Governance and Development: The Challenges for Bangladesh

The problem of governance is now the overriding aspect of Bangladesh to sustain both economic growth and social development. The paper examines the situation of various governance dimensions in Bangladesh during the period 1996-2004 and analyses these governance dimensions in economic development. The key governance dimensions that have emerged from Principal Component Analysis are p olitical governance, institution dimension and technology dimension. The performance on Bangladesh political governance is found to be deteriorated over the years from 1998 to 2004. Political institutions become dysfunctional during the period due to imperfections prevailing in political markets. Domestic political industries become more inefficient. Political governance of Bangladesh is better than in Pakistan, Sri Lanka and Indonesia but worse in all other Asian economies. In terms of institutions index, Bangladesh score is the lowest of all countries under study. The corruption index in public institution component provides the gloomiest picture although its performance improves marginally over the years. Employing 2SLS and OLS methods, the focal variables: political dimension, institution and ICT are found to be significant when they are linked with gross national product per capita. As the coefficient of public institution is found higher than that of political governance, the effect of public institutions on the economy is greater. Improvement of public institutions and judicial independence at all levels are to be given priority followed by effective parliamentary system.