries from foreign competition. This includes tariffs, import quotas,
and trade restrictions designed to nurture local businesses until they can compete
on a global scale. Protectionism aims to create economic self-sufficiency and
reduce dependency on imports.
3. Import-Substituting Industrialization (ISI)
o Governments should actively promote import-substituting industrialization by
subsidizing industries that produce goods traditionally imported in large
quantities. This approach aims to develop domestic manufacturing sectors, create
jobs, and reduce trade deficits. By investing in local industries, countries can
decrease their vulnerability to external economic shocks.
4. State Intervention and Vigilance
o The state must play an active and vigilant role in economic planning and
development. This includes regulating markets, directing investments, and
curbing the influence of foreign capital. A strong, interventionist state can ensure
that national resources are allocated to projects that foster long-term economic
growth and social welfare, rather than serving the interests of global corporations
or local elites.

By implementing these strategies, dependency theorists argue that underdeveloped nations can
challenge the entrenched global inequalities that perpetuate poverty and economic stagnation.

Limitations

o Lack of competition: By subsidizing local industries and preventing foreign industry,

may have less incentive to those companies improve their products.
o Sustainability: Industries dependent on government aid may struggle to poor, and
remain viable, especially in dependent countries.
 THEME 02

THE POLITICAL ECONOMY OF BUDGET

IN BANGLADESH
The national budget of Bangladesh plays a crucial role in shaping the country’s economic
policies and directing resources toward key developmental priorities. As a vital tool for
economic management, the budget reflects the government’s fiscal strategy, policy choices, and
plans to foster sustainable growth, reduce poverty, and enhance public welfare. However,
Bangladesh faces several challenges in managing its budget effectively, including revenue
shortfalls, inflation, and inefficient public spending. This paper explores the nature of
Bangladesh's budget, identifies key problems and issues in its execution, and provides
recommendations for improving the overall fiscal framework to achieve long-term economic
stabilit

WHAT IS BUDGET?

 ★Budget is a Political and economic document.

 ★Budget is a political instrument to control economy.
 ★Budget is holistic in nature.

A budget is a spending plan based on income and expenses. In other words, it's an estimate of
how much money you'll make and spend over a certain period of time, such as a month or year.

The simplest definition of the term budget is given by Leroy Beaulieu. According to him, the
budget is, 'A statement of the estimated receipts and expenses during a fixed period.

The Constitution of Bangladesh does not use the word budget. In place of budget, Article 87(1)
of the Constitution of the People's Republic of Bangladesh uses the phrase annual financial
statement. Article 87(1) provides, 'In respect of each financial year, a statement containing the
estimated income and expenditure of the Government for that year.' The statement (in this
section called the "annual financial statement") shall be presented to Parliament. Although the
term budget is not used in the Constitution, the Parliamentary Procedure Rules of the People's
Republic of Bangladesh refer to annual The financial statement is described as budget.

★Nature of Budgetary System in Bangladesh★

Here’s a concise critical look at the nature of Bangladesh’s budgetary system, addressing both
structural features and common issues.

1. Revenue Budget

Noted by Momin Sagor

 The revenue budget focuses on recurring expenses, mainly funded by indirect taxes such as
VAT. Reliance on indirect taxes is regressive, impacting lower-income people more heavily than
wealthier citizens. Expanding direct taxes (like income tax) could make the system fairer and
improve revenue, but the narrow tax base limits resources for development.

2. Medium Term Budgetary Framework (MTBF)

MTBF is a three-year budgeting approach intended to align spending with long-term policy
goals.While MTBF promotes planning, its effectiveness is limited due to inconsistent
implementation, lack of reliable data, and ministries missing targets. This gap between planning
and actual outcomes reduces MTBF’s ability to improve fiscal accountability.

3. Unbalanced/Deficit Budget

Bangladesh often has a budget deficit, financed through borrowing.

Persistent deficits lead to high debt, which limits future spending options and increases financial
risks. Excessive borrowing to cover recurrent (rather than developmental) expenses is
unsustainable and strains the budget.

4. Constitutional Provisions: Articles 87(1), 83, 111(2)

 Article 87(1) The government must present the budget to Parliament each year for
review and approval. While this allows Parliament to review the budget, the executive
(the government) often controls the process, limiting real debate and scrutiny.
Parliament’s power to influence the budget is weak in practice.
 Article 83 Taxes can only be collected if there is a law that allows it, preventing
arbitrary taxation. This stops the government from imposing taxes without approval,
but Bangladesh relies too much on indirect taxes (like VAT), which are unfair to
poorer people. The country also has a small tax base, meaning not enough taxes are
collected for development.
 Article 111(2) The rulings of the Supreme Court must be followed by all lower courts
to ensure consistency in legal decisions. While this helps keep the law consistent, it
can also create problems if the Supreme Court makes a decision that doesn’t reflect
current needs or public opinion. Lower courts must still follow it, even if it seems
outdated or unjust.

These provisions are meant to promote transparency, fair taxation, and consistent legal decisions,
but they are often weakened by limited enforcement and practical challenges. The government’s
control over the budget, reliance on regressive taxes, and rigid application of court rulings can
make it difficult to achieve the intended fairness and accountability.

5. Centralized Budgetary System

The central government controls most budget decisions, with little financial autonomy for local
governments.This centralization hampers the ability of local governments to address specific
regional needs and leads to slower and sometimes misaligned resource allocation. Decentralizing
some fiscal powers could improve efficiency.

6. Absence of Accountability and Transparency

The budget process lacks sufficient oversight, and audit reports are often delayed.

Weak accountability mechanisms and limited public access to budget information lead to
inefficiency and misuse of funds. Strengthening oversight institutions and ensuring timely audits
would increase transparency and build public trust.

7. Inflated Estimation of Income

Revenue projections are often set unrealistically high, leading to income shortfalls.

Overestimating revenue reduces budget credibility and forces last-minute adjustments through
additional borrowing or spending cuts. More realistic revenue forecasts would create a more
stable financial planning process.

In summary, the budgetary system in Bangladesh could benefit from structural reforms to
improve fairness in tax collection, decentralize some decision-making, and ensure stronger
accountability and transparency for sustainable fiscal management.

★Budgetary system in BD:Problem and Issues ★

The budgetary system in Bangladesh faces various challenges.

★Budget Deficit

1. Failure in Collecting Taxes and Revenues: Bangladesh has a low tax-to-GDP ratio,
hindered by a narrow tax base, inefficient tax collection, and tax evasion. Weak
administration and lack of reforms lead to consistent revenue shortfalls.
2. Failure in Downsizing State Expenditure: Political pressures and bureaucratic
expansion keep public spending high, often focusing on short-term needs rather than
sustainable growth, widening the deficit.

★Income and Expenditure

1. Income:

Inflated Estimation: Overly optimistic revenue projections often result in budget gaps when
expected income isn’t realized.

Inefficient Taxation System: Corruption, poor technology, and weak enforcement make tax
collection inefficient, reducing potential revenue.

Group Interests: Powerful groups receive favorable tax treatment, which shrinks the tax base
and creates inequalities.

Noted by Momin Sagor

2. Expenditure:

Contingent Liabilities: The government’s financial guarantees for state-owned enterprises

(SOEs) create budget risks, especially if SOEs fail.

Foreign Loans and Debts: Heavy reliance on foreign loans burdens future budgets and creates
repayment risks, especially if the projects funded by these loans don’t yield sufficient
returns.Khan emphasizes the need for transparent, accountable reforms to ensure fiscal
discipline, equitable taxation, and long-term economic growth.

★Ineffectiveness of the Parliament

1. Budgetary Discussion: Parliamentary debate on budgetary matters is limited, often

lacking depth and critical analysis, which reduces its effectiveness.
2. Absence of Strong Opposition: A weak opposition limits accountability and
scrutiny, allowing the ruling party to pass budgets with minimal challenge.
3. Undemocratic Constitutional Provisions: Certain provisions limit parliamentary
authority and independence, reducing democratic oversight in financial matters.
4. Nascent Role of Committees: Parliamentary committees and sub-committees lack
the power and resources to provide meaningful oversight or detailed scrutiny of the
budget.

