In this chapter, the key findings and arguments of the previous chapters are combined into a synthesis. This ‘institutional diagnostic’ not only provides an account of the most important institutional issues facing Bangladesh but also seeks to identify the complex chains of causality which relate them both to the economic outcomes that they generate and to the proximate causes and deep factors from which they derive. It begins with a summary – firstly of the historical and political context and then of the more specific findings that have emerged from the thematic studies. From this, three basic institutional weaknesses are identified, each of which recur multiple times in the thematic studies – the supremacy of the ‘deals environment’, ineffective regulation, and weak state capacity. In each case, it is explained both how these institutional factors constrain economic development and how they derive from and indeed maintain the political economy context and other deep factors. Some key directions for reform are identified together with a discussion of where the political barriers to implementing them may lie. Some further reflections are made on impact of the COVID-19 pandemic.

This chapter identifies areas where in-depth research can find out institutional challenges that are most critical to Bangladeshs economic development. Two approaches are employed. The first approach uses a variety of institutional measures available in international databases to examine how a country, in this case, Bangladesh, differs from a set of comparators. It is largely based on these indicators that the idea of a Bangladesh paradox was formed: Bangladesh appears as a country with impressive economic growth performance but weak institutional performance. However, there can be some doubt about the reliability of institutional indicators in global rankings. Therefore, the second approach is undertaken where a questionnaire survey of various types of decision-makers and academics is used. The survey respondents identify several institutional weaknesses which include ubiquitous corruption (electoral, business, and recruitment to the civil service); executive control over legal bodies, the media, the judiciary, and the banking sector; inadequate coverage of public services; the number and intensity of land conflicts; and gender discrimination.

This chapter elaborates on the general approach pursued in this volume to identify institutional weaknesses that may be preventing growth in Bangladesh from being faster and more inclusive today and that may cause it to slow down in the future. It also provides a brief overview of the political history of the country, without which it is difficult to understand its development achievement, as well as the present political economy context. Finally, in the light of that historical sketch, some reflections are offered on the specificity of the institutional link between business and politics in Bangladesh, a link that very much frames its development and that are often referred to throughout this volume.

This synthesis aims to put together the different threads pursued throughout this volume and presents our institutional diagnostic. We note as point of departure that Frelimo’s continuing inability to promote agriculture and broad-based private sector growth helps explain why the country lacks a consistent domestic engine of inclusive growth. We also return to the fork in the road. Remaining on the present path would lead to increasing inequality, further regional imbalances, and possibly armed conflict. The alternative is to use the expected gas revenues effectively for poverty reduction. Political power and authority continue to be almost exclusively vested in Frelimo. This stands out as a deep factor in our diagnostic. It takes visionary and brave leaders to take on the necessary reforms. to put the country back on a favourable trend. The uniting capabilities that Frelimo at least once possessed are exactly what is needed now. While one may argue that changes identified here are not necessary for Frelimo’s hold on power, the implications of increasing inequality, fragmentation, and conflict, serve as a strong warning sign and incentive to act in the national interest.

The final chapter first aims to synthesise what has been learned from the previous chapters, emphasising the institutional challenges that have been identified there and identifying the main common factors behind those challenges, as well as the policies and reforms most able to weaken their effects. Most of the identified institutional challenges in theTanzanian economy result from a small number of basic institutional weaknesses, which logically form the core of our final diagnostic. In turn, these weaknesses are shown to be the symptoms of dysfunctional institutions that the diagnostic seeks to identify by delving into the proximate causes of identified weaknesses, and then by investigating the deep political economy factors likely to prevent corrective action. Even though political economy considerations rarely lead to consensual policy reform recommendations, they may point to general principles that may guide the reflection of policy makers, political actors, and civil society when thinking of potential reforms. The concluding pages of the chapter insist that transparency and accountabilty are two of these principles.

The Introduction provides a brief summary of the various approaches to the relationship between institutions and development in the literature, the originality of the institutional diagnostic approach, a presentation of the Institutional Diagnostic Project, and an outline of the volume

This chapter summarises the institutional diagnostic studies in Benin and Mozambique. Benin’s past development performances are modest. A cotton exporter, its activity fluctuated widely due to a continuously changing organisation of the sector. Illegal cross-border trade with neighbouring Nigeria is another major activity. It generates income, but has limited domestic economic impact while raising informality and corruption. The oligarchs who run the two sectors had practically captured the state, pre-empting alternative development strategies. The situation may now have changed with one of them becoming president. Mozambique entered a civil war shortly after gaining independence. When peace was back, in 1992, development was triggered by the recovery from the war period, and the transition to a modern market economy monitored by Western donors. The country has now started exploiting its abundant natural resources (coal, oil, and huge gas fields). This strategy revealed a highly corrupt institutional setting and the neglect of the great mass of population in rural and often isolated areas, despite clear potential comparative advantages in agriculture.