A newly elected government assuming office with a mandate to create jobs and control prices must immediately confront a fundamental truth: the economy is not a collection of isolated sectors but a single, dynamic, and interconnected system. To govern effectively is to understand this system—to recognize that a policy decision in one domain inevitably ripples through the others, creating consequences that can either amplify or undermine the original intent. This understanding begins with the four foundational pillars of the economy: fiscal, monetary, domestic, and international. These pillars form the structural framework within which all economic activity occurs, and their continuous interaction—the “nexus”—determines whether a nation can achieve its goals of stable prices and meaningful employment.The formation of a new government in Bangladesh presents a critical opportunity to steer the national economy. To navigate this transition successfully, the administration must focus on its dual mandate: creating jobs and controlling prices. Achieving this requires appointing leaders with the right blend of academic rigor, practical experience, and institutional credibility, particularly for the roles of Finance Minister and good staffing of Governor of Bangladesh Bank.The appointment of a capable Finance Minister is paramount. Professor Dr. Mahbubullah is proposed as an ideal candidate whose unique qualifications align perfectly with the government’s core priorities.Economic Expertise: As a former Professor of Economics at the University of Chittagong, and Development studies of the University of Dhaka, he ensures fiscal decisions are grounded in sound economic principles, not short-term political expediency.
Development Strategy: His tenure as a Professor of Development Studies at Dhaka University equipped him to translate theory into actionable strategies for poverty alleviation and sustainable growth.Administrative Leadership: His experience as a Vice-Chancellor demonstrates the executive capacity to manage large institutions and coordinate complex policy implementation.Financial Governance: His role as a former Bank Chairman provides a rare, practical understanding of monetary policy, credit flow, and the financial sector, essential for designing policies that foster job creation while maintaining price stability.
Dr. Mahbubulallah’s profile ensures that economic policy will be evaluated not just by aggregate growth, but by its impact on employment and the living standards of ordinary citizens.The government’s focus on jobs and prices cannot succeed without monetary discipline. This requires a Bangladesh Bank Governor who combines deep expertise in both financial and monetary economics, with experience grounded in Bangladesh’s unique institutional context.
The Governor must balance price stability with growth. This requires sophisticated judgment, as excessive tightening chokes job creation, while excessive accommodation ignites inflation. Beyond monetary policy, the Governor oversees the banking sector. Expertise in financial economics is needed to calibrate regulations that protect the system without constricting credit to job-creating enterprises, especially SMEs.
Bangladesh-Grounded Experience Economist : A Governor with local experience possesses irreplaceable contextual intelligence about how policy transmits through Bangladesh’s specific financial structures, and the relationship capital needed for effective coordination with the Finance Ministry and commercial banks.
The ideal candidate synthesizes microstructural insights with macroeconomic frameworks, understanding how banking supervision affects monetary policy and how monetary policy influences financial stability.A Governor with this rare combination of competencies can support price stability through credible policy, facilitate job creation by ensuring credit flows to productive sectors, and maintain the financial stability that underpins both objectives.
The fiscal economy is the domain of the government’s own budget, administered by the Ministry of Finance. It encompasses two fundamental activities: taxation (revenue collection) and government spending (expenditure allocation). Fiscal policy serves as the primary instrument for long-term strategic investment. Through the national budget, the government decides how much to invest in infrastructure, education, healthcare, and social safety nets. These decisions shape the productive capacity of the nation for decades to come.
The monetary economy is the domain of the central bank—in Bangladesh, this is Bangladesh Bank. It concerns the management of the money supply, interest rates, inflation, and the stability of the banking system. Unlike fiscal policy, which is often oriented toward long-term structural goals, monetary policy is the primary tool for short-term macroeconomic stabilization.
The domestic economy is the real economy of production, consumption, and investment within Bangladesh’s geographical borders. It is the arena where the abstract goals of policy manifest as tangible outcomes for citizens. The domestic economy comprises several interconnected components:
The Real Sector: This includes agriculture, manufacturing (particularly the ready-made garment sector), and services. These are the activities that produce goods and generate employment.
Households: Their consumption patterns determine aggregate demand, and their labor supply decisions determine the workforce available for production.
Firms: Their investment choices, production levels, and hiring decisions translate policy signals into economic reality.
The health of the domestic economy is the ultimate measure of policy success. It is where jobs are created or destroyed, where prices are determined by the interaction of supply and demand, and where the lived experience of economic life unfolds for ordinary Bangladeshis. The international economy encompasses all economic transactions that cross Bangladesh’s borders. These include:
The export of goods (predominantly ready-made garments) and the import of essentials such as food grains, fuel, and capital machinery. Remittances sent home by overseas workers, foreign direct investment (FDI), foreign loans, and portfolio investment in financial markets.
The value of the Bangladesh Taka (BDT) against other currencies, which determines the relative price of exports and imports.
Bangladesh is a small, open economy, deeply integrated into global markets. This integration brings opportunities—access to foreign capital, technology, and markets for exports—but also profound vulnerabilities. Shifts in global financial conditions can trigger capital outflows and pressure the exchange rate.