★Weak Institutional Framework

1. Bangladesh Bank: The central bank’s limited independence weakens its role in
monetary policy and financial oversight, impacting fiscal discipline.
2. Comptroller and Auditor General (CAG): The CAG lacks authority and resources
to enforce accountability in public spending, reducing transparency in budget
execution.
3. Bangladesh Bureau of Statistics (BBS): Limited funding and political influence
affect the BBS's data accuracy, impacting economic planning and decision-making.
4. Weak and Partisan Civil Society Organizations: Politicized civil society groups are
unable to provide unbiased oversight or mobilize public opinion, limiting their role in
holding the government accountable.

Khan emphasizes that these institutional weaknesses hinder the budgetary system's efficiency,
transparency, and accountability, ultimately impacting economic governance in Bangladesh.

★The political economy of budgetary system in Bangladesh ★

The political economy of Bangladesh's budget system can be understood through a set of
interconnected dynamics, where different players and strategies shape how public funds are
allocated and used. Here’s a breakdown of each element:

1. Political Game
In Bangladesh, the budget is influenced heavily by political interests, as politicians and
government officials strategically allocate resources to consolidate power and maintain control.
The budget often reflects the ruling party’s need to appease loyalists, win over new supporters,
and secure alliances. In this context, the budget process becomes a "political game" where
decisions are based on political expediency rather than on broader economic or social needs.

2. Primitive Accumulation of Wealth

The term "primitive accumulation" refers to the process by which certain groups accumulate
wealth and resources, often through exploitative or non-transparent means. In Bangladesh’s
budget system, this might manifest as corruption, embezzlement, or manipulation of public
resources for personal or political gain. This accumulation is not always driven by economic
productivity but rather by privileged access to state resources, contracts, and licenses.

3. Patronage Distribution

Patronage distribution is a mechanism by which politicians and officials reward their loyal
supporters with public funds or access to resources. In Bangladesh, budget allocations are often
directed toward projects or areas that serve the political base of those in power. This system
strengthens patron-client relationships, creating a network of dependency where supporters rely
on political favor rather than on merit or productivity. Patronage ensures that resources are
diverted towards political objectives rather than public benefit.

4. Undue Benefits to Vested Interest Groups

Vested interest groups, such as influential business elites or specific industrial sectors, exert
considerable influence over budget decisions. These groups lobby to secure budget allocations
and policies that favor their interests, often at the expense of the broader population. As a result,
parts of the budget may be disproportionately allocated to sectors or projects that do not align
with national development goals but instead serve the financial interests of powerful groups.

5. Misuse and Squandering of Public Money

Budget allocations are sometimes misused through inflated project costs, overextended timelines,
or mismanagement, leading to significant wastage of public funds. Contractors, bureaucrats, or
even elected officials may misuse allocated funds for personal gain or reallocate funds for
unintended purposes. This practice contributes to inefficiencies and slows down essential
infrastructure and social projects, hindering sustainable economic growth and the effective
delivery of services to the public.

6. Unjust and Inequal Economic System

These factors combine to create a budget system that reinforces inequality, with a small elite
benefitting disproportionately from public resources while the majority sees little improvement
in their economic conditions. Budget allocations that favor political allies, wealthy elites, or
vested interests lead to an imbalanced economic structure. This dynamic perpetuates poverty and

Noted by Momin Sagor

inequality, as resources that could address social issues, infrastructure, and public welfare are
instead concentrated in the hands of a few.

In summary, Bangladesh’s budget system reflects a complex web of political and economic
interactions that often prioritize individual gain over public welfare. This system, critiqued by
economist Akbar Ali Khan, shows how public resources are frequently redirected away from
inclusive development and equity, leading to systemic inefficiencies and entrenched inequality.

★Recommendations ★

1. Democratic Political System: A system where political leaders are elected by the people,
ensuring representation, accountability, and protection of individual freedoms. It promotes
regular elections, rule of law, and checks and balances.

2. Participatory Budgetary Culture: A process where citizens actively engage in decision-

making about public spending, ensuring that resources are allocated in ways that reflect the
needs and priorities of communities.

3. Vibrant Role of the Parliament: A parliament that actively debates, legislates, and holds the
executive accountable. A strong parliament represents public interests, scrutinizes government
actions, and ensures transparency.

4. Presence of Strong Opposition Political Party: A robust opposition provides necessary

checks on the ruling party, fosters healthy political debate, and prevents the abuse of power by
offering alternative policies and holding the government accountable.

5. Effective Institutional Framework: Well-established institutions that operate independently

and efficiently, ensuring that laws are enforced, policies are implemented, and public services are
delivered with integrity and transparency.

6. Vigilant Civil Society: An active and engaged civil society that monitors government actions,
advocates for citizens' rights, and holds authorities accountable, helping to maintain a
functioning democracy.

7. Protection of the Whistleblowers: Legal protections for individuals who expose corruption,
malpractice, or illegal activities within organizations or governments, ensuring they are not
subjected to retaliation or harm.

Reform of the Conventional Budget System

The budget system in Bangladesh has several peculiarities, strengths, and weaknesses. Building
on these insights, nine critical reforms are deemed necessary to improve the system, as outlined
below:

1. Introduction of Innovative Program: The traditional budgeting system in Bangladesh

focuses primarily on allocations without adequately analyzing their outcomes. In the United
States, innovative budgeting practices have been implemented since the 1950s, such as
performance budgeting, which emphasizes government work programs, performance
evaluations, and reporting. However, this approach was limited in providing an accurate
assessment of budget allocation. Subsequently, program planning and budgeting systems were
introduced, prioritizing projects with favorable cost-benefit analyses. Finally, zero-based
budgeting was adopted to justify every allocation, though it is less applicable in parliamentary
systems like Bangladesh due to potential job losses. In Bangladesh, external pressures from non-
governmental organizations (NGOs) and civil society may help create demand for fair resource
allocation and evaluation, as governmental attempts, such as the 2001 Public Expenditure
Commission, have largely failed.

2. Revenue Problems: Bangladesh faces significant revenue shortfalls, collecting only 10.5% of
its national income compared to over 40% in developed countries. Administrative inefficiencies
and corruption exacerbate the issue, as only 20% of potential income taxpayers contribute.
Furthermore, tax evasion in sectors like import-export remains rampant, undermining revenue
collection. Addressing these challenges is essential for balanced budget formulation.

3. Expenditure Problems: Budgetary expenditures in Bangladesh are marked by inefficiencies.

Many autonomous entities, initially established to operate on a commercial basis, incur heavy
losses, with the government eventually bearing their liabilities. Additionally, hidden
expenditures, such as implicit liabilities arising from government guarantees, are often excluded
from the budget. Strengthening parliamentary oversight can address these issues, ensuring
greater accountability for financial obligations.

4. Long-term Debt Management: Governments worldwide borrow for infrastructure

development, but exceeding debt ceilings can lead to financial crises, as seen in 1980s Latin
America and Africa. Bangladesh has historically maintained a conservative borrowing policy,
but recent large-scale projects like the Rooppur Nuclear Power Plant and Padma Bridge, funded
through commercial loans, pose risks. Parliamentary hearings on such projects are crucial to
ensure economic stability.

5. Parliamentary Oversight: In Bangladesh, parliamentary oversight of the budget is limited.

Budgets are often approved with minimal deliberation, influenced by the Prime Minister and
Finance Minister. Opposition parties rarely contribute to discussions, reducing the effectiveness
of parliamentary debates. Strengthening the role of Parliament in approving and implementing
budgets, including discussions on supplementary budgets, is imperative for better governance.

6. Parliamentary Committees: The committee system, vital for enhancing parliamentary

authority, has been ineffective in Bangladesh. While standing committees have been established
under donor pressure, overlapping responsibilities among committees have created
inefficiencies. Prompt reforms are needed to resolve these issues and strengthen committee
functions.

