{"title":"Japan Center for Economic Research","authors":"","doi":"10.1111/aepr.12501","DOIUrl":"https://doi.org/10.1111/aepr.12501","url":null,"abstract":"","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"176"},"PeriodicalIF":4.5,"publicationDate":"2025-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12501","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143115292","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Hal Hill, Takatoshi Ito, Kazumasa Iwata, Colin McKenzie, Shujiro Urata
<p>This special issue of the <i>Asian Economic Policy Review</i> examines the economic development of four economies of South Asia,<sup>1</sup> Bangladesh, India, Pakistan, and Sri Lanka. Over the past 38 issues of the journal, we have had 2 issues devoted to India (Vol. 3, No. 2 and Vol. 14, No. 1), but not even 1 paper focused solely on Bangladesh, Pakistan, or Sri Lanka. This issue of the <i>Asian Economic Policy Review</i> attempts to fill that gap.</p><p>South Asia is the world's most populous region, comprising 21% of the world's population. However, poverty is widespread and the economies are relatively small in global terms: they generate 5.2% of global output, indicating that their average per capita income is about one-quarter of the global figure.<sup>2</sup></p><p>Although Bangladesh and Pakistan have very large populations (173 million and 240 million, respectively), India, the world's most populous nation with 1,429 million people, dominates South Asia's economy, politics, and demographics. India is now the world's fifth largest economy measured at official exchange rates and the third largest as measured by purchasing power parity exchange rates.</p><p>Since independence in the late 1940s (1947 for India and Pakistan, 1948 for Sri Lanka),<sup>3</sup> the region has experienced mixed economic fortunes. Kathuria (<span>2025</span>) characterizes the early post-independence period as one of “wasted decades.” Over the long sweep of economic development, from 1950 to 2016 real global per capita income in international prices increased 4.4 times. The increases in India (4.3 times) and Pakistan (4.4) were very similar to the global average. Sri Lanka grew faster (7.6), while Bangladesh was slower (2.9).<sup>4</sup> As van der Eng (<span>2025</span>, figure 1) shows, at the time of its independence Sri Lanka had the region's highest per capita income by a substantial margin, followed by Bangladesh, Pakistan and India. Until its recent macroeconomic crisis, Sri Lanka continued to be the most prosperous country, but India has overtaken both Bangladesh and Pakistan. Pakistan is now the poorest of the four, again by a substantial margin.</p><p>Sri Lanka is also the region's leader as measured by social indicators. In 2021, its human development index was 0.78, much higher than India (0.63), Bangladesh (0.66), and Pakistan's very low 0.54. Sri Lanka is the leader, and Pakistan the laggard, with respect to various indicators, including education, health, poverty, and gender equity. Moreover, notwithstanding the region's egalitarian rhetoric, poverty has also generally been less responsive to economic growth than it has in Northeast and Southeast Asia (hereafter referred to as East Asia). South Asia has yet to experience the rapid, labor-intensive, export-oriented industrialization that has had transformational labor market effects in much of East Asia. One important factor is the relatively low labor force participation rates, exceptionally so f
{"title":"South Asia: Editors' Overview","authors":"Hal Hill, Takatoshi Ito, Kazumasa Iwata, Colin McKenzie, Shujiro Urata","doi":"10.1111/aepr.12499","DOIUrl":"https://doi.org/10.1111/aepr.12499","url":null,"abstract":"<p>This special issue of the <i>Asian Economic Policy Review</i> examines the economic development of four economies of South Asia,<sup>1</sup> Bangladesh, India, Pakistan, and Sri Lanka. Over the past 38 issues of the journal, we have had 2 issues devoted to India (Vol. 3, No. 2 and Vol. 14, No. 1), but not even 1 paper focused solely on Bangladesh, Pakistan, or Sri Lanka. This issue of the <i>Asian Economic Policy Review</i> attempts to fill that gap.</p><p>South Asia is the world's most populous region, comprising 21% of the world's population. However, poverty is widespread and the economies are relatively small in global terms: they generate 5.2% of global output, indicating that their average per capita income is about one-quarter of the global figure.<sup>2</sup></p><p>Although Bangladesh and Pakistan have very large populations (173 million and 240 million, respectively), India, the world's most populous nation with 1,429 million people, dominates South Asia's economy, politics, and demographics. India is now the world's fifth largest economy measured at official exchange rates and the third largest as measured by purchasing power parity exchange rates.</p><p>Since independence in the late 1940s (1947 for India and Pakistan, 1948 for Sri Lanka),<sup>3</sup> the region has experienced mixed economic fortunes. Kathuria (<span>2025</span>) characterizes the early post-independence period as one of “wasted decades.” Over the long sweep of economic development, from 1950 to 2016 real global per capita income in international prices increased 4.4 times. The increases in India (4.3 times) and Pakistan (4.4) were very similar to the global average. Sri Lanka grew faster (7.6), while Bangladesh was slower (2.9).<sup>4</sup> As van der Eng (<span>2025</span>, figure 1) shows, at the time of its independence Sri Lanka had the region's highest per capita income by a substantial margin, followed by Bangladesh, Pakistan and India. Until its recent macroeconomic crisis, Sri Lanka continued to be the most prosperous country, but India has overtaken both Bangladesh and Pakistan. Pakistan is now the poorest of the four, again by a substantial margin.