1 Governance , Structural Adjustment & the State of Corruption in Bangladesh

Structural Adjustment The structural adjustment programme the Washington consensus claim is designed to eliminate distortions and elementary economics tells us distortions create allocative and distributive inefficiency. The programmed was aimed to stimulate growth in developing economies most of whom stagnated due to effects of external and internal shocks. The basic idea is simple i.e. establish a market determined regime; this requires containment of the role of the state in product and factor markets. The state, which was earlier identified as the organized force for propelling growth, was identified as the prime source of distortion manifested through regulation, control, protection under high tariff wall, ownership and operation of public enterprises, price control, exchange control, high presence in financial sector and poor quality of public expenditure. The basic thrust of structural adjustment was deregulation, privatization, and liberalization for allowing the market forces to play their rightful role. The framers of the policy possibly did not dream of achieving the ideal of a perfectly competitive economy in product, labor and capital markets but generally couch their arguments in the language of the second best. Bangladesh implemented the structural adjustment policies science 1982 and enjoyed support of SAF and E SAF in this regard. Bangladesh has been credited for carrying out one of the most rapid tariff liberalization and privatization program as well as carrying out policy reforms in financial and fiscal sectors. It has devalued currency and decontrolled current account operations, it has adopted measures to deregulate many sectors including private investment and foreign direct investment, withdraw many subsidies and price controls, reduced effective average tariff rates, followed on the whole a fiscal policy of budgetary deficit containment, rationalized tax structure, allowed monetary sector to function according to market signals and increased spending in social sector. It has not carried forth labor market reform or a meaningful reform in public administration. The basic premise was that such policy adjustments and withdrawal of state control will reduce costs due to transactions and inefficiency, increase entry into the market increasing competition, production and employment through a cumulative efficiency impact and these efficiency gain will increase productivity gain and income of factors thus propelling the economy towards higher gross domestic product. We all know by now that the expectations of the framers of structural adjustment policy have not been realized and the blame has been severally apportioned depending on value predilection of the analyzer. This write …