7. Audit Processes: Effective audits are essential to ensure government activities align with
approved budgets. However, widespread corruption and resource constraints hinder the Office of

Noted by Momin Sagor

the Auditor General and Controller. With only 20% of required audits conducted annually, the
audit capacity must be significantly increased to address systemic corruption and inefficiency.

8. Addressing Wastage: Traditional audits fail to capture technical and allocative inefficiencies,
wrong investments, and corruption in government activities. Bangladesh faces significant active
wastage, including fraud and theft, necessitating specialized auditor training and enhanced
transparency mechanisms, such as whistleblower protections, to curb corruption.

9. Public Participation: The budget process lacks avenues for public participation, limiting the
role of ordinary citizens. Grassroots participatory budgeting, as seen in Porto Alegre, Brazil, has
proven successful in prioritizing projects for marginalized communities. While replicating such
models in Bangladesh faces challenges, including limited engagement from women and the poor,
exploring local-level participatory budgeting could promote inclusivity and efficiency.

Despite the presence of institutions like Parliament, judiciary, and parliamentary committees,
widespread corruption and governance failures hinder effective budget management. A mass
movement for reforms is necessary to ensure the budget system meets the needs of the people.
As Anthony Giddens aptly noted, “Nothing comes without struggle… The furthering of
democracy at all levels is worth fighting for.”

THE POLITICAL ECONOMY OF STATE:

NEOPATRIMONIALISM

Introduction

This development success story of a once war-stricken nation in 1971 to one of the fastest-
growing economies of current South Asia is vindicating the triple transition. In the four
categories of the GDP growth, poverty, gender, and life expectancy, the country has well
accomplished over the last fifty years of its independence. However, what has come out clearly
is that, while the success story can be real, there are deep rooted structures that have informed
the situation, which cripple the chances of a sustainable development. Bangladeshi political
economy thus exhibits characteristic features of neopatrimonial state where embedded formal
and informal structures of clientelistic relations breed corruption, inequality and inefficiency.
The substantiated neopatrimonial form of rule that mixes the control of the political executive
with the state apparatus is present in Bangladesh in the forms of clientelism, crony capitalist
relations and rent-seeking. The given model of governance enables rulers to control the
Presidential grants and embezzle state resources, control the economic policies and entrench the
power, therefore nurturing a development model that benefits the few affluent citizens. High
growth connotes positive signs of development but the question is whether the growth is
sustainable and inclusive? The answer is no, because what we experience in Bangladesh is high
growth with low development.

Conceptualizing Neopatrimonialism

Neopatrimonialism is a compounded regime of governance and is part way between patrimonial

authority and formal legal-rational organisations. In neopatrimonial states, the political power is
taken to be wielded through personal networks when the service and access to state apparatus
depend on the personal loyalty. The term was coined by Max Weber & further developed by
Jean-Francois Bayart & Richard Joseph in an attempt to explain the State in post-colonial
societies.

Neopatrimonial states exhibit three fundamental characteristics: Hegemony, customized political

authority, mordant and structural organizational bribery. These traits disrupt meritocracy in
institutions and strengthen political inequity. It must be noted that neopatrimonialism is not
entirely incompatible with economic development – however, the resulting growth trajectory is
unsustainable and fractures society.

In Bangladeshi context neopatrimonialism can be defined by predominance of political actors

using state apparatus for self- and party benefits. This system maintains itself by barter, when
political support is compensated with economic benefits, state contracts, or an official position.
Neopatrimonial mechanisms erode institutional quality by blurring the separation between the
public and the private.

The Patron-Client Relationships in Bangladesh

The patron-client relationship in Bangladesh reflects neopatrimonial principles, where

hierarchies of superiors and inferiors dominate. Historically, social stratification in Bangladesh,
influenced by Hindu caste systems and later by Muslim hierarchies, created a deeply embedded
patron-client network. This structure, evolving through colonial and post-colonial periods,
persists today, shaped by economic factors like land scarcity, credit needs, and employment
opportunities, as well as political factors like the need for protection.

In rural society, patrons offer protection and resources, while clients provide labor, services, and
loyalty. Basic services, such as police support, often require the intervention of a "powerful"
patron, highlighting dependency on elite intermediaries. In urban settings, patron-client
dynamics are equally prevalent, as connections or “recommendations” are necessary for access
to jobs, promotions, business opportunities, or justice. A common saying, “chacha-mama chara
chakri hoy na” (“you won’t get a job without connections”), illustrates this dependency.

Noted by Momin Sagor

This system perpetuates hierarchies of power, with marginalized groups seeking protection from
their oppressors, as noted by Sobhan (2010). While democratic governance has been restored, it
continues to reinforce clientelism by empowering a small political elite who use their positions to
consolidate wealth and influence. Representative institutions are monopolized by affluent
individuals, who further entrench their control over resources and power.

The patron-client network in Bangladesh operates as a pyramidal structure, linking individuals

from the Prime Minister to the lowest peasant. Each person acts as both a client to a superior and
a patron to subordinates, creating a web of dependency that permeates all levels of society. This
deeply entrenched system undermines horizontal relationships and fosters a cycle of patronage,
reinforcing existing social and political inequalities.

Personalization of State Power in Bangladesh

In contrast to Western nations, where political power is distributed among state organs to prevent
hegemony, Bangladesh’s political leadership has historically sought to personalize state power.
Since independence, successive governments have aimed to control the judiciary under the
executive and centralize power within the executive branch. Leaders consistently strive to
monopolize formal political power, a trend that has remained unchanged regardless of the ruling
party or military regime. Studies by Khan, Kochanek, Ahmed, Ali, and others highlight this
historical pattern of power accumulation and personalized decision-making. Despite regime
changes, power remains concentrated among a small elite, leaving state mechanisms and broader
society largely unaffected. Leaders typically represent narrow circles of clients, aligning with the
neopatrimonialism theory described by Bratton and Van de Walle (1994), where political
consensus is minimal, and decision-making is personalized.

Khaleda Zia, during her tenures from 1991–1996 and 2001–2006, lacked administrative
experience but maintained unchallenged leadership. Power was centralized, decision-making was
slow, and her governance style was highly personalized. She was surrounded by a small circle of
inexperienced advisers, many from previous regimes, and intra-party fragmentation led to
intense competition for positions. A leaked US embassy cable described her decision-making
process as dysfunctional and controlled by a few insiders, including her son Tariq Rahman, who
acted as her heir apparent.

Sheikh Hasina’s regimes from 1996–2001 and 2009–present similarly displayed centralized and
secretive governance, with decision-making controlled by a small group of relatives and trusted
advisers. Consultation with formal institutions like the cabinet was minimal. Reports indicate she
sidelined individuals deemed disloyal and relied heavily on family members, including her sister
and son, for sensitive matters. Observers, including The Economist (2011), described her
governance style as increasingly autocratic.

Both leaders’ regimes exhibit the hallmarks of personal rule, where formal institutions are
marginalized, decision-making is secretive, and power is concentrated among a small inner
circle. These patterns align with the key features of neopatrimonialism, where state power is
treated as personal property, reinforced by patronage networks, and accountability is avoided.

Political Parties, Political Culture, and Clientelism

In Bangladesh, clientelism is deeply embedded not only in state apparatus but also within the
internal structures of major political parties. While there are ideological differences between the
Awami League and the Bangladesh Nationalist Party (BNP), these distinctions have significantly
diminished over time. Both parties share a clientelistic political system characterized by
hereditary politics and a lack of internal democracy. These features, far from being standalone
characteristics, function as tools for power accumulation and entrenchment in a pyramidal
patron-client network.

Competitive Bipolar Political System

Bangladesh has a two-party system dominated by the Awami League and BNP, which align with
smaller parties to consolidate power. While this structure is typical of democratic traditions, in
Bangladesh, it has fostered confrontational and polarizing politics. The sharp polarization
between the two parties has fragmented the polity, creating a "tribalization" of politics in what is
otherwise a homogenous society. This winner-takes-all approach to power has led to intense
rivalries, with political elites using state power for survival in an insecure political environment.
The polarization extends to issues like nationalism (e.g., Bengali vs. Bangladeshi), secularism vs.
Islamism, and differing interpretations of the 1971 independence war, further deepening
divisions.