</p><p>Sri Lanka is also the region's leader as measured by social indicators. In 2021, its human development index was 0.78, much higher than India (0.63), Bangladesh (0.66), and Pakistan's very low 0.54. Sri Lanka is the leader, and Pakistan the laggard, with respect to various indicators, including education, health, poverty, and gender equity. Moreover, notwithstanding the region's egalitarian rhetoric, poverty has also generally been less responsive to economic growth than it has in Northeast and Southeast Asia (hereafter referred to as East Asia). South Asia has yet to experience the rapid, labor-intensive, export-oriented industrialization that has had transformational labor market effects in much of East Asia. One important factor is the relatively low labor force participation rates, exceptionally so f","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"2-26"},"PeriodicalIF":4.5,"publicationDate":"2025-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12499","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143115290","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Kathuria (<span>2025</span>) should be congratulated on writing about the experiences of five or six countries in South Asia given the heroic nature of the task. I will concentrate my comments in my remarks in kind of three broad areas.</p><p>My first set of comments relates to some of the common challenges and opportunities that Kathuria did not touch upon. The first and most obvious common challenge is climate change. We have seen recently real environmental extreme and even calamitous events in Nepal, India, and Pakistan. So, what would South Asia have to do to address some of these climate-related challenges? The second obvious common thing that is happening in all these countries, Sri Lanka, India, Pakistan, Bangladesh, and Nepal, is the rise of identity-based majoritarian politics. Does this kind of majoritarian politics have any implications for addressing the challenges? Even the economic challenges that Kathuria has so carefully and elaborately laid out. There are two dimensions to this. One is of course that it affects bilateral relations, and therefore it is good to be made aware that economic cooperation on some of these issues will be much more difficult. It is going to have a kind of direct impact on bilateral relations and bilateral approaches to cooperation and regional cooperation more broadly. What is it going to do within each country, to the investment climate, to the scope for conflict and all of those things that affect a long-run development? These may be political issues, but I think in this case we cannot escape at least some of the economic long-term economic consequences of politics.</p><p>Is South Asia's demographic dividend one common kind of opportunity? If you look at all these alarming population projections that we are seeing around the world, we observe aging in advanced countries, and absolute declines in population in China, Korea, East Asia, and maybe even in Europe. Is there a possibility that South Asia could benefit from their labor surplus compared to other countries, advanced countries in even in Asia that are going to face growing labor shortages? So is there a kind of common kind of South Asian opportunity stemming from not just its own demographic dividend, but also from the kind of demographic collapse in the rest of the world?</p><p>My second set of comments relate to Kathuria's approach of going through the challenges in each country. The approach I would like Kathuria (<span>2025</span>) to have taken is to examine South Asia through a regional approach rather than through individual country approaches. The latter could be dealt with in more detail in some of the other papers in this issue. Let me give just two examples related to macroeconomic instability and trade. Kathuria very rightly and nicely points out that Pakistan, and Sri Lanka, and even Bangladesh, and Nepal have experienced macroeconomic instability, but India has escaped this. Why is it that you know one country seems to have escap
{"title":"Comment on “South Asia's Conundrum: Turning Potential into Sustained Progress”","authors":"Arvind Subramanian","doi":"10.1111/aepr.12496","DOIUrl":"https://doi.org/10.1111/aepr.12496","url":null,"abstract":"<p>Kathuria (<span>2025</span>) should be congratulated on writing about the experiences of five or six countries in South Asia given the heroic nature of the task. I will concentrate my comments in my remarks in kind of three broad areas.</p><p>My first set of comments relates to some of the common challenges and opportunities that Kathuria did not touch upon. The first and most obvious common challenge is climate change. We have seen recently real environmental extreme and even calamitous events in Nepal, India, and Pakistan. So, what would South Asia have to do to address some of these climate-related challenges? The second obvious common thing that is happening in all these countries, Sri Lanka, India, Pakistan, Bangladesh, and Nepal, is the rise of identity-based majoritarian politics. Does this kind of majoritarian politics have any implications for addressing the challenges? Even the economic challenges that Kathuria has so carefully and elaborately laid out. There are two dimensions to this. One is of course that it affects bilateral relations, and therefore it is good to be made aware that economic cooperation on some of these issues will be much more difficult. It is going to have a kind of direct impact on bilateral relations and bilateral approaches to cooperation and regional cooperation more broadly. What is it going to do within each country, to the investment climate, to the scope for conflict and all of those things that affect a long-run development? These may be political issues, but I think in this case we cannot escape at least some of the economic long-term economic consequences of politics.</p><p>Is South Asia's demographic dividend one common kind of opportunity? If you look at all these alarming population projections that we are seeing around the world, we observe aging in advanced countries, and absolute declines in population in China, Korea, East Asia, and maybe even in Europe. Is there a possibility that South Asia could benefit from their labor surplus compared to other countries, advanced countries in even in Asia that are going to face growing labor shortages? So is there a kind of common kind of South Asian opportunity stemming from not just its own demographic dividend, but also from the kind of demographic collapse in the rest of the world?