Bangladesh needs to encourage the youth by undertaking initiatives to promote entrepreneurs and ensure their participation in the development process, says Finn Kydland, Nobel Laureate economist and professor of economics at the University of California.
He strongly feels that the government of Bangladesh has to ensure proper and quality education and jobs for the younger generation. “They must have space to utilise their potential that encourages innovative activities,” he said in an interview with Prothom Alo during his visit to Dhaka on 8-12 May.
Prof. Finn Kydland is a member of the eminent panel on Bangladesh Priorities research, a collaboration initiative between the Copenhagen Consensus Centre and BRAC’s Research and Evaluation Division (RED).
Prothom Alo (PA): Bangladesh is trying to achieve 7.05% GDP growth. What are the macroeconomic challenges to attain this and make it sustainable?
Finn Kydland (FK): The government, through its own activities, can strive to attain a higher level of GDP growth but I think the private sector’s participation is necessary for the sustainability of long-run development initiatives. That means the private sector should also be willing to play a role in the development process, otherwise it will not be sustainable. Equally, the government’s policy and credibility are very important to encourage private sector participation.
Private sector investment also depends on future government policy. Businesses always want to be sure that future tax and regulatory policies will continue to be supportive of their activities. So, the government should always encourage young entrepreneurship, growth promoting activities backed by supportive policy and an enabling environment.
PA: How do you see participation of youth in the country’s development process?
FK: The government has to ensure proper and quality education and jobs for the younger generation. They must have space to utilise their potential that encourages innovative activities. On the top of everything, I think encouraging young entrepreneurship in terms of policy and state initiatives are the best ways to ensure participation in the development process.
PA: Despite falling interest rate we are not having enough private sector investment. How do you explain this?
FK: What matters for investment is real interest rate. That means whether nominal interest rate has been adjusted with inflation or not to reflect the real cost of funds to the borrower, and the real yield to the investor. It’s good that interest rate is falling in Bangladesh. Low interest rate is important but not a dominant factor for larger scale private investment. It is the business that ultimately decides the investment environment and productivity of undertaken investments.
PA: Digital governance is a priority for the current government. What should be the two most immediate priorities for digital governance?
FK: From my experience with Bangladesh Priorities, I will put “land digitisation” as the top priority, followed by e-procurement. These are two key areas where government needs to have a long-term plan to extract the right macroeconomic benefits. I see a lot of potential in these two sectors for acquiring a higher return of investment if the government is able to fully digitise procurement activities and land administration system.
PA: How has your experience been with the Bangladesh Priorities research?
FK: It has been great! I have been an eminent panel member for a number of global and regional studies, but this is the first time that I got to focus and work on one specific country. In a way, Bangladesh is the first country to pioneer the use of cost-benefit analysis in prioritising public policy decisions. We can only hope that some of the research interventions, almost all of which come from the country’s 7th Five-Year Plan, are prioritised by the government and international development community in supporting Bangladesh’s dream of becoming a middle-income country.
Thank you very much for your time
FK: It has been a pleasure.
this interview was originally published in Prothom Alo on 28 May 2016