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Southern Voices for Change in the International Aid System Project

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Revisiting Foreign Aid: An Independent Review of Bangladesh's Development (IRBD) 2003

Source: Centre for Policy Dialogue, Bangladesh

The chapters in the thematic part of the Independent Review of Bangladesh’s Development (IRBD) 2003 captures a wide spectrum of issues related to foreign aid situation in Bangladesh which includes political economy of foreign aid, macroeconomic dimensions of foreign aid, role of aid in public investment, utilization of foreign aid, impact of foreign aid, aid and poverty alleviation, and aid and NGOs. The key findings from the chapters are presented below.

Dwelling upon the issue of changing importance of aid in Bangladesh, it was argued that Bangladesh is now evolving from an aid to a trade dependent economy. The fact of growing regional export concentration during the 1990s in the markets of the EU and the USA, with a single product, namely the readymade garments, is now playing a more important role in defining Bangladesh’s foreign policy than its need for aid. In contrast, during the 1980s Bangladesh’s foreign policy was targeted to ensure an uninterrupted flow of foreign aid. Today, Bangladesh’s aid dependence is focused on the international and regional financial institutions. Only a few bilaterals, such as Japan, are largely delinked from Bangladesh’s trade relations whilst remaining an important source of FDI. In contrast, the EU, which is Bangladesh’s principal trading partner, lets its individual members develop their own bilateral aid relation with Bangladesh, whilst their role as an individual aid donor is much less significant.

As a whole the analysis of the issues in the IRBD2003 will provide valuable food for thoughts to all stakeholders in Bangladesh, and will continue to serve as an important reference for policymakers, parliamentarians, DPs, researchers and students, both on the state of the Bangladesh economy and in promoting constructive dialogue on the aid relationship.

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