Bangladesh United Students Of Economics

Md. Mehedi Hasan Recent
days, we have seen many foreign funded Bangladeshi research organisations and their
policy preaching economists have been consulting the government to degrade
exchange rate as the market mechanism and Bangladesh Bank later fall into their
volatile suggestions. If we leave the exchange rate control completely in the
hands of the market, it could create more volatility. Such a thing will not
surely lead us to Sri-lanka, but it'll certainly lead us to where the Pakistani
economy stands today. When we are a net importer with a huge trade deficit each
year and our primary industry largely depends on foreign raw materials and
foreign consumer markets, then we mustn't enter into a free fall exchange rate
as our industry will get hindered in securing raw materials and pay good labor
wage. This will be subject to hyper inflation and if you try to squeeze money
supply, a lower volatile income group cannot afford the price of daily living.
We are entering into such a double-edge problem. Old fashion monetary&
fiscal policy may be some relief to that situation, but there are more things
to do which I call 'Economic Leadership' rather than 'Prudent Macroeconomic
Management'.<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgflSc4spJ01VYTxlEYo7AQTosQ_2WcZcD_GPZV3sNkeHWTSHRTobYBfdxj0NuN9-2X5_b1BWbDavImzBS4ztA_Z24bp0lE4p9v4tSRWloAuVWK1x_dR60pCutvSHuGck45kebPZoApBoYu836gD03HZKU5IrEkAL0lJNxgkt1-jG2s_4xsVOyDYw90Ow/s570/Md.%20Mehedi%20Hasan.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="570" data-original-width="450" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgflSc4spJ01VYTxlEYo7AQTosQ_2WcZcD_GPZV3sNkeHWTSHRTobYBfdxj0NuN9-2X5_b1BWbDavImzBS4ztA_Z24bp0lE4p9v4tSRWloAuVWK1x_dR60pCutvSHuGck45kebPZoApBoYu836gD03HZKU5IrEkAL0lJNxgkt1-jG2s_4xsVOyDYw90Ow/s320/Md.%20Mehedi%20Hasan.jpg" width="253" /></a> </div><div class="separator" style="clear: both; text-align: center;">File Photo: Md. Mehedi Hasan, </div>For
example, the Russian Federation could end up like the Soviet Union back in 90’s
on the verge of economic collapse, yet Russia has survived the economic blow
from the West, not because of only 'prudent macroeconomic management' but also
excellent 'economic leadership' of President Putin or Moscow. As a student of
economics, I have closely observed how the Western economic calculation for
Russia turned into wrong way and Elvira Nabiullina, the Chairwoman of Russian
Central Bank and Putin, the President of Russia, have done tremendous 'economic
leadership' effort that has made new history in the field of international
trade and economics

Another
example, India is also showing great economic leadership in recent days. India
is securing 30% low rated oil, gas from Russia while not giving any priority to
the Western pressures and saving wheat production and various raw materials to
keep up the industrial production for uncertain days of international
instability. On the other hand, controlling hyper inflation and the fall of
exchange rate quite smartly. Yes, Indian 'economic leadership' is doing a
remarkable job which is largely supporting, of course, inter 'prudent
macroeconomic management'. Without excellent economic leadership, only prudent
macroeconomic management will face double-edge economic problems as stated
above. These exceptional days need exceptional economic leadership first.

Firstly,
fall of the exchange rate needs to be controlled in a way that free fall of
taka canbe avoided. What we have recently experienced from Russia is that the
exchange rate cannot improve unless you have excellent control over net export
income. Bangladesh may be on  the way to becoming a middle income country
on the arm of cheap labor or labor exploitation as Marxian theory defines, it
needs more time to turn into a net exporter on capital-based production.
Therefore, we cannot expect a sudden reverse appreciation of Taka and that’s
why we mustn’t allow a free fall depreciation of Taka as market mechanisms
determine. There should be some sort of control in upholding a justifiable exchange
rate system alongside lowering dollar demand.

Secondly,
secure main industrial raw materials, mainly from China within mutually fixed exchange
currency or bypass dollar to buy raw materials, at least during the Russia-Ukraine
war. On the other hand, industrial raw material related to possible dollar
crises must get relief. We can also peg or fix Ruble-Taka exchange rate as
Ruble is now fixed with gold and gaining more powerful stability against
dollar. If Bangladeshi leadership can not do so as they are afraid of the West,
Chinese Yuan is the alternative to reduce pressure on dollar demand.

Thirdly,
we have to save the vulnerable labor class by rationing under government which
will keep them productive within this crisis period. RMG can't secure full raw materials
with falling exchange rate and at the same time with the increasing wage rate
demand-it's a double-edge problem for the industries. Therefore, the
government. has to interfere here smartly by introducing labor basic need
relief cards or programs.

Fourthly,
we can't buy Russian oil ,gas for a 30% discount directly, but diplomatic
friendly countries like China or India could help us with indirect imports
which could get a 10-20% discount at least. In this process, there is a
possibility to get refined oil or processed gas using these countries. We have
to stoke or save various raw materials to keep up the industrial production for
uncertain days of international instability.

Finally, t's a great moment of history to
build or active regional economic interest organizations. Bangladesh, once
pioneered the SAARC and should enforce it to create a more important economic
block to keep the small nation's economic interest in the time of international
conflicts. Recently, the African Union is getting wheat from Russia and doesn't
care what the West might say! The AU nations may have different support in UN voting
on the same Russia-Ukraine war, but they all are united on the AU platform to
defend their economic rights from the conflicting world! Whereas almost all
South Asian countries stand with Russia, but can't get the same benefit like
India gets. So naturally, we small nations should make economic block
irresistible for different support in international issues. As Russia wants to
expand energy business and industrialization in South Asia with enhancing
Chinese interest and friendly cooperation with India, then it is our duty and
scope as a small nation to make or go under economically beneficial block or
union or some sort of consumer conglomerate.

There
are more things or points in my consideration as economic leadership to support
any prudent macroeconomic management. However, someone might say, Bangladesh
cannot do such economic leadership as the largest RMG market is in the West. If
the RMG consumer can build buyer organizations, then RMG selling countries can
also make selling organizations like OPEC or other organizations. The West has
removed our GST benefits, we are no longer upon their charity and someday we
have to stand firmly with our labor and quality and that day has come up on
their crisis days of war.

In
conclusion, I firmly believe, the willingness to lead will give birth to a
thousand reasons to bring economic leadership. Now Bangladesh needs such an
influential world-stage economic leadership.

Author

Md. Mehedi HasanB.S.S. & M.S.S. in Economics,
Comilla UniversityResearcher & Founding President of
Bangladesh United Students of Economics (BUSE) Life Member of Bangladesh Economic
Association (BEA)

Md. Mehedi Hasan Recent days, we have seen many foreign funded Bangladeshi research organisations and their policy preaching economists hav...

Bangladesh United Students Of Economics - BUSE

Bangladesh United Students of Economics-BUSE

Bangladesh United Students Of Economics - BUSE

Thursday, June 23, 2022

Bangladesh Desperately Needs Economic Leadership

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