What type of Economic system does Bangladesh have?
Bangladesh operates under a mixed economy, which means it incorporates
elements of both socialism and capitalism. This is a hybrid of the two systems,
market-driven system versus a government-driven one.
What type of economic system Bangladesh has is explained with examples:
Private Sector Dominance: In industries such as the textile industry,
the majority of the ownership is private. For instance, the ready-made
garments sector in Bangladesh is however dominated by private firms
which constitute the major portion of the economy due to their
contribution in exports.
Government-Controlled Sectors: Areas such as utilities (electricity,
water utilities) and transport infrastructure are heavily regulated and
managed by the government. For example, the government of Bangladesh
owns and runs the Bangladesh Railway along with majority of the power
distribution companies.
Public-Private Partnerships (PPP): Both the private and public sectors
are involved in health and education. In that government invests in and
manages public hospitals and schools, with the inclusion of privately
operated hospitals and schools which increases the range of services
availed to people of all income classes.
This kind of economic system has its own advantages and disadvantages. In
below we are going to talk about it.
Advantages: -
Balanced Economic Growth: While the mixed economy permits the
growth of the private and especially entrepreneurial sectors, the
government can risk and contain key sectors and avoid the creation of
monopolies. For instance, state policy provides the garment industry in
the country to induce investment in the industry leading to the increase of
exports, under the condition that labor laws will be complied with.
Public Welfare and Services: The presence of market-centric sections
and those that are controlled makes the economy flexible. The
organization is adopted and resources are devoted for emergencies (such
as natural calamitous events or recessions), when it becomes imperative
to provide certain functions such as those provided for agriculture by the
government.
Encouragement of Private Enterprise: A mixed economy will always
promote private business as there are no such strict regulations in the
economy as to scare away private firms. This creates more jobs and nets
in more investment which helps in the fight against poverty and elevates
the living standards.
Disadvantages: -
Government Inefficiency: The thrusts in government operations of
specific sectors can cause problems in the operations of such sectors. For
example, the state-owned companies in energy or transportation may
suffer from bureaucracy and lack the innovation as well as the
effectiveness seen in private enterprises.
Risk of Corruption: Engagement of businesses in government processes
increases tendency of corruption when mixed economy is practiced, as
seen in most cases where private business entities seek for licenses or
donations from government officials. Such has been the case in the real
estate and construction businesses in Bangladesh.
Limited Private Growth in Some Areas: Industries characterized by
high levels of government intervention and regulation. For example, in the
case of public utilities Such conditions may limit the presence, let alone
growth, of private players in the economy, thereby reducing the
competition and the level of innovation in those industries.
Bangladesh benefits from both the public and private sectors thanks to its mixed
economy, but it is also constrained by the need to manage its resources both
internally and externally and with greater efficiency in its regulatory.