Patron-Client Politics

The fundamental characteristic of Bangladeshi politics is its patron-client structure. Political

parties are multi-class organizations composed of pyramidal patron-client networks. National
leaders recruit local leaders who command regional support, granting them party nominations or
leadership roles in exchange for delivering votes. Local leaders, in turn, receive economic
benefits or government support, creating a reciprocal system of loyalty.

Hereditary dynastic politics and a lack of internal democracy reinforce the patron-client system.
Leadership in both major parties is hereditary, with Sheikh Hasina of the Awami League and
Khaleda Zia of the BNP maintaining unchallenged authority. Party constitutions, such as that of
the BNP, grant absolute power to the party chief, ensuring centralized control. This has created a
culture where clients avoid challenging their patrons for fear of losing privileges. Party activities,
including policymaking and decision-making, revolve around the leader, with the cult of
personality shaping internal dynamics.

In essence, Bangladesh’s political culture, rooted in a neopatrimonial framework, is

characterized by patron-client relationships, hereditary leadership, and centralized control,
perpetuating a system where power and loyalty are concentrated in the hands of a few.

Noted by Momin Sagor

Personalization of State Power: Tools and Mechanisms

This section explores how state power in Bangladesh has been personalized, particularly after the
return to multi-party democracy. It examines how key state organs—such as the parliament, local
governments, bureaucracy, judiciary, and law enforcement—have become subordinate to the
executive branch. In Bangladesh’s political system, politicians, particularly those in high-ranking
positions, play a central role in controlling state power. This dominance allows them to influence
the careers of bureaucrats and military officials, creating a complex network of political,
bureaucratic, and military elites. Unlike the military-led bureaucratic oligarchy of 1976-1990, the
current elite system is a mix of political, bureaucratic, military, and business actors, with
politicians at the core. Bureaucrats and military personnel who align with the ruling party can
secure positions of significant power, often through clientelistic practices.

1. Personal Rule via Formal Power: "Government for the Prime Minister": The
transition to a parliamentary system in 1991 did not curtail the centralization of power.
Instead, the Presidential Secretariat transformed into the Prime Minister’s Office (PMO),
retaining absolute control over government functions. The Prime Minister wields
extraordinary power through constitutional provisions and the rules of business. Analysts
often describe Bangladesh’s government as a system that serves the Prime Minister above
all else. For instance, the PMO holds sway over decision-making and policy
implementation, with every action requiring the Prime Minister’s approval. Critics liken
this setup to practicing democracy under feudal principles.

Moreover, successive Prime Ministers have held additional critical portfolios, such as Defence,
Energy, and Public Administration, further consolidating their power. This concentration of
authority has led to scenarios where even minor officials in the PMO can hold more influence
than some cabinet ministers. Calls to abolish the PMO, citing its redundancy in a parliamentary
system, have gone unheeded, symbolizing its role as a hub of concentrated power.

2. Weakening Parliament: Bangladesh’s parliament is widely regarded as ineffective,

often described as "dysfunctional." While opposition boycotts are frequently blamed for
this, the underlying issue is the ruling government’s unwillingness to strengthen
parliamentary democracy. Governments avoid defining powers formally through
parliamentary procedures, fearing it would limit their control. Prime Ministers do not act
as "first among equals," as intended in a parliamentary system, but rather dominate the
legislative process.

Opposition MPs face restrictions on speaking opportunities, partisan behavior from the Speaker,
and rejection of motions. Important national matters, such as treaties and constitutional
amendments, are often decided without proper parliamentary debate. This autocratic governance
style alienates the opposition, prompting them to boycott sessions or resort to strikes. Even when
the opposition attends, discussions often devolve into irrelevant or uncivil exchanges, with MPs
prioritizing loyalty displays to party leaders over meaningful debate.
 3. Manipulating the Judiciary: Judicial manipulation is a hallmark of neopatrimonial
regimes in Bangladesh. Successive governments have used the judiciary to consolidate
power and suppress opposition. Judges with political affiliations or personal connections
to the ruling party are often appointed to key positions. This practice ensures loyalty,
enabling the regime to use the judiciary for political gains, including influencing
elections and silencing dissent.

For example, in 2011, the appointment of 17 additional High Court judges sparked controversy
due to their alleged lack of qualifications and strong ties to the ruling party. Despite opposition
from the Chief Justice, constitutional provisions compelled their appointment. Such politically
motivated appointments undermine the judiciary’s credibility and erode public trust.

4. Politicization of the Bureaucracy: In theory, Bangladesh’s bureaucracy operates under

legal-rational authority, where recruitment and promotion are merit-based. In practice,
however, political connections determine career progression. Successive governments
have purged civil services of previous regimes’ appointees, favoring loyalists instead.
This politicization weakens bureaucratic discipline, promotes inefficiency, and fosters
corruption.

For instance, in 2009, the newly elected Awami League government reassigned several top
bureaucrats to inactive roles. Similar actions were observed under previous governments,
illustrating a consistent trend. Bureaucrats aligned with the ruling party often enjoy accelerated
career advancement, supplemented by illicit earnings. While this strengthens the regime’s
personal control, it undermines administrative accountability and professionalism.

5. Control Over Law Enforcement: Law enforcement agencies in Bangladesh,

particularly the police, have also been co-opted for political purposes. Recruitment,
promotion, and postings are influenced by patronage rather than merit. Governments use
the police to suppress opposition and dissent, leading to allegations of human rights
abuses.

The establishment of the Rapid Action Battalion (RAB) in 2004 marked a new phase in state
control. While initially tasked with combating crime, RAB has faced accusations of extrajudicial
killings and enforced disappearances. Human rights groups have labeled it a "government death
squad." From 2009 to 2011, numerous cases of "crossfire" killings and enforced disappearances
were reported, often involving individuals detained by law enforcement agencies. Despite
international criticism, such practices persist, with disappearances increasingly replacing overt
killings.

Nature of Patronage: Power Above Moral Boundaries

The nature of patronage politics in Bangladesh reflects the simultaneous exercise of power and
control over supporters and opponents, often defying moral and institutional principles. A

Noted by Momin Sagor

Bengali proverb, “Bite like a snake, offer a remedy like a medic,” aptly captures this dual role.
Governments not only extend benefits like money, promotions, and support to their loyalists but
also intervene to protect criminals linked to the regime. This system reinforces the dominance of
personal rule and undermines institutional governance.

Withdrawal of Politically Motivated Cases: A prominent example of patronage is the

withdrawal of so-called politically motivated cases. After assuming office in 2009, Sheikh
Hasina’s government established the National Committee on Withdrawal of Politically
Motivated Cases. By June 2010, approximately 3,000 cases involving nearly 10,000 individuals
were recommended for withdrawal. These cases ranged from gang robbery and corruption to
murder and even an attempted rape involving a ruling party lawmaker. Critics, including
Transparency International Bangladesh (TIB), questioned this process, arguing that courts are
capable of determining politically motivated cases. The withdrawal of such cases exemplifies
how personal rule overrides legal systems, a hallmark of neopatrimonial regimes.

Presidential Clemency and Duty-Free Benefits: Another dimension of patronage is the

granting of Presidential clemencies for high-profile criminals, often at the recommendation of
the Prime Minister. This practice has drawn significant criticism in the media. Additionally,
financial benefits are extended to ruling party members, such as allowing lawmakers to import
luxury cars duty-free, depriving the National Board of Revenue of significant tax revenue. For
example, during Khaleda Zia’s tenure, 275 luxury cars were imported by lawmakers, costing the
state Tk 280 crore in taxes. A similar privilege was granted during Sheikh Hasina’s tenure. Such
actions highlight the prioritization of personal loyalty over national interests.