The “nexus” refers to the continuous, dynamic interaction between these four pillars. They are not separate silos but a unified system, much like interconnected tanks where a change in the water level of one immediately affects all others. Understanding these connections is essential for coherent governance.
When the government runs a large fiscal deficit and finances it by borrowing from the banking system, it can “crowd out” private sector access to credit. This reduces the funds available for private investment and job creation. Furthermore, excessive government spending can generate inflationary pressures. The central bank may then be forced to raise interest rates to contain inflation, which further slows the domestic economy. Conversely, when fiscal and monetary authorities coordinate effectively, their combined power is formidable.
A surge in global oil prices immediately increases transportation and production costs throughout Bangladesh. This cost-push inflation raises the prices of essential goods, erodes household purchasing power, and can reduce the profitability of local firms, potentially leading to layoffs or hiring freezes. Similarly, a depreciation of the Bangladesh Taka against the US dollar has dual effects: it makes Bangladeshi exports more competitive in global markets (benefiting the RMG sector), but it simultaneously makes all imports more expensive, fueling domestic inflation. The exchange rate thus serves as a critical transmission mechanism between the international and domestic economies.
Consider a shock emanating from the international economy. Rising interest rates in the United States or Europe can trigger capital outflows from emerging markets like Bangladesh as investors seek higher returns elsewhere. This capital outflow pressures the Taka to depreciate. To defend the currency and prevent a full-blown balance of payments crisis, Bangladesh Bank may need to intervene by selling foreign exchange reserves or raising domestic interest rates. Higher interest rates cool domestic economic activity, potentially reducing investment and job creation. Slower economic growth, in turn, reduces government tax revenue, widening the fiscal deficit and putting pressure on the Ministry of Finance. The cycle is continuous and self-reinforcing.
This interconnected nexus provides the most compelling argument for why Bangladesh must strategically ensure that its key products and industries remain under national control. “Control” in this context does not mean autarky—the foolish and impossible goal of complete economic isolation. Rather, it means ensuring that the strategic command, value addition, and regulatory oversight of critical sectors reside in Bangladeshi hands. This is a matter of economic sovereignty: the ability to pursue national goals—jobs and price stability—without being held hostage by decisions made in foreign boardrooms or by foreign governments.
The government’s focus on jobs and prices is directly threatened when key sectors fall under foreign control. The nexus argument illuminates why.
If the import, storage, and distribution of essential commodities—food grains, fuel, fertilizer—are controlled by a handful of multinational corporations, Bangladesh becomes a price-taker with no influence over its own destiny. A decision made in a corporate headquarters abroad to raise prices, driven by that corporation’s global supply chain issues or profit targets, immediately translates into domestic inflation. The government’s ability to control prices, a core mandate, is severely undermined. The solution is Bangladeshi control over strategic reserves, import logistics, and distribution networks. By maintaining national capacity in these areas—through publicly-owned enterprises or Bangladeshi private companies—the government creates a buffer. It can smooth supply and stabilize prices during international shocks, directly protecting domestic consumers.
Foreign-owned banks and multinational corporations operate according to global strategies that may not align with Bangladesh’s national development priorities. During a crisis, foreign banks may pull capital out to strengthen their parent companies’ balance sheets elsewhere, exacerbating a foreign exchange crisis. More fundamentally, they may be unwilling to lend to risky but vital domestic small and medium enterprises (SMEs), which are the primary engine of job creation in Bangladesh. A domestically-controlled banking sector, supervised by a strong and independent Bangladesh Bank, is far more likely to align its lending with national priorities.
When a key industry—whether a nascent technology sector or a specialized agricultural processing industry—is dominated by a foreign entity, the highest-value activities often remain overseas. Management, research and development, strategic decision-making, and the associated high-paying jobs are concentrated in the multinational’s home country. Bangladesh is left with low-wage, low-skill roles in the production chain. Moreover, profits are repatriated abroad rather than reinvested in the local economy. Fostering and protecting Bangladeshi-owned enterprises in strategic sectors ensures that the multiplier effect of economic activity stays within the country. Profits are more likely to be reinvested locally, creating a virtuous cycle of more jobs, more sophisticated skills, and more dynamic economic activity. This aligns directly with the policy emphasis on “productive entrepreneurship.”
A vibrant and dominant Bangladeshi corporate sector is easier to tax effectively. When companies are headquartered in Bangladesh, with their primary operations and decision-makers here, tax avoidance becomes more difficult and less socially acceptable. A strengthened fiscal base gives the government more resources to invest in the infrastructure, education, and human capital that underpin long-term inclusive growth.
For the newly elected government, the call for Bangladeshi control over Bangladeshi products is not an ideological commitment to protectionism. It is a pragmatic strategy derived from a clear understanding of the monetary-fiscal-domestic-international nexus. By ensuring national control over strategic sectors—from banking and finance to essential commodity distribution to key industries—the government strengthens its own policy levers. It insulates the domestic economy from external shocks, protects monetary policy from being undermined by the actions of foreign entities, and secures the fiscal resources needed to invest in its people.
Professor Dr. Muhammad Mahboob Ali
teaches Economics in Bangladesh
University of Business and
Technology (BUBT), Dhaka.