</p><p>My second set of comments relate to Kathuria's approach of going through the challenges in each country. The approach I would like Kathuria (<span>2025</span>) to have taken is to examine South Asia through a regional approach rather than through individual country approaches. The latter could be dealt with in more detail in some of the other papers in this issue. Let me give just two examples related to macroeconomic instability and trade. Kathuria very rightly and nicely points out that Pakistan, and Sri Lanka, and even Bangladesh, and Nepal have experienced macroeconomic instability, but India has escaped this. Why is it that you know one country seems to have escap","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"55-56"},"PeriodicalIF":4.5,"publicationDate":"2024-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12496","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143114233","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Kathuria (<span>2025</span>) presents what he labels as South Asia's conundrum, namely, how to turn the region's potential into sustained progress. To answer this question, he focuses on <i>why</i> South Asia is punching well below its weight. Several factors covering many areas are identified to explain South Asia's economic situation including macroeconomic instability, protectionist trade policies, inability of the countries to reap the benefit of the demographic dividend, quality of human capital, and few other factors. Drawing on this analysis, Kathuria, however, does not directly offer a resolution to the conundrum he presents. Instead, it is implied—indeed left to the reader to conclude—that by reversing the negative trends listed would South Asia be able to realize its potential. Kathuria (<span>2025</span>) is loudly silent on the question of <i>how</i> South Asian countries will reverse the negative trends that are holding back the welfare of close to 2 billion people.</p><p>Take for example the case of Pakistan. Kathuria points out to an astonishing fact: Pakistan has so far sought an International Monetary Fund bailout 24 times—more than any other country in South Asia and even more than Argentina's 22 bailouts. That Pakistan must stabilize its macroeconomy is an understatement. Which factors will allow this turnaround to happen, and which will ensure that any stability secured will be sustained is the story that needs desperate analysis. Similarly, Kathuria refers to the challenge of both the quality and the quantity of human capital across South Asia—for example, low learning-adjusted years of schooling and low female labor force participation—suggesting these two factors also are contributing to the low economic attainment of the population. These points have been well documented in the literature. Kathuria, however, does not extend his analysis to explain how the trends could be reversed.</p><p>The difficulty of presenting a set of solutions or mapping how South Asia could address the development challenges it faces is understandable. Beyond listing potential technocratic options, a credible analysis of the solution path would need to identify the <i>political economy factors</i> that could potentially enable South Asia to address the challenges listed in Kathuria (<span>2025</span>). Such an analysis would require a different methodology and approach than one adopted by Kathuria. <i>To address the issue Kathuria so aptly placed in the title of his paper, however, requires a political economy lens</i>. Kathuria refers to certain aspects of political economy—for example, the linkage of the state with crony capitalists and business oligarchs—but falls short of presenting the political economy of policy reforms.</p><p>Take the issue of stunting, another issue well documented in the literature. Kathuria correctly suggests that this persistent problem in the region represents a “South Asia Enigma.” Framing the topic in such a bold w
{"title":"Comments on “South Asia's Conundrum: Turning Potential into Sustained Progress”","authors":"Junaid K. Ahmad","doi":"10.1111/aepr.12497","DOIUrl":"https://doi.org/10.1111/aepr.12497","url":null,"abstract":"<p>Kathuria (<span>2025</span>) presents what he labels as South Asia's conundrum, namely, how to turn the region's potential into sustained progress. To answer this question, he focuses on <i>why</i> South Asia is punching well below its weight. Several factors covering many areas are identified to explain South Asia's economic situation including macroeconomic instability, protectionist trade policies, inability of the countries to reap the benefit of the demographic dividend, quality of human capital, and few other factors. Drawing on this analysis, Kathuria, however, does not directly offer a resolution to the conundrum he presents. Instead, it is implied—indeed left to the reader to conclude—that by reversing the negative trends listed would South Asia be able to realize its potential. Kathuria (<span>2025</span>) is loudly silent on the question of <i>how</i> South Asian countries will reverse the negative trends that are holding back the welfare of close to 2 billion people.</p><p>Take for example the case of Pakistan. Kathuria points out to an astonishing fact: Pakistan has so far sought an International Monetary Fund bailout 24 times—more than any other country in South Asia and even more than Argentina's 22 bailouts. That Pakistan must stabilize its macroeconomy is an understatement. Which factors will allow this turnaround to happen, and which will ensure that any stability secured will be sustained is the story that needs desperate analysis. Similarly, Kathuria refers to the challenge of both the quality and the quantity of human capital across South Asia—for example, low learning-adjusted years of schooling and low female labor force participation—suggesting these two factors also are contributing to the low economic attainment of the population. These points have been well documented in the literature. Kathuria, however, does not extend his analysis to explain how the trends could be reversed.</p><p>The difficulty of presenting a set of solutions or mapping how South Asia could address the development challenges it faces is understandable. Beyond listing potential technocratic options, a credible analysis of the solution path would need to identify the <i>political economy factors</i> that could potentially enable South Asia to address the challenges listed in Kathuria (<span>2025</span>). Such an analysis would require a different methodology and approach than one adopted by Kathuria. <i>To address the issue Kathuria so aptly placed in the title of his paper, however, requires a political economy lens</i>. Kathuria refers to certain aspects of political economy—for example, the linkage of the state with crony capitalists and business oligarchs—but falls short of presenting the political economy of policy reforms.