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Elite-Donor Relations

Aid no longer defines the relationship between Bangladesh and the rest of the world, but the early dependent years permanently shaped the political economy of development. Aid continues to contribute a significant chunk of government expenditure, and even more of that of the NGOs whose spending is assumed to be comparatively more concentrated on services to people on lower and more precarious incomes.

Figure 3.2 shows that the relative importance of aid has fluctuated over time, suggesting aid flows could not have been entirely reliable; also that there are distinct periods, more or less coinciding with political regimes, in which aid flows were absolutely and relatively higher or lower. This appears to reflect the amenability of different governments to particular areas of economic reform, and more generally the relationship between donors and governments at particular moments of their rule (see Quadir 2000; also Guhathakurta 1990). Overall, aid has become a smaller contribution to gross national income over time, and this has altered the relation between donors and elites beyond recognition. This owes partly to the declining relative importance of aid as a result of relatively rapid economic growth from the 1990s, but also (and not coincidentally) to the fact that aid relations were always easier, from the point of view of donors, under authoritarian regimes.

That aid has influenced the pathways of Bangladesh's development does not need to be re-established.[1] It is beyond question that pressure from aid donors explains some of the key turns in macroeconomic, trade, and social policy in Bangladesh's development history. We will look at some of those turning points in more detail, but here our focus is on understanding how donors feature within the relationship between the elite and the masses. There appear to have been three distinct stages to that relationship:

  • 1. The immediate post-war period 1971-5, in which aid was dominated by the UN-managed reconstruction and recovery programme and the modalities of the aid relationship were being figured out. The continuities with how aid donors viewed the country before and after it achieved independence were discussed in Chapter 2. Under first the elected Awami League Government and then the single-party BAKSAL regime, public policy took an increasingly socialist-statist turn, at least in intention. Western aid donors disapproved of the policies, the political direction they implied, and the corruption and mismanagement that were evident by 1975, and were openly lobbying for economic reforms. At the height of the economic crisis, Mujib was assassinated and the series of military coups that put General Ziaur Rahman in power took place.
  • 2. The military era, dominated by Zia and his successor, General H. M. Ershad, 1975-91. Partly to appease donors and partly to win popular legitimacy, this period was marked by acquiescence to the aid donor push in most directions, but in particular under Zia on food security and population, and under Ershad on privatization and economic deregulation, credit and other support for the manufacturing industry, basic health and education, and flood prevention. Aid-financed NGOs began to grow large and significant in the long Ershad decade, performing the functions played by progressive politics or a functioning bureaucracy in other settings, but which were absent or weak in the Bangladesh of the time.
  • 3. The democratic period, from 1992 onwards. The first decade in this period was the golden era for Bangladesh's success, building on the foundations of food security, disaster prevention, macroeconomic stability, and a growing set of governmental and other institutions geared towards human development. As a proportion of national income, aid fell sharply in this period. By the 2000s, aid donors arguably needed Bangladesh more than Bangladesh needed them. Certainly this was true enough of the mega-NGOs like BRAC. But it was also increasingly true of the major human development sectors, for which Bangladesh had won so many laurels: any serious donor needing to show 'impact', 'results', or 'value for money' had to try to fund some health, education, or antipoverty initiative (preferably one with a female face) in Bangladesh. The country still had large numbers of poor people densely and therefore accessibly located, and it was increasingly clear that skeptical taxpayers and charitable donors back home could get the best bang for their buck if they backed Bangladesh.

  • [1] Sobhan's (1982) study makes the point in significant detail;see also Islam (2003);Guhathakurta (1990);Khan (2014);Quibria and Ahmad (2007).
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