Abstract
Bangladesh has been maintaining reasonable macroeconomic stability for the last two decades or so, which served as the basis for higher economic growth trajectories in subsequent years. The economic growth, along with other development interventions, provided a dividend for poverty reduction. However, with higher growth rate, the pace of poverty reduction has slowed down and income inequality is on a rising trend. This chapter provides an overview on the role of macroeconomic policy in attaining macroeconomic stability over time with its implications for growth and poverty reduction, drawing lessons from various chapters of this book.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
Macroeconomic instability can generate volatility of key macroeconomic variables or predicts future volatility.
- 2.
Though interest rate structure in Bangladesh is not considered very competitive, the bank interest rate spread which has been around 5 percent for a long time induces positive investment return. The issue has been discussed elaborately in Chap. 16.
- 3.
The policy reforms in the 1980s included mainly the withdrawal of food and agricultural subsidies, privatization of state-owned enterprises, liberalization of interest rates and other financial obligations and withdrawal of quantitative restrictions. The reforms of the early 1990s were particularly aimed at moving toward an open economy, such as making the current account convertible, reducing import duties and removing virtually all controls on the movements of foreign private capital. In addition, on the fiscal front, value added tax (VAT) was introduced. As indicated earlier, reforms of the early 1990s led to an improvement in macroeconomic indicators. It may be relevant to point out here that the quality of reforms in the two decades may vary as the decade of the 1980s was ruled by a military government while transition to parliamentary democracy happened in the early 1990s.
- 4.
References
Alesina, A., & Rodrik, D. (1994). Distributive politics and economic growth. The Quarterly Journal of Economics, 109(2), 465–490.
Ames, B., Brown, W., Devarajan, S., & Izquierdo, A. (2001). Macroeconomic policy and poverty reduction. Washington, DC: International Monetary Fund.
Asadullah, M. N., Savoia, A., & Mahmud, W. (2014). Paths to development: Is there a Bangladesh surprise? World Development, 62, 138–154.
BIDS. (2018). How much is mobile money worth? Bkash experience in Bangladesh. Dhaka: Bangladesh Institute of Development Studies. Unpublished.
Bourguignon, F., & Morrisson, C. (1998). Inequality and development: The role of dualism. Journal of Development Economics, 57(2), 233–257.
Datt, G., & Ravallion, M. (1992). Growth and redistribution components of changes in poverty measures: A decomposition with applications to Brazil and India in the 1980s. Journal of Development Economics, 38(2), 275–295.
Deininger, K., & Squire, L. (1998). New ways of looking at old issues: Inequality and growth. Journal of Development Economics, 57(2), 259–287.
Dollar, D., & Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7(3), 195–225.
Duryea, S., Behrman, J., & Székely, M. (1999). Schooling investments and macroeconomic conditions: A micro-macro investigation for Latin America and the Caribbean. Washington, DC: Inter-American Development Bank, Research Department.
Easterly, W., & Kraay, A. (2000). Small states, small problems? Income, growth and volatility in small states. World Development, 28(11), 2013–2027.
Hossain, M., & Samad, H. (2017). Mobile phones, household welfare and women’s empowerment: Evidence from rural off-grid regions. Presented in BIDS Research Almanac Seminar, 2017, Dhaka.
Iqbal, K., & Pabon, N. F. (2018). Quality of growth in Bangladesh: Some new evidence. Bangladesh Development Studies, XLI(2), 43–64.
Osmani, S. R. (2018). Aspects of the poverty scenario in Bangladesh during 2010–2016. Bangladesh Development Studies, XLI(3), 1–31.
Perotti, R. (1992). Income distribution, politics, and growth. The American Economic Review, 82(2), 311–316.
Perotti, R. (1996). Redistribution and non-consumption smoothing in an open economy. The Review of Economic Studies, 63(3), 411–433.
Persson, T., & Tabellini, G. (1994). Is inequality harmful for growth? The American Economic Review, 84, 600–621.
Ramey, G., & Ramey, V. A. (1994). Cross-country evidence on the link between volatility and growth (No. w4959). National Bureau of Economic Research.
Ravallion, M. (1997). Can high-inequality develo** countries escape absolute poverty? Economics Letters, 56(1), 51–57.
Thorbecke, E., & Jung, H. S. (1996). A multiplier decomposition method to analyze poverty alleviation. Journal of Development Economics, 48(2), 279–300.
Timmer, C. P. (1997). How well do the poor connect to the growth process? Cambridge, MA: Harvard Institute for International Development.
UNDP. (2010). Assessment of development results, Bangladesh, 2010. New York: United Nations Development Program.
White, H., & Anderson, E. (2001). Growth versus distribution: Does the pattern of growth matter? Development Policy Review, 19(3), 267–289.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Appendix
Appendix
Rights and permissions
Copyright information
© 2020 The Author(s)
About this chapter
Cite this chapter
Hossain, M. (2020). Macroeconomic Policy, Economic Growth and Poverty Reduction in Bangladesh: An Overview. In: Hossain, M. (eds) Bangladesh's Macroeconomic Policy. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-1244-5_1
Download citation
DOI: https://doi.org/10.1007/978-981-15-1244-5_1
Published:
Publisher Name: Palgrave Macmillan, Singapore
Print ISBN: 978-981-15-1243-8
Online ISBN: 978-981-15-1244-5
eBook Packages: Economics and FinanceEconomics and Finance (R0)