Academic journal article Social Development Issues

Implementation of the Structural Adjustment Program in Bangladesh: Experience of Shrimp Culture

Academic journal article Social Development Issues

Implementation of the Structural Adjustment Program in Bangladesh: Experience of Shrimp Culture

Article excerpt

Like many other developing nations, Bangladesh embraced nationally managed economic growth with financial and technical assistance from global tions such as International Monetary Fund and World Bank as a development strategy during the emergence of the neoliberal economic order. Hoping to participate in the trillion dollar global trade, resource-poor nations responded very positively to the call of globalization, liberalized their trade policies, and welcomed foreign investment by lessening restrictions (Steger, 2009). Promoted by the Bretton Woods institutions, structural adjustment programs (SAPs) were prescribed Mashooq by the World Bank as the development strategy for poor nations in the 1980s (Bhattacharya, Rahman, & Khatun, 1999). The objective of the SAP was to stimulate the economic growth by restructuring macroeconomic instruments in all major sectors of the economy. In particular, international trade and finance sectors were targeted for a major shift under this adjustment program.

Bangladesh was one of the first thirty-six countries to accept and instigate such economic reform measures in the mid-1980s with a view to accelerating its economic growth. This article evaluates the overall impact of the SAP in Bangladesh. Using the example of the expansion of the commercial shrimp culture, which was implemented under the shadow of the SAP, this article uses secondary data to analyze the context, trend, and implications of the export-oriented macro policy reformation under the SAP in Bangladesh. An explanation of the underlying theoretical framework that links this transformation with globalization is also presented. The discussion begins with the background of SAP implementation in Bangladesh.

Context of the Structural Adjustment Program in Bangladesh

Since the early 1980s, the World Bank and International Monetary Fund have interposed the concept of stabilization and structural adjustment of macroeconomic policies with financial and technical assistance in the least developed countries (Steger, 2009). Under this initiative, Bangladesh received conditionality based structural adjustment credits from the World Bank to facilitate the suggested sectoral reform programs (Bhattacharya, Rahman, & Khatun, 1999). In the form of financial assistance, Bangladesh received a total of U.S.$1.76 billion from 1980 to 1995 as adjustment lending. As a policy package, the SAP targeted almost all the major macroeconomic sectors of Bangladesh including agriculture and manufacturing, energy and communication, and finance and trade with an overarching goal of achieving high economic growth (Bhattacharya & Titumir, 1998; man, 2003) creating a friendly framework of a market-based economy using the comparative advantages (e.g., cheap labor and suitable climate) of Bangladesh.

The SAP demanded a number of measures, such as cutbacks in public sector expenditures, reduction of an anti-export bias in the tax structure, tariff rationalization and overall trade liberalization, incorporation of flexibility in the exchange and interest rates, privatization, price decontrol, and de-subsidization (Bhattacharya et al., 1999) to be taken by the government with a view to reforming several macroeconomic policies. As suggested by many scholars, it is evident that, since the mid-1980s development strategies of Bangladesh have mainly been defined and guided by the SAP framework (Bhattacharya, 1995; Rahman, 1992; Sabur, Palash, Awal, & Rahman, 2010) that ignored the potentially adverse ecological and social impacts. In the next section we will present an overview of the outcome of SAP implementation in Bangladesh, mainly from a macroeconomic perspective.

Structural Adjustment Program Implementation: Outcomes in Bangladesh

The outcome of the SAP in Bangladesh has been reported as mixed by numerous studies (Alauddin & Tisdell, 1998; Rahman, 1992; Sabur et al., 2010). Structural reform of macroeconomic instruments has transformed the once protective economic system into a market-driven and competitive one by deregulating the financial sector; encouraging foreign investment in industry and the money market; reducing import tariff rates; and most importantly, by withholding subsidies to the agricultural sector and privatizing state-owned industries (Bhattacharya et al. …

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