</p><p>Take the issue of stunting, another issue well documented in the literature. Kathuria correctly suggests that this persistent problem in the region represents a “South Asia Enigma.” Framing the topic in such a bold w","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"52-54"},"PeriodicalIF":4.5,"publicationDate":"2024-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12497","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143111989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Ginting, Razzaque, and Hasan (<span>2025</span>) focus on two areas: first, the critical policy barriers toward export diversification and second, the potential options to overcome such barriers. In doing so Ginting et al. briefly discuss the nature of export concentration in Bangladesh, identify the key policy obstacles for expanding and strengthening the non-readymade garments sector, and suggest a few actionable solutions.</p><p>Ginting et al. have rightly pointed out the impressive development trajectory of Bangladesh during the past few decades which has been manifested through high growth of Gross Domestic Product (GDP), increases in per capita income, and progress in several social indicators. The export-oriented readymade garments (RMG) sector has been an important contributor to the economic transformation of Bangladesh. While the strong growth of the RMG sector has created employment opportunities, especially for women from poor families, and generated a multiplier impact on the economy, this has also led to overreliance on the RMG sector making the economy little diversified.</p><p>Ginting <i>et al</i>. (<span>2025</span>) has significant relevance for Bangladesh in the short and long terms, particularly in the context of its current development landscape. Throughout Ginting <i>et al</i>. (<span>2025</span>), one special circumstance has been highlighted by the author which is the implications of Bangladesh's graduation from the least developed country (LDC) category and measures to tackle the possible ramifications during post-graduation period. The loss of various LDC specific international support measures (ISMs) will put Bangladesh in a disadvantageous situation during the post-graduation period. RMG and other exports from Bangladesh will face competition in the global market due to erosion of tariff preference. Hence, export diversification is critically important for keeping Bangladesh economy stable.</p><p>The diagnosis of the problems in Ginting <i>et al</i>.'s (<span>2025</span>) Section 3 is well-articulated which can be useful menu for the policymakers to expand Bangladesh's export basket. Ginting et al. have identified two sets of policy measures which have helped RMG exports but those have also become important bottlenecks that affected export diversification. These are: (i) global trade policy regime which offered quota support through Multi-Fibre Arrangement (MFA) till 2005; and (ii) domestic export incentives for the RMG sector in the form of back-to-back letters of credit, bonded warehouse facilities, duty drawback facilities, and cash incentives to RMG exporters. But no less important are the structural issues such as the cost of doing business, inadequate infrastructure, and the overall investment climate, which Ginting et al. have alluded to.</p><p>Ginting et al.'s recommendations (Section 4) for export diversification emanate from the discussion of the impediments identified by the authors. Sections 3 and 4 are
{"title":"Comment on “Export Diversification in Bangladesh: Overcoming Policy Impediments”","authors":"Fahmida Khatun","doi":"10.1111/aepr.12498","DOIUrl":"https://doi.org/10.1111/aepr.12498","url":null,"abstract":"<p>Ginting, Razzaque, and Hasan (<span>2025</span>) focus on two areas: first, the critical policy barriers toward export diversification and second, the potential options to overcome such barriers. In doing so Ginting et al. briefly discuss the nature of export concentration in Bangladesh, identify the key policy obstacles for expanding and strengthening the non-readymade garments sector, and suggest a few actionable solutions.</p><p>Ginting et al. have rightly pointed out the impressive development trajectory of Bangladesh during the past few decades which has been manifested through high growth of Gross Domestic Product (GDP), increases in per capita income, and progress in several social indicators. The export-oriented readymade garments (RMG) sector has been an important contributor to the economic transformation of Bangladesh. While the strong growth of the RMG sector has created employment opportunities, especially for women from poor families, and generated a multiplier impact on the economy, this has also led to overreliance on the RMG sector making the economy little diversified.</p><p>Ginting <i>et al</i>. (<span>2025</span>) has significant relevance for Bangladesh in the short and long terms, particularly in the context of its current development landscape. Throughout Ginting <i>et al</i>. (<span>2025</span>), one special circumstance has been highlighted by the author which is the implications of Bangladesh's graduation from the least developed country (LDC) category and measures to tackle the possible ramifications during post-graduation period. The loss of various LDC specific international support measures (ISMs) will put Bangladesh in a disadvantageous situation during the post-graduation period. RMG and other exports from Bangladesh will face competition in the global market due to erosion of tariff preference. Hence, export diversification is critically important for keeping Bangladesh economy stable.</p><p>The diagnosis of the problems in Ginting <i>et al</i>.'s (<span>2025</span>) Section 3 is well-articulated which can be useful menu for the policymakers to expand Bangladesh's export basket. Ginting et al. have identified two sets of policy measures which have helped RMG exports but those have also become important bottlenecks that affected export diversification. These are: (i) global trade policy regime which offered quota support through Multi-Fibre Arrangement (MFA) till 2005; and (ii) domestic export incentives for the RMG sector in the form of back-to-back letters of credit, bonded warehouse facilities, duty drawback facilities, and cash incentives to RMG exporters. But no less important are the structural issues such as the cost of doing business, inadequate infrastructure, and the overall investment climate, which Ginting et al. have alluded to.