Why are we so poor?

1. Lack of adherence to democratic principles of governance;

2. Weak enforcement of the rule of law;

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3. Corrupt politicians and bureaucrats;

4. Absence accountability and transparency of governance; and

5. Lack of proper education among politicians and bureaucrats.

Not surprisingly, all five factors to a great degree are found to apply to the operations of the government in Bangladesh. Because of the image of poor governance major donors and international institutions including the US Millennium Challenge Account are setting preconditions for approving aid to Bangladesh.

A government is called bad, either because its actions are bad for growth or it does not do things that are good for growth. There are many tools available to a government with which to influence the economy. These tools are: provision of the rule of law, regulations of how firms behave, planning (direction of resources to specific targeted industries), trade policies such as tariffs and quotas, and outright ownership of the factors of production. Government also influences the level of economic efficiency and performance by tax and spending policies. With the exception of the rule of law, which is unambiguously good for growth, there are no unique guidelines to determine which other policies are good for growth. The oddities of economies are such that outcome of these policies may vary from country to country over time.

One unequivocal answer to why poor countries have bad governments refers to well established relationship between economic growth and democracy. Freedom House's (a non-profit organisation in the US) annual press freedom survey of 194 countries and territories rated Bangladesh "not free."

The survey questionnaires are designed to examine the legal environment for the media, political pressures that influence reporting, and economic factors that affect access to information. In the survey, Bangladesh scored 150 points, along with Cameron, Egypt, Ethiopia, Maldives, and Russia. The bad news is that there is a growing freedom gap between Islamic countries and the rest of the world. Of the world's 192 countries, 121 are electoral democracies. However, only 11 of the 47 nations with a Muslim majority have democratically elected governments. The report also manifests a link between freedom and economic progress. Countries rated "free" account for $27.1 trillion of the world's annual GDP, and represent 87 percent of global economic activity. By contrast, countries rated "partly free" account for only $2.0 trillion in output (6 percent), and those rated "not free" produce only $2.2 trillion amounting to 7 percent.

Although democracy does not guarantee the rule of law, the later is even more important for growth. In economic literature, there exists a clear and unambiguous relationship between productivity and the rule of law which asserts: countries with better rule of law, enjoys higher productivity, and hence more growth. Freedom House's annual Legal System and Property Rights (LSPR) report shows that the rule of law in Bangladesh has been deteriorating over the last 10 years.

The other equally or more important factor that deters growth is certainly corruption, which is well known to all and sundry at every nook and corner of Bangladesh. Corruption exists and proliferates because of the weak enforcement of the rule of law. When the policy makers and the policy implementers defy the rule of law, corruption becomes pervasive and blends with the official culture. "An empirical analysis of capital flows shows that a country with TIB's corruption perception index (CPI) of 7.0 is 10 times more likely to succeed in attracting a dollar of foreign direct investment (FDI) per capita than a country with a score of 6.0." For example, Malaysia with a CPI score of 5.0 is 36 times more likely than Bangladesh (CPI = 1.5) to attract a dollar of FDI per capita.

If the politicians who are elected to work for the people and lead them to prosperity engage in malfeasance themselves, to whom the citizens would look up to. Such politicians will bargain for payoffs from foreign businesses who will be willing partners to the despicable acts of corruption. Such politicians will not hesitate to collaborate in activities which will throw citizens into vulnerability to industrial wastes, pollution, and consumption of lower quality products. A burning example is the recent ouster of the state minister for energy and mineral resources who allegedly acted to serve foreign interest against his people's interest.

A bad government is generally intolerant to the free media, and always attempts to harass and intimidate journalists at every opportunity when reporting is unfavourable to the ruling party. When politicians lose elections and take the seat of opposition benches, they clamour for all out freedom of the media, but when installed in power the same politicians stiffen their grip on state control over television and radio broadcasting media to funnel misinformation, and often outright lie about everything that matters. Most often, a bad government attempts to impose censorship to hide its misdeeds from the voters. One may convincingly argue that absence of freedom of press can be a factor for a country to have a bad government. Because a free and open media can expose bad governance by uncovering and shedding light on corruption, inefficiency, and abuses and thus can improve the quality of governance.

In transition economies in Eastern and Central Europe, the fall of communism brought with it openness which helped unearth a plethora of stories of fraud, corruption, and criminal activity, making the media perhaps the most effective institution in the fight against corruption. Journalists have paid dearly for this: in the territory of the former Soviet Union alone, more than 200 journalists have been killed in the line of work as they investigated stories on corrupt officials or criminal gangs. In Bangladesh, threats and intimidation by ruling party political functionaries and even public servants have become common occurrences.

What journalists are subjected to in their line of work in Bangladesh was aptly expressed by the former US Ambassador Harry Thomas, who said:" It is not an easy place for journalists. I salute the journalists of this country for the way they are working under duress." Recalling the killing of journalists in Chittagong, Khulna, Rajshahi, and Jessore, he said: "We want to see the killers of journalists brought to justice." Economic literature is replete with evidence that suggest that democracy, and freedoms of the media are the twins which opens the gateway to transparency and accountability of government policies and performance.

A country where politicians and bureaucrats are exploiting their own citizens, rule of law is virtually capricious, legal profession is weak, voices of the oppositions are disparagingly ignored, and journalists are working under threats and intimidation is hardly a functioning democracy, it is more like a kleptocracy.

The author is Professor of Economics, Eastern Michigan University, and President, Bangladesh Professional and Academic Society of America (BPASA).