Rapid economic growth is delaying governance reforms and creating risks for future crises, economists said on Friday at the virtual opening session of the South Asian Network on Economic Modeling (SANEM) Annual Economists’ Conference 2026.
Offering an early critique, Centre for Policy Dialogue Chairman Rehman Sobhan said concerns over misgovernance and elite dominance in Bangladesh were long overshadowed by a focus on macroeconomic achievements.
“The tyranny of macroeconomic interpretation has led policymakers and international institutions to ignore the processes and inequalities underlying those outcomes,” said Centre for Policy Dialogue Chairman Rehman Sobhan.
He added that some policy approaches strengthened narrow business interests at the expense of broader institutional development.
Delivering the keynote, Georgetown University Professor of International Development Shantayanan Devarajan said the global economy has shifted from early-century optimism and poverty reduction to slower growth, rising debt distress and political instability.
Global growth is now projected at around 2.5 per cent, among the lowest in decades.
He described the trend as a “cost of denial”, where rapid growth created a false sense of progress and allowed governments and development partners to overlook corruption, weak rule of law and elite capture.
While macroeconomic indicators improved, citizens continued to face governance failures, building frustration that later surfaced in political upheavals such as the Arab Spring, Sri Lanka’s Aragalaya movement and Bangladesh’s 2024 student-led protests.
As poverty declined, a growing middle class demanded better jobs, transparency and political rights, expectations many governments failed to meet.
Regional cases show how growth masked weaknesses.
In the Middle East and North Africa, state-backed job and subsidy systems are weakening under fiscal pressure.
In Sub-Saharan Africa, improved macro indicators drove excessive borrowing without scrutiny, leading to debt distress.
Sri Lanka’s 2022 collapse reflected policy complacency and delayed reforms, while Bangladesh showed signs of institutional fragility before recent unrest.
Adding to the discussion, United Nations University World Institute for Development Economics Research Director Kunal Sen said growth and governance reform cannot be treated separately.
Many developing economies rely on informal “deals” rather than formal rules, which can support early growth but limit sustainability and inclusive development if unreformed.
The discussion also flagged limits of global development models, particularly results-based frameworks prioritising GDP growth and poverty reduction.
While aimed at accountability, these approaches often justified overlooking governance weaknesses, even as digital finance and e-governance face resistance from entrenched interests.
Economists agreed governance reform must be integrated with economic policy.
They said growth periods offer the best window for reform as governments are better placed to manage political and economic costs.
The conference will continue on April 18 and 19 at the BRAC Centre Inn with sessions on macroeconomy, labour markets, climate change, governance and regional trade.
Policymakers, researchers and international experts will discuss responses to global challenges, focusing on Bangladesh’s economic future, sustainability and institutional reform.
