Complex geopolitics induces economic challenges for BD: Wahiduddin
Staff Reporter :
Bangladesh and the other least developed countries (LDCs) will face challenges in keeping their trade and economic relations with other nations due to looming geopolitical complexity, said Wahiduddin Mahmud, an economist and former advisor to the caretaker government.
“Geopolitics and geoeconomics are two sides of a coin. It is challenging for countries like Bangladesh to tackle both,” he said at the concluding ceremony of a three day-long public lecture at the Annual BIDS Conference at a city hotel on Saturday.
“Major changes are taking place in geopolitics and the equation of inter-country relations leaving a significant impact on Bangladesh. For LDCs, there are both benefits and losses.
But, it depends on how much the government has support and engagement with the people,” the economist said.
“In this situation, the more a regime has legitimacy in the eye of its own people through popular mandate, it will be easier to coordinate its political interests with foreign economic interests as well as to tackle the unfair advantage of the multinational companies,” Wahiduddin said in his lecture on “Evolving Global Order and Geo-economics: Implications for Less Developed Countries.”
“Similarly, an authoritarian and repressive regime will feel more constrained to do so.
A politically-weak government will be more likely to succumb to the pressures of foreign governments and the multinational companies backed by them to accept exploitative economic deals,” he added.
Highlighting China’s loans to developed countries, he said the easy access came with the risk of becoming indebted, which in turn would mean the affected country would be expected to support China in the international forums.
Wahiduddin said China was trying to offer a development model to the developing world which was a mix of market liberalisation and state control, and in which priority was given to economic growth over the Western concept of democratic values.
“This China model may appear attractive to developing countries with authoritarian regimes, particularly those with soured relationships with the US and other Western democracies,” he said.
He noted that less developed countries had higher stakes in their relationships with industrialised democracies, given the numerous advantages – trade preferences, foreign aid and concessional loans, among others.
“The fallout of the West’s economic sanctions against Russia in the wake of the ongoing Ukraine-Russia war has been all too visible and its disruptive impact was evident by the domestic inflation stoked by global price spikes, especially in fuel prices,” the economist said.
Regarding the US-initiated trade war with China, he said the escalating confrontation meant other countries were hit indirectly through weaker demand for their exports, either through supply chains or in response to weaker global economic growth.
“It is noteworthy that, despite the trade war, the US and China remain the largest trading partners of each other.
It is true that some developing countries may take advantage of the diversion of US trade and investment away from China, provided there are enough skills and favourable investment climate,” he said.
Wahiduddin said the global economy and trade was being governed by neoliberal trade, which focused on trade openness and market orientation for the last 75 years.
But the trend of globalisation has slowed in the last couple of years, with the re-emergence of protectionism and economic nationalism.
“The scenario has become more complicated by the recent tilt towards nationalist trade policies in the industrialised countries, especially in the US, resulting in mainly from the resentment of the alleged impact of trade openness on labour displacement within those countries.
“Many economists however argue that the blame should be put on the lack of appropriate compensating measures within the domestic economies of those countries, and not on the liberalisation of imports from developing countries,” he said.
Terming the rise of economic nationalism in the industrialised West ‘ironic’, he pointed out that the trade rules negotiated under the World Trade Organization were “largely in favour of the industrialised countries.”
Policy Research Institute (PRI) Chairman Dr Zaidi Sattar and Executive Director of the South Asian Network on Economic Modeling (SANEM) Salim Raihan, among others, spoke on the occasion.
