Privatization in Bangladesh: The Emergence of 'Family Capitalism'

Abstract

The programme of state enterprise privatization pursued by the government of Bangladesh since 1975 largely under the influence and financial conditions of the aid agencies has been subject to widespread debate. In 1991 at the suggestion of the World Bank the government of Bangladesh formed the Privatization Board to ensure better outcomes of privatization. This article investigates whether firms privatized under the auspices of the Privatization Board up to 1996 were adding to the nations economic growth or--as critics claimed -- to individual families pockets. More specifically it examines whether enterprises privatized in 1991-6 reversed previous losses and introduced better management controls leading to increased investment productivity and overall organizational effectiveness and efficiency. The major findings are not supportive of privatization policy indicating that the performance of privatized enterprises has not improved significantly. Without denying the economic problems of Bangladeshs public enterprises past and present this article questions the performance of privatized companies in terms of their declining profitability and productivity; employment conditions and trade union and individual rights; altered distributions of value added in absolute and relative terms; and serious lack of financial transparency and accountability. (authors)