</p><p>Ginting et al.'s recommendations (Section 4) for export diversification emanate from the discussion of the impediments identified by the authors. Sections 3 and 4 are ","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"79-80"},"PeriodicalIF":4.5,"publicationDate":"2024-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12498","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143121392","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Athukorala (<span>2025</span>) offers a critical examination of Sri Lanka's economic trajectory, tracing its evolution from a period of postindependence optimism to its current situation plagued by a sovereign debt crisis, which has been worsened by the COVID-19 pandemic. Athukorala attributes this crisis to both policy missteps and the pandemic, but also identifies a deeper vulnerability to external shocks, exacerbated by debt-driven development following the civil war. Athukorala argues that significant structural reforms, particularly to address anti-trade biases, are necessary for Sri Lanka to achieve sustainable and inclusive growth. The paper is well-regarded for its insightful analysis and clarity. I find myself in agreement with the majority of Athukorala's points. Nonetheless, in order to refine and enhance the paper further, I plan to provide some suggestions:</p><p>First, while Athukorala provides a detailed historical overview of Sri Lanka's economic trajectory, it could benefit from a deeper analysis of the causal relationships between historical events, policy decisions, and economic outcomes. For instance, rather than solely describing policy shifts, it could consider exploring the underlying factors driving those shifts and their impact on economic performance.</p><p>Second, a Athukorala (<span>2025</span>) argues that a significant shift in policy toward inward-looking policy, which began in the early 2000s, played a critical influence in defining the current economic situation. The period from 2005 to 2014 was notable for its strong economic growth and a fairly stable current account deficit, which marked the high point of Sri Lanka's economic performance. However, the fiscal situation has been a source of concern, particularly the rising debt service-to-tax revenue ratio, which was driven by declining tax revenues. This situation stems from the Sri Lankan government's policy misjudgment, particularly the significant tax cuts that have compromised fiscal sustainability. A crucial question is whether the crisis would have occurred if the Sri Lankan government had not made blunders in fiscal and monetary policies, as well as the occurrence of a pandemic. This question will help us provide information about how to mitigate the economic crisis.</p><p>The critique draws from Indonesia's 1998 economic crisis to question the International Monetary Fund's strategy of applying a broad set of reforms, some of which did not directly address the core issues. Should Sri Lanka's reforms focus on fiscal and monetary aspects in the short term, with structural issues addressed later? This is an extremely crucial question because the government's ability to implement the reform maybe limited. In my opinion, the sequence and priority of these reforms is critical, as attempting to implement a wide range of changes can be overwhelming. Successful big bang reform requires an extensive amount of political capital (Basri, <span>2017</span>). Further
{"title":"Comment on “The Sri Lankan Economy: From Optimism to Debt Trap”","authors":"M. Chatib Basri","doi":"10.1111/aepr.12492","DOIUrl":"https://doi.org/10.1111/aepr.12492","url":null,"abstract":"<p>Athukorala (<span>2025</span>) offers a critical examination of Sri Lanka's economic trajectory, tracing its evolution from a period of postindependence optimism to its current situation plagued by a sovereign debt crisis, which has been worsened by the COVID-19 pandemic. Athukorala attributes this crisis to both policy missteps and the pandemic, but also identifies a deeper vulnerability to external shocks, exacerbated by debt-driven development following the civil war. Athukorala argues that significant structural reforms, particularly to address anti-trade biases, are necessary for Sri Lanka to achieve sustainable and inclusive growth. The paper is well-regarded for its insightful analysis and clarity. I find myself in agreement with the majority of Athukorala's points. Nonetheless, in order to refine and enhance the paper further, I plan to provide some suggestions:</p><p>First, while Athukorala provides a detailed historical overview of Sri Lanka's economic trajectory, it could benefit from a deeper analysis of the causal relationships between historical events, policy decisions, and economic outcomes. For instance, rather than solely describing policy shifts, it could consider exploring the underlying factors driving those shifts and their impact on economic performance.</p><p>Second, a Athukorala (<span>2025</span>) argues that a significant shift in policy toward inward-looking policy, which began in the early 2000s, played a critical influence in defining the current economic situation. The period from 2005 to 2014 was notable for its strong economic growth and a fairly stable current account deficit, which marked the high point of Sri Lanka's economic performance. However, the fiscal situation has been a source of concern, particularly the rising debt service-to-tax revenue ratio, which was driven by declining tax revenues. This situation stems from the Sri Lankan government's policy misjudgment, particularly the significant tax cuts that have compromised fiscal sustainability. A crucial question is whether the crisis would have occurred if the Sri Lankan government had not made blunders in fiscal and monetary policies, as well as the occurrence of a pandemic. This question will help us provide information about how to mitigate the economic crisis.