Habibullah Khan

Liberalization and Growth: An Econometric Study of Bangladesh

Bangladesh adopted a liberal economic regime, particularly in the areas of trade, finance, and capital account, since mid-1980s. This study seeks to evaluate the impact of liberalization on the country’s economic growth by analyzing the 1974-2002 data with the help of cointegration and error correction methods. The empirical results suggest that long-run economic growth in Bangladesh is largely explained by physical capital and real interest rate and growth remains unaffected by short-term changes in labor force and secondary enrollment ratio. While financial liberalization has had significant negative impacts on economic growth implying that financial reforms failed to attract new investment due to adverse investment climate, the effects of trade and capital account liberalizations were rather insignificant, possibly due to weak supply response and lack of credibility of such reform programs. Bangladesh will not reap the full benefits of any comprehensive liberalization measures unless it can improve infrastructure and quality of governance, the paper argues.

Islamic Finance: Growth and Prospects in Singapore

Islamic finance has been growing rapidly since its launch in the 1970s. The major market for this industry is typically the Middle East and it is gaining popularity in the UK, USA and Southeast Asia. Malaysia is the leading Islamic finance industry in Southeast Asia while its neighbor Singapore is relatively a new market player. Singapore revised its regulatory framework and tax structure and gradually introduced various Shariah-compliant financial products in the last couple of years. This paper argues that despite having small domestic market and competition from Malaysia, Singapore can still position itself in a niche market in the region. Through its strategy of integrated financial and economic development, Singapore can create new opportunities for Islamic finance and related financial products in the region.

Religion and Development: Are They Complementary?

Given that religion drives people’s behavior and actions in a more productive direction, it is not possible to separate religion from development. After a meticulous review of theory and empirical literature, the paper concludes that the relationship between religion and development is likely to be complementary as long as religious beliefs and practices promote ‘moderation’ rather than ‘extremes’. A peaceful co-existence of various religious groups (or sects) within a country and nations with multiple religious affiliations within the global community at large remains the essential prerequisite for growth and prosperity in today’s highly interconnected world, argued in the paper.

The Impact Of Economic Reforms On Growth: A Case Study Of Bangladesh

This study makes a brief assessment of the consequences of economic reforms that included a series of liberalization measures on Bangladeshs growth process by analyzing the 1974-2007 data with the help of cointegration, error correction, and Granger causality tests. The results suggest that long-run economic growth in Bangladesh is largely explained by investments in both physical and human capital, trade openness, and financial as well as capital account liberalization. While the causality runs in both ways between capital account liberalization and economic growth, it runs only in one direction from physical capital and financial liberalization to economic growth in the short-run. Interestingly, growth is not affected by trade openness in the short-run. While trade liberalization and capital account liberalization have had significant positive impacts on economic growth in the long-run, the effects of financial liberalization were found to be significantly negative. This emphasizes the need for ensuring real sector development as a prerequisite for the success of financial liberalization.

Does globalization create a ‘level playing field’ through outsourcing and brain drain in the global economy?

Rapid globalization driven by the development needs of transition economies, economic reform in developing countries, and unprecedented productivity growth owing to lower unit labor cost, Information and Communication Technology (ICT) revolution, and international movement of labor has posed a challenge for maintaining a sustainable economic growth worldwide. Using qualitative analysis based on data from various secondary sources, we note that both outsourcing and brain drain have intensified over the years as more and more countries are now embracing globalization as a strategy for higher economic growth and development. While the benefits of globalization can differ across countries, it seems that outsourcing and brain drain can bring into play some offsetting forces that are likely to bridge the gap between advanced and developing countries by creating a ‘level playing field’ in the global economy. While the developing and emerging economies are losing skilled labor through ‘brain drain’ to the advanced nations, they are gaining remittance earnings from those nations. At the same time, outsourcing from the advanced countries has created new employment and other opportunities in developing and emerging markets. Although the final impact of outsourcing is debatable, it is very likely that companies will intensify such activities in future due to strong evidences in support of significant cost savings. The outflow of skilled manpower, popularly called brain drain, from developing countries is also likely to increase due to growing demand for ‘replacement migration’ from advanced countries. Increasing job gains from outsourcing and the associated benefits on the economies of developing countries are likely to cancel out the perceived negative impact of brain drain, argued in this paper. The implication is that developed countries should ideally target the relatively poorer countries in their plan for outsourcing, because they are still deprived of the benefits of job creation, though these countries are losing their high-skilled manpower through brain drain.

Economic policy implications for socio-economic development in a fast-growing economy: the case of Malaysia

We seek to study the link between economic policy changes and socio-economic development in Malaysia that has shown impressive growth over the years. The country has experienced significant policy changes since independence in 1957, but the main focus of promoting the native Malay (Bumiputera) interest remains. Currently Malaysia is classified by the World Bank as an ‘upper middle-income’ country and it aims at becoming a highincome, inclusive and sustainable economy as part of its Vision 2020. While the New Economic Policy, the New Development Policy, the National Vision Policy and the New Economic Model – all driving the country towards its Vision 2020, promoting Bumiputera interests directly or indirectly in today’s competitive world might be seen as an obstacle towards achieving the Vision, argued in the paper.