Macroeconomic Accounts: The Structure of Demand

Azizur Rahman Khan
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Azizur Rahman Khan: University of California

Chapter 3 in The Economy of Bangladesh, 2015, pp 22-38 from Palgrave Macmillan

Abstract: Abstract Until at least the turn of the century, Bangladesh was universally perceived as a country too poor to save at a decent rate and overly dependent on the inflow of foreign assistance for its modest rate of investment.1 In the past decade or thereabout any serious observer using the official data, including those published by international agencies, had to recognize that Bangladesh had become a nation with high rates of saving. Indeed, on the basis of official data on the expenditure account of GDP and external balance, one had to conclude that Bangladesh had become independent of foreign capital inflow and that this transformation occurred quite early in the 1990s. The continuing puzzle is that the economy by all accounts still seems to have substantial dependence on external assistance. Scarcely a day goes by without some news of negotiations with foreign bilateral and multilateral donors on the financing of some domestic development project. Government budget continues to depend heavily on foreign assistance. Large infrastructural projects are rarely, if ever, conceived without foreign finance. The vast NGO sector is also reported to be dependent on foreign assistance for much of its activities. How can this be reconciled with the macroeconomic data which show that the country now saves at a higher rate than the respectable domestic investment rate? This chapter tries to analyze and untangle these issues and puzzles.

Keywords: Foreign Exchange; Capital Inflow; Current Account Balance; Foreign Exchange Reserve; Domestic Saving (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-54974-7_3

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DOI: 10.1057/9781137549747_3

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