Are protectionist policies or liberal policies more effective in addressing the power and energy crises in Bangladesh?

Abstract

The ongoing energy crisis persisting into 2024, continues to exacerbate Bangladesh's economic challenges. Despite the adoption of protectionist policies such as nationalization and reliance on domestic resources in the power and energy sector during the 1970s, there has been a predominant trend towards liberalization over the past decades. Bangladesh embraced liberal policies including foreign investment in gas extraction, private sector involvement in the power sector, and the decentralization of production, transmission, and distribution activities of the Bangladesh Power Development Board. Faced with the energy crisis in the early 2020s, the pivotal question arises: which policy approach is more effective in addressing power and energy crises for a technology-dependent and low-capital country like Bangladesh? Through a comprehensive review of energy policy spanning the last 50 years, this article analyzes the features and outcomes of historical energy policies. It argues that while protectionist measures were previously employed to address crises, the gradual liberalization over the past half-century has exacerbated them. This historical analysis underscores why protectionist policies adopted in the past are more effective in ensuring energy security compared to current liberal policies.