Politics and Administration of Government Intervention in the Mixed Economy: a Study of Public Enterprises in Bangladesh

Abstract

The broad object of this study is to examine governmental intervention in the context of Bangladesh where the Government has depended heavily on public ownership of productive enterprise as the most important form of intervention in the economy. Though public enterprises in post-liberation Bangladesh have been established in almost all sectors, this study focuses mainly on the involvement of the Government in manufacturing industry. About 85 per cent of the productive capacity in large industries is under public ownership. The emphasis is on the political and administrative issues raised by governmental intervention, rather than its economic implications. Broadly, the subject matter of the study covers three main areas; (i) the contextual and historical factors, (ii) the approach to public enterprises, and (iii) the organisation, administrative structure, financial policies, and evaluation of public enterprises. Intervention policies of a country are influenced by its sociopolitical circumstances and historical experiences. Chapter II describes the context of Bangladesh at independence and discusses the political and administrative structure and economic constraints. The role of the government in the economy before liberation is examined in Chapter III in order to place the post-liberation intervention policies in perspective. The approach to public enterprises has changed significantly in the three periods covered in the study. Pakistan depended on private enterprise, the Awami League Government gave only a residual role to the private sector, and the present Government's policy is to determine the balance of the public and the private sector pragmatically. Most of the public enterprises now operating in Bangladesh were established during the Awami League period (1972-75), on which most of the discussion is focused. The factors which made it possible and imperative for the Awami League to adopt a policy of wide public ownership of industrial undertaking are examined. The importance of determining the balance between the public and the private sector analytically is emphasized. In Chapters VI-X, the issues of organisational choice, the administrative structure, financial policies and the systemic linkages of the public enterprises are examined. It is shown that bureaucratic politics has prevented a clear demarcation of responsibilities between the government, the corporations and their units. The industrial corporations have little operational autonomy in administrative and financial matters. Excessive control, however, has ensured neither better coordination nor greater accountability. It has been suggested that a central coordinating authority should be established to take and overall view of public enterprises and a Parliamentary select committee should be set up for ensuring their accountability. In evaluating public enterprises, account must be taken of their multiple objectives and the socio-economic constraints under which they operate. For this, it is necessary to abandon the narrow concept of profitability and adopt a systems approach. It is suggested that the performance of the nationalised industries can be improved by introducing better management techniques efficient and timely audit and control, and above all, by removing the many bottlenecks that beset them. The advisability of wholesale denationalisation is questioned.