Allocation of Plots and Other Benefits: Patronage also extends to the allocation of valuable
land plots in prime areas of Dhaka, such as Gulshan, Banani, and Uttara. For instance, 301
residential plots were allocated under the discretion of the government. A Prime Minister
reportedly remarked, “I must do something for my poor MPs,” underscoring the clientelist nature
of these decisions. This form of support strengthens the regime’s grip over loyalists while
disregarding broader accountability.

Targeting Opposition and Undermining Institutions: Alongside supporting its followers, the
regime actively targets opposition leaders and activists through state apparatus such as the police,
intelligence agencies, and courts. Cases against ruling party members are often dismissed, while
those against opposition members proceed aggressively. This zero-sum political environment
fosters systematic harassment of opposition figures, with their families frequently targeted.
Institutions like the judiciary, police, and intelligence agencies are perceived as partisan, further
eroding public trust.

In an environment where institutions are manipulated, even public discourse is stifled. A

politician noted the risks of commenting on national politics due to the likelihood of being sued.
A month-long analysis of two leading newspapers, The Daily Star and Prothom Alo (July 2011),
revealed daily reports of opposition leaders being sued, arrested, beaten, or harassed by ruling
party activists.
Through its patronage-based mechanisms, the government strengthens its control, marginalizes
dissent, and perpetuates a cycle of neopatrimonial rule. This deeply entrenched system of
favoritism and repression continues to undermine institutional integrity and democratic
governance in Bangladesh.

Strategies to Remain in Power in a Zero-Sum Game

In a zero-sum game political environment like Bangladesh, power struggles between the two
major political parties—Awami League and Bangladesh Nationalist Party (BNP)—have
frequently resulted in instability and unrest. These struggles are often shaped by a neopatrimonial
system, where power is concentrated in the hands of a few individuals, leading to political
transitions marked by social protest and mass mobilizations rather than peaceful, institutionalized
processes.

 Power Transitions and Popular Protests

One of the key characteristics of neopatrimonial regimes is that political transitions are
often triggered by social protests, especially when political systems are viewed as
illegitimate by large sections of the population. Bangladesh's history of power struggles
illustrates this. Before the return to pluralistic democracy in 1991, political leaders like
Sheikh Mujibur Rahman, Ziaur Rahman, and Hussain Muhammad Ershad were either
assassinated, overthrown, or removed through mass protests. After 1991, Bangladesh’s
democracy was formally restored, but the major political transitions remained far from
peaceful.

 Mass Movements and Power Struggles

Both of Khaleda Zia’s tenures (1991-1995 and 2001-2006) ended due to massive popular
movements that resulted from her increasingly autocratic rule and centralized decision-
making. For instance, in the 1990s, after allegations of electoral manipulation, opposition
parties launched the Movement for the Caretaker Government (CTG). This movement,
lasting from 1994 to 1996, saw violent protests and political disturbances that led to the
1996 resignation of Khaleda Zia. The 15 February 1996 parliamentary election, held
amidst a boycott by opposition parties, had a turnout of only 5-10%, rendering the results
invalid and prompting Khaleda to step down.

In 2006, a similar political crisis erupted when the BNP government attempted to appoint a
partisan chief to the CTG, leading to widespread political violence. This eventually resulted in a
state of emergency and a military-backed caretaker government, signaling yet another
undemocratic transition.

 Persistent Struggles for Power

Noted by Momin Sagor

 Throughout the 1990s and 2000s, Awami League and BNP alternated in power, but both
faced significant opposition mobilization against them. In the 2000s, after Khaleda Zia’s
BNP government was ousted, Sheikh Hasina’s regime faced similar challenges, with
mass protests and general strikes (hartals) often resulting in bloodshed. These strikes
were frequently used as tools for street protests and political sabotage, turning the
political game into a zero-sum contest.

During the 2001 elections, as Transparency International labeled Bangladesh as the most corrupt
country in the world, political instability reached new heights, as the incumbent Hasina
government was ousted by the opposition in a landslide victory.

 Autocratic Shifts Under Hasina

In Hasina’s second tenure (2009 onwards), the Prime Minister’s increasingly autocratic
behavior became evident. In an attempt to consolidate power and ensure her party’s
control over future elections, Hasina amended the Constitution unilaterally in 2011. The
key change was the abolition of the Caretaker Government (CTG) system, which had
previously been used to ensure fair and neutral elections. This move was met with fierce
opposition from both political rivals and civil society, marking a significant shift towards
more authoritarian governance. The CTG system, once championed by Hasina herself
during her earlier tenure, was now discarded in a bid to maintain control over future
electoral processes.

This amendment paved the way for a more centralized control over elections, which critics argue
would make it easier for Hasina’s government to manipulate the electoral process. Despite
leading violent movements in the 1990s to institutionalize the CTG for free and fair elections,
Hasina’s own government scrapped it when it became a tool of opposition.

Conclusion: Is Bangladesh a Bipolar Competitive Neopatrimonial State?

Bangladesh’s political system can indeed be characterized as a bipolar competitive

neopatrimonial state due to its unique blend of personal rule and intense party competition
between the two major political forces: the Awami League and the Bangladesh Nationalist Party
(BNP). This characterization, however, requires a nuanced understanding of both
neopatrimonialism and the competitive nature of Bangladesh’s political environment.

Neopatrimonialism, a concept frequently used to describe political regimes that combine

traditional patrimonial rule with modern state structures, does not have a singular, uniform
expression. As observed by Bratton and Van de Walle (1994), neopatrimonial systems can
exhibit different variants depending on the context. In the case of Bangladesh, it does not fit
neatly into any of the classical categories of personal dictatorship, military oligarchy, or
plebiscitary one-party systems, as seen in other regions like Africa or Southeast Asia. Instead, it
embodies a more competitive variant where power alternates between two major political parties
in a zero-sum game, which ultimately shapes the state's political dynamics.

In Bangladesh, the competitive two-party system leads to frequent power transitions. Each
regime, despite being personally driven by leaders like Sheikh Hasina or Khaleda Zia, operates
within the same institutional framework, relying on patronage and clientelism to maintain power.
Personal rule, centralization of decision-making, and the use of state resources to reward
loyalists are all hallmark traits of a neopatrimonial state. As a result, political power tends to
circulate between the two main parties, but the fundamental structure and functioning of the state
remain unchanged. New rulers simply replace old elites while maintaining the same patronage-
based governance, leading to a system that is described as “old wine in a new bottle.”

The competitive nature of Bangladesh’s neopatrimonialism lies in the intense rivalry between the
Awami League and BNP, each of which vies for control of the state apparatus, using patronage
and client networks to consolidate their rule. Despite this competition, the polity remains largely
unchanged, as competitive politics fail to introduce fundamental institutional reforms or shifts in
governance. The result is a system that, although marked by electoral competition, lacks the
capacity for sustained, stable rule or genuine democratic consolidation.

Thus, Bangladesh exemplifies a competitive neopatrimonial regime, where party politics and
patronage structures intersect in a zero-sum struggle for power. While the competitive bipolarity
of the system introduces periodic changes in leadership, the fundamental character of the state
remains unchanged, reaffirming its classification as a neopatrimonial state.

LOCAL POWER

Till 2008, the political system in Bangladesh was a two-party competitive clientelism. The
principle of this system was 'Winner takes all'. It was a rotating political settlement. The linkage
between the national and local levels was kind of weak. After 2007, the system decayed. Around
2014-16, this system broke down completely (according to David Luis). The national level
started to tighten its hold on the local government institutions and civil societies. (College
principals, head of madrasa or masjid committees.) Through patronage distribution, they started
dominating the local government institutions.

LOCAL POWER, INFORMALITY AND PATRONAGE IN BANGLADESH

The formal local government system in Bangladesh is organized through Union Parishads (UPs),
which oversee rural areas and serve as distribution points for central resources. Established in

Noted by Momin Sagor

1870 during the British colonial era, UPs were initially designed for local control and tax
collection. The UPs evolved into elected bodies in the 1980s but remained closely tied to local
elites, with political parties playing a minimal role in rural governance. Over time, the UPs have
handled local economic activities, dispute resolution, and project implementation, while political
allegiances shifted pragmatically between party blocs.

