Does corruption foster growth in Bangladesh?

Abstract

Purpose

The purpose of the paper is to unveil the relationship between corruption and economic growth in Bangladesh.

Design/methodology/approach

The paper is designed to combine both theory and empirical work.

Findings

Bangladesh poses a positive relation between corruption and growth. This relationship has been significant since 1977 when Bangladesh embarked on a market economy and unleashed private investment, but failed to implement corresponding reforms in bureaucracy and major public utilities. As a result, consumers with rising income and producers with thriving business opportunities confronted public regulatory bodies for utilities and permits, and indulged in increasing corruption. Thus, both corruption and economic growth increased with the pace of privatisation and the market economy in Bangladesh. Hence, a positive association between corruption and growth, though spurious and co‐incidental, becomes apparent.

Research limitations/implications

A bigger sample size for survey can be covered in the future.

Practical implications

While corruption does not foster growth, it greases the wheels of commerce in Bangladesh's regulation‐heavy systems that would otherwise impede businesses.

Social implications

It can be argued that Bangladesh has the potentials to make growth performance even brighter if corruption can be further reduced through comprehensive liberalisation and bureaucratic reform.

Originality/value

Conventional wisdom suggests that corruption impedes economic growth. But this relationship is not that simple and straight forward in Bangladesh as it initially appears to be. Other institutional factors must be addressed before spurring growth in the country. This finding has implications to the development policymakers of Bangladesh or other emerging economies that experience both high growth and high corruption.

Citation

Paksha Paul, B. (2010), "Does corruption foster growth in Bangladesh?", International Journal of Development Issues, Vol. 9 No. 3, pp. 246-262. https://doi.org/10.1108/14468951011073325