</p><p>The critique draws from Indonesia's 1998 economic crisis to question the International Monetary Fund's strategy of applying a broad set of reforms, some of which did not directly address the core issues. Should Sri Lanka's reforms focus on fiscal and monetary aspects in the short term, with structural issues addressed later? This is an extremely crucial question because the government's ability to implement the reform maybe limited. In my opinion, the sequence and priority of these reforms is critical, as attempting to implement a wide range of changes can be overwhelming. Successful big bang reform requires an extensive amount of political capital (Basri, <span>2017</span>). Further","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"174-175"},"PeriodicalIF":4.5,"publicationDate":"2024-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12492","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143120889","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Ginting <i>et al</i>. (<span>2025</span>) examine Bangladesh's export diversification challenges amidst significant economic growth driven primarily by the Ready-Made Garments (RMG) sector. It underscores the risks associated with over-reliance on RMG exports and the upcoming transition from Least Developed Country (LDC) status. Despite being a top policy priority, efforts to diversify exports face obstacles such as protectionist trade policies, limited tariff liberalization, and currency appreciation. While there is agreement on policy options, implementation is hindered by fiscal constraints and inflation. Ginting <i>et al</i>. advocate for proactive policy reforms, including improving the investment climate, reducing business costs, and attracting foreign direct investment (FDI) to enhance export competitiveness and facilitate the post-LDC transition.</p><p>Ginting <i>et al</i>. emphasize the importance of addressing structural barriers to promote non-RMG exports and highlight the risks of RMG sector dominance and the effects of LDC graduation on export competitiveness. However, they could strengthen their analysis by comparing diversification efforts with successful models like Vietnam and providing a more nuanced examination of potential policy reforms. Moreover, while Ginting <i>et al</i>. acknowledge the need for strategic engagement post-LDC graduation, they could expand on specific strategies and alternative support mechanisms for exporters.</p><p>Beyond highlighting challenges, Ginting <i>et al</i>. could propose actionable solutions to enhance the investment climate, reduce business costs, and facilitate technology transfer to non-RMG sectors.</p><p>Given the imminent LDC graduation, Ginting <i>et al</i>. should explore strategies for a smooth transition and mitigate the adverse effects on export performance. There are several related issues to be addressed. For example, how Bangladesh could proactively engage with trade partners to negotiate extended trade preferences and design alternative support mechanisms for exporters? Are there any lessons from similar other countries to be learned? How to address Bangladesh's infrastructural bottlenecks and enhance its export competitiveness through targeted policy interventions that are crucial to minimize disruptions post-graduation?</p><p>There is a notable lack of high-value-added items in the RMG product portfolio. Bangladesh primarily engages in the production of basic garments, such as t-shirts and basic apparel, which offer limited profit margins compared with value-added products like designer clothing or specialized textiles. This lack of diversification limits Bangladesh's ability to capture higher margins and increases vulnerability to market fluctuations. What should RMG sector do to move itself to high value-added garment exporting sectors?</p><p>The RMG sector in Bangladesh grapples with challenges related to labor rights, workplace safety, and environmental sustainability. Is
{"title":"Comment on “Export Diversification in Bangladesh: Overcoming Policy Impediments”","authors":"Asad Islam","doi":"10.1111/aepr.12495","DOIUrl":"https://doi.org/10.1111/aepr.12495","url":null,"abstract":"<p>Ginting <i>et al</i>. (<span>2025</span>) examine Bangladesh's export diversification challenges amidst significant economic growth driven primarily by the Ready-Made Garments (RMG) sector. It underscores the risks associated with over-reliance on RMG exports and the upcoming transition from Least Developed Country (LDC) status. Despite being a top policy priority, efforts to diversify exports face obstacles such as protectionist trade policies, limited tariff liberalization, and currency appreciation. While there is agreement on policy options, implementation is hindered by fiscal constraints and inflation. Ginting <i>et al</i>. advocate for proactive policy reforms, including improving the investment climate, reducing business costs, and attracting foreign direct investment (FDI) to enhance export competitiveness and facilitate the post-LDC transition.</p><p>Ginting <i>et al</i>. emphasize the importance of addressing structural barriers to promote non-RMG exports and highlight the risks of RMG sector dominance and the effects of LDC graduation on export competitiveness. However, they could strengthen their analysis by comparing diversification efforts with successful models like Vietnam and providing a more nuanced examination of potential policy reforms. Moreover, while Ginting <i>et al</i>. acknowledge the need for strategic engagement post-LDC graduation, they could expand on specific strategies and alternative support mechanisms for exporters.</p><p>Beyond highlighting challenges, Ginting <i>et al</i>. could propose actionable solutions to enhance the investment climate, reduce business costs, and facilitate technology transfer to non-RMG sectors.</p><p>Given the imminent LDC graduation, Ginting <i>et al</i>. should explore strategies for a smooth transition and mitigate the adverse effects on export performance. There are several related issues to be addressed. For example, how Bangladesh could proactively engage with trade partners to negotiate extended trade preferences and design alternative support mechanisms for exporters? Are there any lessons from similar other countries to be learned? How to address Bangladesh's infrastructural bottlenecks and enhance its export competitiveness through targeted policy interventions that are crucial to minimize disruptions post-graduation?</p><p>There is a notable lack of high-value-added items in the RMG product portfolio. Bangladesh primarily engages in the production of basic garments, such as t-shirts and basic apparel, which offer limited profit margins compared with value-added products like designer clothing or specialized textiles. This lack of diversification limits Bangladesh's ability to capture higher margins and increases vulnerability to market fluctuations. What should RMG sector do to move itself to high value-added garment exporting sectors?</p><p>The RMG sector in Bangladesh grapples with challenges related to labor rights, workplace safety, and environmental sustainability. Is","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"76-78"},"PeriodicalIF":4.5,"publicationDate":"2024-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12495","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143116924","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>The Panagariya (<span>2025</span>) paper on India's economy is structured around four key areas: performance, policies, politics, and future prospects. These comments follow the same structure.