Public finances

A weak revenue base is a symptom of the absence of development and the limited administrative capacity of the state. It also directly constrains the government's developmental activity and its contribution to domestic savings. Not surprisingly, Bangladesh has an unusually low revenue-to-GDP ratio, below that of other low-income African countries including Myanmar (table 9). The share of revenues has been rising since the mid- 1980s, but slowly. The ratio of 9.6 percent achieved in 1991 was below the 14.3 percent achieved by India, and about half that of Pakistan.

Each of these variables adds to the story of resource availability in Bangladesh. Undoubtedly, the country's low per capita income has stymied capital accumulation. Still Bangladesh has done much worse than other low-income countries in the region and in Africa. Despite having an abundance of cheap labor, it has attracted little foreign capital. And despite the attempts made by the government, aided by the donor community, the government's capacity to increase revenues has remained weak.