For decades, Bangladesh’s economic story has been framed through growth figures, export earnings, and infrastructure expansion. Roads, bridges, power plants, and mega projects became the visible symbols of “development,” often used to signal progress to both domestic and international audiences. Yet beneath these surface-level indicators lies a more complex and troubling reality: economic stability cannot exist without strong democratic institutions, accountability, and rule-based governance.
The recent economic pressures—rising inflation, declining foreign reserves, debt stress, capital flight, and erosion of investor confidence—have revealed a fundamental truth that was long ignored. Growth without democratic governance is fragile, reversible, and deeply unequal.
The Institutional Foundation of an Economy
At its core, an economy is not merely a collection of markets and numbers; it is a system governed by rules, trust, and institutions. Independent courts, transparent regulatory bodies, a professional civil service, and accountable political leadership create the predictability required for economic actors to plan, invest, and innovate.
In Bangladesh, however, the gradual weakening of democratic institutions over the past decade has had direct economic consequences. When institutions become politicized, decision-making shifts from evidence-based policy to loyalty-based governance. This undermines efficiency, increases corruption, and distorts resource allocation—all of which silently damage economic resilience.
When Accountability Disappears, Economic Risk Grows
One of the most damaging outcomes of weakened democracy is the absence of accountability. Without meaningful parliamentary oversight, free media, or independent watchdogs, economic decisions escape scrutiny. Large-scale public investments proceed without transparent feasibility studies, cost-benefit analysis, or post-implementation audits.
As a result, Bangladesh has seen:
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Escalating project costs far beyond original estimates
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Mounting public debt with limited productive returns
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Preferential treatment of politically connected firms
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Declining confidence among domestic and foreign investors
These are not isolated governance failures; they directly translate into fiscal stress, inflationary pressure, and reduced public spending on health, education, and social protection.
Crony Capitalism and Market Distortions
Economic growth driven by political favoritism creates what economists call crony capitalism. In such systems, success is determined not by productivity or innovation, but by proximity to power. This discourages competition, suppresses small and medium enterprises, and concentrates wealth in the hands of a few.
In Bangladesh, repeated banking scandals, loan defaults by influential groups, and regulatory leniency toward politically connected businesses have weakened the financial sector. When banks are forced to absorb bad loans without consequences, the burden ultimately shifts to ordinary citizens through inflation, currency depreciation, and reduced access to credit.
Democracy and Investor Confidence
Investors—both local and international—value stability, predictability, and rule of law. Elections that lack credibility, policy decisions made without consultation, and sudden regulatory changes driven by political considerations increase uncertainty.
Over time, this uncertainty manifests in:
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Capital flight
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Reduced foreign direct investment
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Informalization of economic activity
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Slower job creation
Economic stability cannot be sustained when investors fear arbitrary enforcement of laws or politically motivated policy shifts.