Private sector key driving force of development in new era: David Engeman

Business Report :

David C. Engerman, Professor of History and Global Affairs at Yale University in the United States, envisioned the private sector, not state-run, as the key driving force for development in the new era.

“The era of government-led development aided by donor countries is almost over. It will be the private sector, rather than the government, that leads the way in development efforts,” he said while addressing a seminar held at the Muzaffar Ahmed Chowdhury Auditorium of the Faculty of Social Science of Dhaka University on Wednesday.

In his address, he further delved deeper in the future of private sector, saying: “The private sector will be the next driving force behind development as in the new era of development financing primarily driven by different forms of loan replacing grants or aid.”

The seminar titled ‘International Development: Past, Present and Possible Future’ was jointly organised by the Department of Economics of Dhaka University and the Bangladesh Economic Association.

The event was presided over by Mahbub Ullah, Convener of Bangladesh Economic Association and former Professor of Economics of Dhaka University.

At the seminar, David C. Engerman said that the era of development through traditional donor financing is now coming to an end. It lasted for about 70 years; from 1955 to 2025, which is longer than the Cold War.

As a result, he said, development should be thought of not in terms of recipient and donor, but in terms of borrower and lender relationships.
“Until now, various regional organisations, including the World Bank, have been providing bank loans. Now the private sector is spearheading that role. Especially initiatives like China’s ‘Belt and Road Initiative’ are being seen,” he highlighted.

David Engerman, however, said that the ‘desire for development’ will continue, noting that this desire has been created not only among Western banks or organisations, but also within the Global South or developing countries themselves.” “We now live in a world where the main force is the private market and private finance.

Consequently, the importance of developing countries’ own private companies, aid organisations (NGOs) and social businesses for financing is increasing.”
Talking about the malady of corruption, he said, “I agree with the statement that corruption hinders development.”

“Large government contracts and procurement processes create easy opportunities for the prevalence of corruption within government. The private sector is not always managing its finances perfectly. Corruption, I think, will not disappear completely even in this new and more private-centered development system,” he said.
Technological change can both advance human development and harm it, said David C. Engerman, citing examples of artificial intelligence, which poses a major risk of increasing inequality between and within countries.
Pointing out the nationalisation of several institutions of Bangladesh after its independence in 1971, David C. Engerman said, “Nationalisation is a complex and difficult issue. After independence, many institutions and factories in East Pakistan were abandoned by their West Pakistani owners. The state then became the only institution to take control of them. This was not an ideological (socialist) issue. However, in the end, these state-run institutions did not succeed due to corruption and incompetent people.”
The seminar, moderated by Mohammed Helal Uddin, was also attended by, among others, member secretary of the interim committee of the Economic Association, was also addressed by Sajjad Zahir, executive director of the Economic Research Group (ERG), Masuda Yasmin, Chairperson of the Department of Economics at Dhaka University, and Kazi Iqbal, researcher at the Bangladesh Institute of Development Studies (BIDS).