</p><p>The discussion on India's economic performance in Panagariya (<span>2024</span>) largely revolves around economic growth. However, an alternative periodization of India's economic growth phases since 1951 can offer a different perspective (Datt and Swamy, <span>2024</span>). Particularly notable is the economy's slowdown prior to the COVID-19 pandemic, with growth in Gross Value Added (GVA) declining over seven successive quarters from 7.1% in Q1 2018-19 to 3.4% in Q3 2019-20. Alongside this, private consumption growth and investment also fell, indicating a broader economic slowdown.</p><p>There are also concerns about the accuracy of recent official growth statistics, especially for the post-pandemic period, where the gross domestic product (GDP) deflator's inflation rate seems out of sync with the consumer price index (CPI). The discrepancy suggests that actual economic growth may be slower than reported, a hypothesis supported by sluggish private consumption growth.</p><p>Furthermore, GDP/GVA growth alone is an insufficient metric to assess economic performance. Rising inequality since the 1990s implies that the growth rate for the bottom 50% of the population is well below that of GDP. Real rural wages and earnings for regular and self-employed workers have stagnated or declined, contrasting with the supposed “V-shaped” recovery in GDP/GVA.</p><p>Most of the discussion on economic reforms and political economy in Panagariya (<span>2025</span>) spans the tenures of six prime ministers since the early 1990s, four prominent ones being: P.V. Narasimha Rao, Atal Bihari Vajpayee, Manmohan Singh, and Narendra Modi. In a nutshell, Panagariya gives high credit to Narasimha Rao, a high distinction to Vajpayee, an unsatisfactory grade to Manmohan Singh, and a distinction to Modi though with a slap on the wrist for recent backsliding on trade openness. He also laments the enduring influence of Nehru's socialist policies on current economic policymaking, though judgements may differ on how socialist and enduring this influence has been.</p><p>While there are points of agreement with this analysis, some differences are notable. For instance, Panagariya's unsatisfactory assessment of Manmohan Singh's tenure (2004–14) seems somewhat unfair. While there were missteps, such as the 2012 retroactive amendment to the Income Tax Act, significant progress was made on economic reforms, particularly in the first 7 years. The Right to Education Act (2009) and the Land Acquisition Act (2013) as examples of “backsliding” of reforms seems incorrect.</p><p>Additionally, several reforms enacted in later regimes had their foundations laid earlier. The Goods and Services Tax (GST) and Aadhaar are prime examples. Although initially opposed by the Bharatiya Janata Party (BJP),
{"title":"Comment on “Indian Economy: Performance, Policies, Politics, Prospects and Challenges”","authors":"Gaurav Datt","doi":"10.1111/aepr.12494","DOIUrl":"https://doi.org/10.1111/aepr.12494","url":null,"abstract":"<p>The Panagariya (<span>2025</span>) paper on India's economy is structured around four key areas: performance, policies, politics, and future prospects. These comments follow the same structure.</p><p>The discussion on India's economic performance in Panagariya (<span>2024</span>) largely revolves around economic growth. However, an alternative periodization of India's economic growth phases since 1951 can offer a different perspective (Datt and Swamy, <span>2024</span>). Particularly notable is the economy's slowdown prior to the COVID-19 pandemic, with growth in Gross Value Added (GVA) declining over seven successive quarters from 7.1% in Q1 2018-19 to 3.4% in Q3 2019-20. Alongside this, private consumption growth and investment also fell, indicating a broader economic slowdown.</p><p>There are also concerns about the accuracy of recent official growth statistics, especially for the post-pandemic period, where the gross domestic product (GDP) deflator's inflation rate seems out of sync with the consumer price index (CPI). The discrepancy suggests that actual economic growth may be slower than reported, a hypothesis supported by sluggish private consumption growth.</p><p>Furthermore, GDP/GVA growth alone is an insufficient metric to assess economic performance. Rising inequality since the 1990s implies that the growth rate for the bottom 50% of the population is well below that of GDP. Real rural wages and earnings for regular and self-employed workers have stagnated or declined, contrasting with the supposed “V-shaped” recovery in GDP/GVA.</p><p>Most of the discussion on economic reforms and political economy in Panagariya (<span>2025</span>) spans the tenures of six prime ministers since the early 1990s, four prominent ones being: P.V. Narasimha Rao, Atal Bihari Vajpayee, Manmohan Singh, and Narendra Modi. In a nutshell, Panagariya gives high credit to Narasimha Rao, a high distinction to Vajpayee, an unsatisfactory grade to Manmohan Singh, and a distinction to Modi though with a slap on the wrist for recent backsliding on trade openness. He also laments the enduring influence of Nehru's socialist policies on current economic policymaking, though judgements may differ on how socialist and enduring this influence has been.</p><p>While there are points of agreement with this analysis, some differences are notable. For instance, Panagariya's unsatisfactory assessment of Manmohan Singh's tenure (2004–14) seems somewhat unfair. While there were missteps, such as the 2012 retroactive amendment to the Income Tax Act, significant progress was made on economic reforms, particularly in the first 7 years. The Right to Education Act (2009) and the Land Acquisition Act (2013) as examples of “backsliding” of reforms seems incorrect.</p><p>Additionally, several reforms enacted in later regimes had their foundations laid earlier. The Goods and Services Tax (GST) and Aadhaar are prime examples. Although initially opposed by the Bharatiya Janata Party (BJP), ","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"100-102"},"PeriodicalIF":4.5,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12494","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143115954","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Van der Eng (<span>2025</span>) is a comprehensive and well-argued paper which discusses recent macroeconomic trends as well as structural aspects of Pakistan's growth and development going back six decades. In my comments, I focus only on the structural aspects since these are useful in explaining the country's recurring economic challenges. In some years, of course, exogenous factors, such as exceptional rains and floods in 2022–23, have added fuel to the fire. But the fire itself has been smoldering for a long time.