Abstract/Summary

This paper revisits Bangladesh’s ‘double paradox’ – sustained macroeconomic growth despite the poor state of governance and a high level of corruption – by critically reviewing trends in governance and corruption indicators during 1990–2017 vis-à-vis other South Asian countries. In addition, we draw upon data from a purposefully designed survey of manufacturing firms to assess the state of economic governance in the export-oriented ready-made garments (RMG) sector, the country’s main source of foreign exchange and driver of economic growth. Consistent with the country’s poor ranking in a host of indicators of investment climate and corruption perception, in-depth interviews of RMG factory owners confirm the high cost of doing business in various forms. We also find no evidence of growth-mediated improvements in indicators of governance. On the contrary, our review of print media reports suggests a growing governance deficit in the country’s financial sector. We conclude by discussing the implications of our findings for the country’s future growth as well as performance of the RMG sector.