International donors, such as the World Bank, have supported efforts to strengthen local
governance through capacity-building programs, including the 2009 Local Government Act,
which aimed to improve transparency, accountability, and citizen participation. Despite these
reforms, local political dynamics have remained dominated by the ruling political party,
particularly the Awami League (AL), which has used informal connections and local patronage
networks to consolidate power. This has been achieved through local party workers, bypassing or
capturing local bodies, and creating new local organizations when necessary.

AL's political success has been driven not only by local factors but also by broader national
strategies, including the influence of Members of Parliament (MPs) on resource distribution,
economic opportunities, and the control of civil society. The party's electoral dominance has
been bolstered by voter manipulation, violence, and effective control of local administration.

THE SHIFTING INTERACTION OF FORMAL AND INFORMAL INITIATIVES

The interaction between formal and informal politics in Bangladesh has shaped local political
dynamics, particularly through patronage relations. While economic growth and improvements
in health and education have occurred, the political system remains characterized by competitive
clientelism, where support is often purchased on a personalized basis. Bangladesh is seen as a
"limited access order," lacking formal property rights, enforceable contracts, and an efficient
bureaucracy, which hampers the development of a stable democracy.

Patronage relations, based on hierarchical and personalized interactions, are central to local
politics and often involve mutual aid, loyalty, and political support. These relationships remain
fluid and evolving, with elites adapting to maintain their influence. Patronage is not just
exploitative; it also serves as a mechanism for the poor to navigate politics, secure resources, and
improve their livelihoods. While often criticized for undermining civil society, patronage can
also be seen as a way for marginalized people to engage politically in spaces where formal laws
and rights are inaccessible.

The concept of "political society," where patronage operates outside formal governance
structures, challenges traditional views of civil society. However, patronage also has a "dark
side," limiting impartiality in service provision and reinforcing elite dominance. The interaction
between formal and informal practices in Bangladesh complicates the binary distinction between
civil and political societies, showing how both forms coexist and shape people's political actions
and aspirations.

UNDERSTANDING LOCAL POLITICAL PRACTICE

The study examines the evolution of local political practices in rural Bangladesh, focusing on the
changing dynamics of informality and patronage. Historically, village power structures were
dominated by traditional elites, but by the early 2000s, rural power became more diverse, with a
wider range of potential patrons, including local elected officials, party politicians, and NGOs.
This shift allowed poorer people to negotiate more effectively, fostering a more flexible
"multifocal power structure" in rural areas. As a result, local participation and pro-poor
initiatives, such as collaborations between local officials and NGOs, began to emerge,
strengthening the rights of marginalized groups.

However, significant changes occurred by the time of the follow-up study. The local economy
had grown, leading to improved infrastructure, but fewer civil society organizations were
focused on rights-based work. The ruling Awami League (AL) worked to consolidate power in
local government institutions, especially in opposition-controlled areas, using informal political
practices like circumvention, capture, brokerage, and the creation of new organizations to
maintain control.

These informal practices, while not new, evolved and adapted existing systems of informality.
They illustrate broader trends in local governance, such as the increasing centralization of
resources and political control, with more funds and social welfare directed from the central
government. Furthermore, formal changes to regulations, like the politicization of local elections
and the removal of elected UP members from certain roles, enhanced the AL's influence and
cemented its power at the local level. The study highlights the interplay between formal and
informal political practices, showing how the AL consolidates control over local resources while
strengthening informal mechanisms of governance.

Four interrelated dimensions of informal political practice

Circumvention

Circumvention in local political practices involves bypassing formal local institutions,

particularly the Union Parishad (UP), in favor of party-affiliated mechanisms. In the
study, this was evident in the distribution of local public services, where the AL-affiliated
Upazila Chairman influenced the allocation of resources. For example, the UP Chair
would set aside around 50% of resources for distribution by local party leaders, activists,
and supporters, limiting the UP's role in managing road repair and renovation projects.
This practice extended to the leasing of water bodies and marketplace licenses, where
opposition-affiliated individuals found it futile to participate in the tendering process
controlled by the ruling party.

The AL's local president became a more powerful authority than the opposition-affiliated
UP Chair, even overseeing important dispute settlements like shalish (village-level
dispute resolution). Local AL leaders and Chhatra League members also began to
convene shalishes, further bypassing the UP. The relationship between the Member of
Parliament (MP) and the Upazila Chairman played a crucial role in cementing these
bypass practices. For instance, decisions regarding social welfare benefits, such as
Vulnerable Group Development (VGD) cards and food programs, were increasingly
shared with local AL leaders and activists. The MP's instructions, communicated through

Noted by Momin Sagor

the Upazila Chair, directed these allocations, sidelining the UP's formal role in decision-
making.

Capture

Capture refers to the process by which political parties, particularly the Awami League
(AL), have taken control of local civil society organizations and administrative bodies. In
the 2016 study, it was evident that AL had effectively captured key local institutions such
as School Committees, Business Associations, and committees responsible for leasing
markets and water bodies. This mirrors the concept of 'twilight institutions' (Lund, 2006),
where political authority extends into non-political organizations.

For instance, a fishing rights tender process for a water body was once open to all
interested parties, but the ruling party, through its youth wing (Jubo League),
manipulated the process to exclude other groups. With the support of the local Member
of Parliament (MP), the AL ensured that only their preferred group gained access,
bypassing established rules. Similar control was observed in local religious associations
like Mosque or Temple Committees, where they had become more narrowly focused on
religious functions, though some resistance occurred in specific cases.

In one instance, an AL leader’s failed re-election as chair of a High School Committee

demonstrated resistance when his decision to deny students the chance to re-sit exams
was perceived as politically motivated. Another case of resistance occurred when local
people successfully opposed the encroachment of public land for shops, a move
supported by the MP and local AL figures. The UP Chairman, aided by journalists and a
national NGO, resisted the encroachment, resulting in the demolition of the unauthorized
shops, highlighting the fragile nature of state control and the potential for resistance.

Brokerage

Brokerage involves intermediaries who bridge political and social gaps by leveraging
local opportunities and resources. In the 2016 study, the role of party-affiliated brokers
had become more prominent in local politics, reflecting changing dynamics in areas like
Faridpur.

Two examples illustrate this shift:

1. In a remote village, a former leftist activist who had earned respect for his past stands
was elected as an AL member despite the BNP-controlled UP. His strong ties with the
local MP allowed him to bypass the UP Chair, helping the AL extend its influence in the
village. Although the activist had been involved in a violent robbery and was later
imprisoned, his relationship with the MP helped secure his release and survival. This
arrangement enabled the AL to incorporate a popular local leader into its patronage
network, providing a more effective way to exert influence than external imposition.

2. In a peri-urban village, a community lawyer and AL activist from the bedia minority
community had used his contacts to prevent the eviction of squatters from railway
 embankment land. As an intermediary, he brought the local MP to meet with the
community, securing an agreement to protect their rights. With support from the AL
Upazila Chair, he became an informal coordinator for local development projects,
accessing both MP and UP funds for community improvements like madrasa, temple, and
road construction. He also helped lobby for a new bridge and a local college, highlighting
how brokerage can facilitate local development and secure political gains for the ruling
party.

Creation of New Organisation

Creation of New Organizations highlights the use of informal political actions to bypass
existing regulations and create new structures. A key example is the emergence of a new
type of electric auto-rickshaw in Greater Faridpur, which, while popular due to its
efficiency and affordability (supported by local NGO business loans), was technically
illegal due to lack of official licensing. To address this, local activists from the ruling
party established a new rickshaw driver association that shielded drivers from legal
repercussions. This created a way for drivers to continue their business without police
interference, demonstrating how new organizations can be used to circumvent formal
regulations and gain political leverage.

Conclusion

Over the past decade, local politics in rural Bangladesh has shifted towards a more partisan
structure, with the ruling party, the Awami League (AL), consolidating control over most local
organizations. This transformation contrasts with earlier dynamics, where local leaders were
loosely associated with national political parties. The AL’s increasing dominance has been
facilitated by both formal changes, such as the introduction of party symbols in local elections
and the increase in discretionary funds for MPs, and informal strategies, where party-affiliated
power holders bypass local institutions to assert control.

