Background Studies of 7th Five Year Plan

It's already known that Planning Commission (PC), Bangladesh is in the process of preparing the 7th Five Year Plan (FY2016-FY2020). Recently, PC uploaded, in its website, 25 background studies which are conducted sectoral experts of the country for person/group who has the interest to know how the planning process is done.

Link to access the background studies.   

Maintaining Growth in India: R. Rajan

Raghuram Rajan, Governor of the Reserve Bank of India, writes on basic factors that may shape up the Indian growth process in future. He broadly focused on three issues: deepening regional and domestic demand, strengthening India's macroeconomic institutions including his central bank, and finally, joining in the fight for an open global system. More specifically, he talked about:

• Infrastructure development (for having links to domestic and international markets)
• Human capital development (developing skills that are valued in the labor market and  the creation of jobs in firms that have an incentive to invest in training) 
• Fiscal prudence (controlling budget deficits and monitoring the quality of budgets)
• Low inflation (while ensuring optimal conditions for growth) 
• Financial stability (no to asset price boom)
• Attracting more FDI while keeping India's interest intact 
• Searching more natural resources from abroad, and if necessary, using multilateral institutions for that 
• Playing strong role in the international monetary system   

Most of these excellent points that he pointed out may be relevant for the Bangladesh case also. A worth reading for Bangladeshi policymakers.

Link for the article.

Bangladesh Inclusive Growth Diagnostic Study

USAID and DFID have jointly produced a study 'The Inclusive Growth Diagnostic Study' which identifies the binding constraints that deter households and firms in Bangladesh from making investments and taking risks that would significantly increase their incomes. The analysis provides a framework that will focus attention on the most pressing obstacles (electricity, low skills and governance) to development. Based on it, policymakers may identify appropriate reforms and projects that will ease those binding constraints, stimulating economic growth.

Wasted Investment: China's $6.8-trillion hole?

The Economist published this worth reading article (Wasted investment: China's $6.8-trillion hole?) based on a research done by two Chinese government researchers. The topic is simple: based on the Chinese investment, the researchers calculated the efficiency of investment through incremental capital investment ratio (ICOR), and interestingly they found that China has made worthless investment of $6.8 trillion over 2009-2013 for building bridges and other infrastructure investments. With this ICOR analysis, they tried to show how Chinese investment has been becoming less efficient in the recent past.

While the Economist analysed the research findings of Chinese government researchers, and also it provided alternative analysis. Based on a coherent and using more realistic approaches to research, the Economist tried to show how Chinese researchers miscalculated the whole thing and what were the missing areas in their research that should be considered.

Researchers, who often get involved in debate, must read this article, at least, to know how an economic debate should take place.     

Alvin Roth: The Fixer

IMF's F&D profiles Nobel Laureate Alvin E. Roth, who uses game theory to make people's lives better.

Link for the profile.

Why are rich countries democratic?

Ricardo Hausman, a Professor at Harvard University, writes on the necessity of proper democracy (beyond voting cast) through decentralizing the power and empowering the legislation to monitor government activities. The main theme of the article comes in the following way:

"... successful political systems have had to create an alternative invisible hand – a system that decentralizes the power to identify problems, propose solutions, and monitor performance, such that decisions are made with much more information."

Link for the article.

Look East Policy for Bangladesh

Ifty Islam writes on the much needed policy prescription 'Look East Policy'. As Ifty rightly mentioned, there is twin benefit of the said policy: (i) countries in the East Asia have the potential to bring a large amount of FDI in Bangladesh, if they receive the required support, and (ii) these countries are likely to be the biggest importer of Bangladeshi products after USA and Europe. Both of these benefit will trigger GDP growth in Bangladesh from its current position. A worth reading article!

Link for the article.    

Impact of reducing oil prices

The price of oil in the global market has been declining, we all know that. Policymakers want to know the real impact of it, and implications for the domestic economy. The article (The Geopolitical Impact of Cheap Oil) by Martin Feldstein (Professor of Economics at Harvard University) analyses various aspects of reduction of oil prices.

As a net oil importer of oil, Bangladesh might have similar implications like other importers. However, it has more implication for local electricity production and supply as there are large number of oil-based power generation companies. The consequential impact would be on current account balance and thus  the overall balance of payments. 

Link for the article. 

The end of China's Economic Miracle?

Bob Davis writes based on his personal experience of working in Beijing as a senior editor of the Wall Street Journal. The attached article explains the continuous downfall of the Chinese economy over the last couple of years, and as he sees -

"In China, I have learned, yellow isn't just the color of development. It is also the color of a setting sun."

Link for the article. 

Jeffrey Sachs: A New Macroeconomic Strategy

One really doesn't need so much complicated paper to express core policy messages. Definitely, someone like Jeffrey Sachs's stature,  it would be even easier. And he wrote a wonderful article while giving a new, relevant and realistic macroeconomic strategy, which may be applicable across economies. Probably, his policy suggestions are more appropriate for the developed world, however some of them are closely related with economies like Bangladesh too. Lots of issues are here to think/rethink. People who claim themselves macroeconomist, or want to be good macroeconomist in future may spend 15-20 minutes for reading this, and get enriched.

Link for the article.  

Bangladesh Development Update, WB (October 2014)

World Bank releases its flagship publication (Bangladesh Development Update, October 2014 edition) with recent economic developments, structural reforms and an update on readymade garment industries.

Link for the report.

WB Report on Export Opportunity

South Asia Economic Focus (Fall 2014), World Bank provides depth analysis on growth potentials of South Asian nations and its link with export opportunities in these economies.

Link for the report.

Forbes interviewed on BD's Stock Markets

Forbes interviewed Shahidul Islam, CEO of VIPB Asset Management Company, on the Bangladesh's stock markets, its potential and recent upturn of stock market indicators. While talking on the equity market issues, Islam also points out a few basic problems and potential of the Bangladesh economy.

Link for the interview.

It seems, time has come up again to talk about stock market volatility issues. Definitely, the way the market has been moving during the last couple of months is quite surprising. It's true that a new government came to the power which may stabilize the concerns of the long-term investors. Foreign investment in Dhaka stock market soared in recent months like anything. For example, in September 2014, overseas investors bought stocks worth Tk.5.9 billion, and sold worth Tk.1.6 billion, showing a 403% rise in net investment compared to the same period last years. This trend reflects the current buying mood of investors. 

HOW LONG? Retail investors would probably need to be more concerned about the selling mood than the buying mood of big investors. 

Bangladesh-India Trade: NTM & NTB

Asjadul Kibria writes in the Hindu on India's non-tariff measures and non-tariff barriers towards Bangladesh's exports into it while comparing the same aspect from Chinese point of view and concludes that more accommodation is required from India's side to allow Bangladesh's exports. This is a must read one if one wants to know the basic facts on trade gaps between Bangladesh and India.

Link for the article.

IMF ECF Mission Statement

The Statement of IMF Mission for 5th Review under the Extended Credit Facility with Bangladesh hailed Bangladesh's progress in macroeconomic stability. Key points are as follows:

• Despite a moderation in exports, foreign exchange reserves have continued to increase and have reached adequate levels, inflation has declined, the fiscal deficit is contained and public debt is on a downward path;
• With a calmer political environment economic activity and strong domestic demand, real GDP growth is expected at about 6.25% in FY2015;
• However, the introduction of a new VAT, a key government reform to boost fiscal space for development spending, is facing delays.

The link for the statement.