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Issue 05

April 2019

Keeping in line with growing environmental concerns across the globe, Bangladesh has made international commitments to keep its carbon dioxide emission in check. There is an array of environmental policies in place, but their enforcement is a tricky issue. The cover article in the issue of Policy Insights makes the point that subsidised fossil fuel prices are not in sync with the policy objective of emission reduction and there is a need for carbon taxing as a possible means of addressing the problem. It presents evidence that such a policy need not hamper economic growth and poverty reduction prospects.

The recently announced Monetary Policy Statement (MPS) by the Bangladesh Bank for the second half of FY19 vis-à-vis the current monetary sector challenges is the subject matter of another article in this issue. Closely related to the just-mentioned article is another that zooms in on the exchange rate. It argues that the cause of deteriorating balance of payments and modest export performance is overvaluation of the exchange rate.

That Bangladesh needs an effective competition regime for promoting inclusive growth is highlighted in one of the articles, citing international evidence, it shows that anti-competitive behaviour is likely to be widespread with disproportionately high consequences being borne by poor and vulnerable households.

This issue includes the third and final instalment of a three-part article discussing the need for decentralisation in Bangladesh while highlighting the lessons that can be learned from East Asia. Other articles in this issue covers such topics as the US-China trade disputes and the likely consequences for Bangladesh; the relevance of an export-led growth model against the backdrop of the current global scenario in which many countries are experiencing a declining export-GDP ratio; the role of informal sector and its interactions with the formal economy; targeting errors in Bangladesh’s social security programmes and the resultant impact on poverty incidence. This issue also includes an article that divides countries into groups to compare their growth in 1990 and 2017 to shed light on the issue of convergence.