This shift in local politics provides valuable insights into how post-colonial states evolve through
micro-political practices. As Bangladesh's ruling party moves towards a one-party democracy, it
has blended formal and informal governance methods to maintain power, especially in the
context of hybrid political settlements. These practices have been instrumental in the AL's
successes in recent elections, demonstrating how informal politics and patronage networks are
central to its strategy.

While the ruling party’s consolidation of power has led to improvements in local governance,
such as better law and order, the increased control over local politics raises concerns about the
future inclusivity and stability of the political system. The growing dominance of the AL,
combined with a weakened political opposition and a reduction in civil society diversity, could
undermine the broader democratic processes. Understanding these dynamics requires attention
not only to the instrumental aspects of patronage but also to the moral dimensions that shape the
party's relationship with local citizens. The AL's ability to frame its governance as a solution to

Noted by Momin Sagor

past instability has bolstered its position, but the long-term effects of its increasing control over
local power structures remain uncertain, potentially threatening the political inclusivity of the
future.

DEVELOPMENT: BANGLADESH
PERSPECTIVE

Defining Development

Development refers to progressive or positive transformations in every sphere of human life.

Historically, the term primarily focused on poverty alleviation. However, its scope has expanded
over time to include unemployment reduction, economic productivity, growth, and sustainability.
Sustainable development, a central aspect of modern development discourse, emphasizes
progress without depleting resources or compromising the opportunities of future generations. It
seeks to balance economic growth with social inclusion and environmental preservation.

Features of Development

 No Universal Model: Development does not follow a universal template; instead, it

depends on the specific socio-economic, political, and cultural contexts of a society.
What works in one region may fail in another due to differences in available resources,
institutional structures, and historical experiences.

 Rhetoric of Domination: Development is often used as a political tool by powerful

states to dominate weaker ones. Historically, development initiatives like foreign aid or
structural adjustment programs have been criticized for fostering dependency rather than
true progress. These programs often impose external models that do not align with local
needs, undermining sovereignty.

 Nonlinear Process: Development is not a uniform or linear process. It fluctuates over

time due to factors like economic crises, political instability, or environmental challenges.
While some countries may experience rapid growth, others stagnate or regress due to
internal or external shocks.

 Inclusiveness: Development should be inclusive, addressing the needs of all social

groups. This requires reducing inequalities in wealth, access to resources, and
 opportunities. Holistic inclusiveness ensures that economic growth benefits marginalized
communities, women, and other underrepresented groups.

 Growth Indicators: Economic metrics like GDP (Gross Domestic Product) and PPP
(Purchasing Power Parity) are essential indicators of development. While these figures
highlight growth, they do not capture the qualitative aspects of development, such as
improvements in quality of life, education, and health services.

 Sustainability: A key feature of modern development is sustainability, which seeks to

achieve progress without exploiting natural resources or creating threats for future
generations. This involves balancing economic, environmental, and social goals to ensure
long-term resilience.

Factors Influencing Development

 Resource Availability: The availability of natural resources, skilled labor, and capital
plays a significant role in determining the pace of development. Societies rich in these
resources often achieve faster growth, provided they manage these assets effectively.

 Institutions and Governance: Strong institutions and effective governance are essential
for development. Institutions ensure fairness by enforcing laws, protecting property
rights, and maintaining social order. When institutions are weak or biased, development
becomes uneven, favoring specific groups over others.

 Capital and Labor: Development strategies often hinge on whether an economy is

capital-intensive (focused on technology and infrastructure) or labor-intensive (relying on
human resources). The choice of focus depends on a country’s resource endowments and
policy priorities.

 Education and Training: Human capital is a cornerstone of development. Education and

vocational training equip individuals with the skills necessary to contribute to economic
productivity and innovation. Societies that invest heavily in education tend to experience
faster development.

 Innovation and Technology: Innovation drives productivity and economic

diversification. Countries that embrace technological advancements, such as
digitalization and renewable energy, can leapfrog traditional development paths.

 Environment: Environmental factors, including climate, biodiversity, and natural

resource availability, significantly influence development. Environmental degradation, if
unchecked, undermines the long-term sustainability of growth.

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 DEVELOPMENT IN BANGLADESH: A MOST PLEASANT SURPRISE

Bangladesh’s transformation from being labeled as an "international basket case" in 1971 to

becoming a beacon of development in South Asia is both remarkable and instructive. Despite its
resource limitations, population challenges, and vulnerability to natural disasters, the country has
consistently defied expectations. This article explores the factors that have driven its success,
while also acknowledging the challenges that lie ahead.

Economic Growth: A Story of Resilience

Bangladesh’s economic performance over the past three decades has been extraordinary.
According to the World Bank, the country's GDP surged from $31.6 billion in 1990 to $302.6
billion in 2019, with per capita income rising from $306 to $1,855 during the same period. These
growth rates surpass those of many of its neighbors and other developing nations. By 2021,
Bangladesh's nominal GDP per capita was projected to overtake India's, according to the IMF,
though disparities remain when measured in purchasing power parity.

Social Achievements

Economic progress has been accompanied by significant improvements in social indicators.

Poverty rates declined from 48.9% in 2000 to 24.5% in 2016. Life expectancy rose from 48.31
years in 1975 to 72.3 in 2018, while literacy rates increased from 29.23% in 1981 to 74.61% in
2019. Moreover, primary and secondary school enrollment rates have improved dramatically,
with female participation outpacing that of males—a notable success in gender equality.

Key Drivers of Growth

1. External Opportunities and Labor Migration: The rise in oil prices in the Middle East
created labor market opportunities for Bangladeshis, with nearly 10 million citizens
working abroad, primarily in Gulf countries. Remittances grew from $1.8 billion in 2000-
01 to $18.2 billion in 2019-20, contributing significantly to the economy.

2. The Ready-Made Garments (RMG) Sector: The relocation of labor-intensive garment

production from East Asia to low-cost countries in the 1980s and 1990s benefited
Bangladesh immensely. The RMG sector, which began with $869 million in exports in
1990-91, grew to $34.1 billion in 2018-19. Today, it accounts for 84% of the country’s
export earnings, contributes 11.1% to GDP, and employs over 4 million workers,
predominantly women.

3. Agricultural Innovation: Bangladesh's agricultural sector has shown remarkable

adaptability. Advances in irrigation, fertilization, and crop diversification tripled
agricultural production between 1972 and 2020, ensuring food security for a rapidly
growing population.
 4. The Role of NGOs: Bangladesh has been a pioneer in leveraging the capabilities of non-
governmental organizations (NGOs) like BRAC and Grameen Bank. These institutions
have introduced microfinance programs, health initiatives, and educational projects that
have transformed lives, particularly for women.

5. Government Initiatives: The government has played a crucial role in reducing

population growth rates, providing social safety nets, distributing free textbooks, and
facilitating the growth of small and medium enterprises. Investments in infrastructure,
energy, and market access have further supported economic and social development.

DEVELOPMENT PARADOX ARGUMENT

Development of Bangladesh: Analyzing Through the Iron Triangle and Blended Regime

Bangladesh’s development story over the past five decades has been a narrative of impressive
achievements juxtaposed with structural challenges that threaten its long-term sustainability.
While the country has made significant progress in areas such as poverty reduction, GDP growth,
and infrastructural development, systemic weaknesses rooted in governance and institutional
inefficiencies are creating barriers to achieving inclusive and sustainable development. Two
critical frameworks—the Iron Triangle and the Blended Regime—provide insight into the
intricate dynamics of Bangladesh's development trajectory.

The Iron Triangle

The concept of the Iron Triangle highlights three interrelated structural challenges that obstruct
equitable and inclusive development in Bangladesh:

1. Infrastructure-Centric Development: One-sided vision of development

2. Policy Corruption: conflict-of-interest-driven policymaking
3. Neglect of Marginalized Groups: economics of injustice

Infrastructure-Centric Development

In recent years, Bangladesh’s development agenda has disproportionately focused on large-scale

infrastructure projects, often at the expense of investments in social welfare sectors such as
education, healthcare, and urban productivity. While these projects, including bridges, highways,
and energy facilities, have garnered international acclaim, their prioritization has led to an
imbalance in resource allocation.