</p><p>van der Eng shows that Pakistan's industrial output, gross investment, public investment, and exports, measured as shares of gross domestic product (GDP), are low relative to middle-income country averages. Many of these rates were higher in earlier years and have declined and stagnated since 1990.</p><p>The flip side of the low investment rate is a high consumption rate which has risen from 70% to 85% of GDP over the last 50 years or so. A high consumption rate implies a low domestic savings rate which underlies a reliance, in turn, on foreign savings. While these have come mostly in the form of concessional debt flows their servicing has, nevertheless, proved difficult. Within total consumption, the share of public consumption has risen. Since 2000, public spending has risen from 15% to 20% of GDP. While this rate is low relative to high- and middle-income economies, it has proven high in relation to revenues. Pakistan has been unable to raise domestic revenues by enough (to match public expenditure levels) to avoid recurrent fiscal deficits in the 5%–7% range. Furthermore, Pakistan's consumption pattern has also featured import-orientation sufficient to generate sustained trade deficits which, in turn, have underpinned recurring balance of payments problems.</p><p>Most analyses of Pakistan's economic challenges converge to these twin deficits. Why have these persisted? Why have they not been resolved even through multiple engagements with Interntaional Monetary Fund (IMF) stabilization programs? van der Eng presents expert views suggesting political economy causes. The country has for long been dominated by an elite (political/business/bureaucratic/military) whose interests have prevailed over considerations of economic efficiency, long-run growth, and distribution. The elite has typically accepted short-term solutions to macroeconomic problems as they have arisen (such as IMF programs) but has resisted deeper structural reforms (in taxation, subsidies, and rents).</p><p>I agree with this assessment. I also believe an additional element could be considered. This element is the Dutch disease impact of foreign aid and remittance inflows. Pakistan has been the recipient of significant flows of foreign aid (including grants for military purposes) since it became a frontline ally of the West in the campaign to oust Soviet forces from Afghanistan after 1979 and to oust al-Qaeda from Afghanistan after 9/11. In addition, since
{"title":"Comment on “Pakistan's Economy: Fallout of 2022 Economic Distress Magnified the Need for Structural Reforms”","authors":"Farrukh Iqbal","doi":"10.1111/aepr.12493","DOIUrl":"10.1111/aepr.12493","url":null,"abstract":"<p>Van der Eng (<span>2025</span>) is a comprehensive and well-argued paper which discusses recent macroeconomic trends as well as structural aspects of Pakistan's growth and development going back six decades. In my comments, I focus only on the structural aspects since these are useful in explaining the country's recurring economic challenges. In some years, of course, exogenous factors, such as exceptional rains and floods in 2022–23, have added fuel to the fire. But the fire itself has been smoldering for a long time.</p><p>van der Eng shows that Pakistan's industrial output, gross investment, public investment, and exports, measured as shares of gross domestic product (GDP), are low relative to middle-income country averages. Many of these rates were higher in earlier years and have declined and stagnated since 1990.</p><p>The flip side of the low investment rate is a high consumption rate which has risen from 70% to 85% of GDP over the last 50 years or so. A high consumption rate implies a low domestic savings rate which underlies a reliance, in turn, on foreign savings. While these have come mostly in the form of concessional debt flows their servicing has, nevertheless, proved difficult. Within total consumption, the share of public consumption has risen. Since 2000, public spending has risen from 15% to 20% of GDP. While this rate is low relative to high- and middle-income economies, it has proven high in relation to revenues. Pakistan has been unable to raise domestic revenues by enough (to match public expenditure levels) to avoid recurrent fiscal deficits in the 5%–7% range. Furthermore, Pakistan's consumption pattern has also featured import-orientation sufficient to generate sustained trade deficits which, in turn, have underpinned recurring balance of payments problems.</p><p>Most analyses of Pakistan's economic challenges converge to these twin deficits. Why have these persisted? Why have they not been resolved even through multiple engagements with Interntaional Monetary Fund (IMF) stabilization programs? van der Eng presents expert views suggesting political economy causes. The country has for long been dominated by an elite (political/business/bureaucratic/military) whose interests have prevailed over considerations of economic efficiency, long-run growth, and distribution. The elite has typically accepted short-term solutions to macroeconomic problems as they have arisen (such as IMF programs) but has resisted deeper structural reforms (in taxation, subsidies, and rents).</p><p>I agree with this assessment. I also believe an additional element could be considered. This element is the Dutch disease impact of foreign aid and remittance inflows. Pakistan has been the recipient of significant flows of foreign aid (including grants for military purposes) since it became a frontline ally of the West in the campaign to oust Soviet forces from Afghanistan after 1979 and to oust al-Qaeda from Afghanistan after 9/11. In addition, since ","PeriodicalId":45430,"journal":{"name":"Asian Economic Policy Review","volume":"20 1","pages":"149-150"},"PeriodicalIF":4.5,"publicationDate":"2024-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/aepr.12493","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142189244","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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