For example, while urban infrastructure has improved, quality outcomes in primary education
and public healthcare remain stagnant. This misalignment exacerbates social inequities, with the

Noted by Momin Sagor

benefits of infrastructure development disproportionately accruing to elite and urban populations.
The lack of complementary investments in human capital threatens the country’s ability to
sustain its growth trajectory.

Policy Corruption

The second leg of the triangle involves conflict-of-interest-driven policymaking that prioritizes
private interests over public good. Corruption in sectors such as energy, finance, and
transportation undermines economic efficiency and competitiveness. A glaring example is the
collusion in infrastructure projects, which inflates costs, delays implementation, and fosters
governance failures.

Furthermore, the dominance of rent-seeking behavior has curtailed private sector investment, as
evidenced by the stagnant export-to-GDP ratio and declining private sector confidence.
Mismanagement of public funds and lack of accountability further weaken institutional
effectiveness, preventing the country from realizing the full potential of its development
programs.

Neglect of Marginalized Groups

The third leg represents what can be described as the “economics of injustice.” While the elites
benefit disproportionately from state-led development initiatives, the majority—comprising
workers, farmers, and small entrepreneurs—continues to face systemic neglect.

Key areas such as affordable healthcare, quality education, and housing remain underfunded,
leaving vulnerable populations with limited opportunities for upward mobility. Youth
unemployment, nutritional deficits, and rising school dropout rates are undermining
Bangladesh’s ability to achieve its Sustainable Development Goals (SDGs). If these trends
persist, the country risks falling into a “middle-income trap,” where growth stagnates due to
rising inequalities and insufficient human capital development.

Breaking the Iron Triangle

To dismantle the iron triangle, Bangladesh must adopt transformative reforms:

 Balancing Development Priorities: Shifting the focus from infrastructure-heavy projects
to social welfare investments.

 Combatting Policy Corruption: Strengthening regulatory frameworks and promoting

transparency to curb elite-driven rent-seeking behavior.

 Ensuring Inclusiveness: Implementing policies that prioritize marginalized groups, such

as social protection programs, universal healthcare, and targeted education initiatives.
Without addressing these systemic challenges, Bangladesh’s development gains risk being
undermined by widening inequalities and governance failures.

The Blended Regime

Bangladesh’s political and economic systems can be described as a blended regime—a

combination of developmental state characteristics and elements of cronyism and rent-seeking.
This regime has allowed the country to achieve notable economic growth despite weak formal
institutions but is increasingly showing signs of fragility as systemic inefficiencies mount.

Characteristics of the Blended Regime

Growth-Enhancing Pockets
Bangladesh’s past economic success was sustained by “growth-enhancing pockets” in sectors
such as the ready-made garments (RMG) industry and remittances. These sectors provided the
country with a steady source of income and foreign reserves, enabling consistent GDP growth.
However, over-reliance on these sectors has exposed vulnerabilities:

 RMG Dominance: The lack of diversification in export industries has made the economy
susceptible to external shocks, such as changing global demand or trade policies.

 Diminishing Remittance Flows: Declining remittance inflows, coupled with limited job
opportunities abroad, have weakened one of the country’s major economic pillars.

Infrastructure Development and Rent-Seeking

The blended regime combines elements of a developmental state—evident in the government’s
focus on infrastructure—with widespread corruption and elite-driven rent distribution. While
large-scale projects lend economic legitimacy to the regime, they often mask inefficiencies
caused by rent-seeking behavior.

For instance, the banking sector suffers from cronyism, weak regulation, and mounting loan
defaults. Public finance management is similarly marred by corruption, undermining the state’s
administrative capacity and eroding public trust in institutions.

Anti-Reform Coalition
The presence of an anti-reform coalition—comprising political elites, bureaucrats, and business
tycoons—has obstructed critical economic and institutional reforms. This coalition thrives on the
status quo, resisting changes that could threaten its interests. As a result:

 The taxation system remains inefficient and corrupt, with low revenue collection
undermining public service delivery.

Noted by Momin Sagor

  Industrial policies fail to promote export diversification, keeping the economy overly
dependent on RMG.

Political Dimensions of the Blended Regime

The blended regime is also characterized by deep political discord between major political
parties. The abolition of the caretaker government system has intensified partisan tensions,
leading to cycles of political instability. This political polarization has further weakened
institutions, creating an environment where governance is driven by short-term electoral
considerations rather than long-term development goals.

Addressing the Challenges of the Blended Regime

To overcome the systemic weaknesses of the blended regime, Bangladesh must prioritize
institutional reforms and adopt a long-term vision for development:

 Institutional Reforms: Strengthening key institutions such as the central bank, judiciary,
and regulatory bodies is essential to enhance governance and accountability. Empowering
these institutions to operate independently can reduce rent-seeking behavior and foster a
more conducive environment for private sector investment.

 Export Diversification: Reducing reliance on RMG by promoting emerging sectors like

IT, pharmaceuticals, and green technology can make the economy more resilient to
external shocks.

 Taxation and Public Finance Management: Reforming the taxation system to enhance
transparency and efficiency is critical for mobilizing domestic resources. This can be
achieved by expanding the tax base, reducing evasion, and improving compliance
mechanisms.

 Political Reconciliation: Resolving political disputes through dialogue and compromise

can help restore stability and create an enabling environment for development. The
upcoming general election presents an opportunity to reset the country’s political
trajectory, provided there is a commitment to free and fair electoral processes.

The frameworks of the Iron Triangle and Blended Regime offer valuable insights into the
structural challenges that impede Bangladesh’s development. While the country has achieved
remarkable economic and social progress, systemic issues such as corruption, inequality, and
political instability threaten to derail its trajectory. Addressing these challenges requires a
combination of political will, institutional reforms, and inclusive policymaking. With the right
strategies, Bangladesh can break free from its structural constraints and achieve sustainable and
equitable development.
So development in Bangladesh is a paradox, a trash story.

The Path Forward

Bangladesh’s achievements are undeniable, but sustaining this momentum requires addressing
systemic issues. Strengthening democratic institutions, promoting transparency, and fostering
inclusive economic growth are critical. The government must also prioritize environmental
sustainability, job creation, and technological innovation to ensure long-term prosperity.

Bangladesh’s journey from despair to hope is a testament to the resilience of its people and the
ingenuity of its institutions. While challenges remain, with visionary leadership and a
commitment to justice and equity, the country can continue to build on its remarkable success.

Recommendations

Recommendations for Fostering Inclusive Development in Bangladesh (by Selim Jahan):

1. Sustained and Pro-Poor Growth:

 Macroeconomic Framework: Scale up public investments in infrastructure, promote high-
productivity sectors, minimize prestige projects, and ensure climate adaptation for
sustainable resource management.

 Pro-Poor Strategies: Focus on employment-led growth, innovative agriculture, rural

economy diversification, empowerment of women and girls, comprehensive social
protection frameworks, and targeted interventions for vulnerable groups like the elderly
and disabled.

2. Equity in Resources, Services, and Income Distribution:

 Resources: Reform land ownership for equitable distribution, ensure pro-poor financial
policies, and provide access to clean energy for poor households and small-scale
producers.
 Basic Social Services: Public investments in health, education, water, and sanitation;
ensure services meet the five ‘A’s (availability, accessibility, affordability, adoptability,
adaptability).
 Income Redistribution: Implement progressive taxes, subsidize essential commodities,
and build a political coalition to enforce redistributive strategies.

3. Participation and Ownership by the People:

Enable active public involvement in development decisions and policy formulation through local
administrative platforms. Encourage citizens to act as watchdogs, monitoring expenditures to
ensure transparency and accountability. Involve people in evaluating policies and projects,
fostering ownership of development outcomes.

Noted by Momin Sagor