Social and development impact bonds by the numbers
Since 2014, Brookings has developed and maintained a comprehensive database on the global impact bonds market. The below data represents a snapshot from that database updated each month.
For further Brookings research on impact bonds, visit our Impact Bonds Project page.
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Tracking an education initiative’s integration into government: An institutionalization tool for scaling
While there are many different pathways to scaling and sustaining the impact of a development initiative, the reality is that in the education sector, delivering at scale over the long term is very often not possible without government in the lead. When an NGO, social enterprise, or donor develops and implements the initiative first, the scaling strategy must center around the gradual transition to government ownership, delivery, and financing—assuring quality and impact are maintained.
This type of scaling—called institutionalization, vertical scaling, or mainstreaming—is the process by which an initiative becomes embedded within the formal education system and is led and sustained by the government. The ultimate goal is that the initiative becomes part of the government’s policies, plans, procedures, budgets, and daily activities—effectively “disappearing” into the broader system.
Tracking institutionalization in Real-time Scaling Labs
One example of this type of scaling pathway can be seen in the Real-time Scaling Lab in Côte d’Ivoire, where the scaling goal is not only to reach 100 percent of students in grades 3-6 with the Teaching at the Right Level or “PEC” targeted literacy and numeracy approach, but also to institutionalize and sustain PEC delivery fully within the education system, such that it is wholly integrated into the Ministry of National Education’s own processes and plans. The Ministry currently implements PEC directly in 1,000 public schools and is in the process of infusing all aspects of delivery throughout the education system, including incorporating data collection and mentoring activities into existing processes and planning to incorporate PEC training into teacher training colleges’ curricula.
Another example can be seen in the Real-time Scaling Lab in Jordan, where the Ministry of Education, in collaboration with the Central Bank of Jordan, has been gradually mainstreaming a financial education course developed by the social enterprise INJAZ in all public, private, and refugee secondary schools over a seven-year period. The end goal is for all program elements to be transferred fully to the government by 2023. Throughout the process of institutionalization, INJAZ has been playing a key role supporting the Ministry in areas such as curriculum revision, teacher training, and monitoring and evaluation of program outcomes.
Through the Real-time Scaling Labs, CUE has witnessed the need for more practical, education-specific guidance on how to track the progress of vertical scaling and prioritize next steps.
Using the tracker
While the end goal for institutionalization may be clear, assessing progress toward achieving it can be less straightforward. Identifying the various elements of the education system to track headway and roadblocks faced in each of these areas can be challenging. Further, it is not always evident what concrete actions need to be taken to advance the institutionalization process and how to prioritize among them. Through the Real-time Scaling Labs, the Center for Universal Education (CUE) has witnessed the need for more practical, education-specific guidance on how to track the progress of vertical scaling and prioritize next steps.
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To support policymakers, practitioners, and funders engaged in this process, CUE has developed the “Institutionalization Tracker,” a tool to measure the progress of efforts to integrate an initiative into the education system and identify areas that require additional attention to strengthen institutionalization. As noted in the tool directions and demonstrated by the graph below (Figure 1), the tool is organized by education system building blocks, each of which is broken down into specific elements. For each element, there is a set of criteria to consider when assigning a score, and a column for providing an explanation for the score selected. The score is based on a scale of 1–4, with 1 meaning “low institutionalization,” and 4 meaning “full institutionalization.” This tool measures the progress of institutionalization efforts related to one government agency or ministry, specifically the ministry of education. The tool is designed to track progress toward national-level institutionalization, but in a decentralized system it can instead track institutionalization for the appropriate subnational education authorities. Notably, the tool is not meant to determine if an initiative should scale, or to assess the strength of an education system, and it does not track other important aspects of scaling such as impact and quality, and so ideally it should be complemented with other scaling metrics. It is important that stakeholders use the tool as part of a collaborative effort not only once, but as a dynamic planning tool—repeated at intervals to assess progress and determine next steps.
Figure 1. Sample radar graph
Source: CUE “Institutionalization Tracker,” 2021.Note: This radar graph visually depicts a sample of two rounds of results from the tracker and can help determine priority actions.
The Institutionalization Tracker can be adapted to the specific needs of the intervention and context where it is used and can be extended to include further dimensions not currently explicitly identified, such as the structure and dynamics of costs that need to be covered by the public budget. This tracker is one in a suite of tools developed and tested by CUE, each of which supports different aspects of the scaling process and works in synergy. While the tracker can certainly be used on its own, we recommend that this tool inform the refinement of a broader scaling strategy and be used in conjunction with a resource such as CUE’s “Scaling Strategy Worksheet.”
The Institutionalization Tracker has been piloted in several of the Real-time Scaling Labs to date and has been directly informed by the work and input of our partners. We welcome readers’ questions, feedback, and reflections to inform future editions.
Leveraging digital technology during the pandemic
During COVID-19, firms experienced unprecedented shocks. Their supply chains were disrupted as were their relationships with customers and workers; demand plummeted, as no one knew what would happen next. The dual shocks pushed firms to look for new ways to stay afloat and navigate their businesses. But in some cases, the crisis became an opportunity for innovative businesses, especially those that increased the adoption of digital technologies. How widespread was the innovation? Will it be enough to foster a productivity-driven recovery?
An initial analysis of novel data collected between April 2020 and January 2021 from Bulgaria, Poland, and Romania, suggests that the pandemic triggered some innovation. Still, it was limited to low-hanging fruits and varied depending on firm size and previous technology investments. A mix of financial constraints and managerial capacities likely limited deeper and more widespread innovation in firms.
COVID-19 lockdowns, workforce restrictions, and limited access to inputs (60 percent of firms reported problems obtaining inputs) reduced firm productivity and supply capacity. At the same time, demand slumped or shifted toward new products and services. These shocks were compounded by unprecedented uncertainty about the virus, the extent and duration of public policy responses, and future outlooks. These channels affected firms and sectors differently and in a manner that required businesses to adopt novel solutions or risk going out of business.
Firms needed a moment, but they did react. Initially (April-August 2020), most firms (more than 60 percent on average) did not implement any adjustments to the way they carried out their business. However, the share of firms that adopted some innovation steadily increased over time. By the end of January 2021, close to 60 percent of firms had either expanded the use of or invested in new digital technology, or introduced product innovation (Figure 1).
The challenges from the pandemic were multifaceted—from the disruption in the availability of inputs to the need to guarantee safe working conditions for workers or recreate broken relationships with customers—and so were the firms’ adjustments. Some firms reorganized production and distribution processes (process innovation, like takeaway and delivery in the hospitality industry). Others revamped their products to meet the customers’ needs (product innovation). We find that while both types of innovation were common to all three countries, on average, process innovation occurred more frequently than product innovation.
Firms’ responses were much more nuanced and complex than what the aggregate numbers suggest. Among the firms that did not increase their digital technologies usage, a minority (9 percent) did not use ICT (information and communication technologies) before COVID-19 and did not start using them during the crisis. Similarly, there were businesses that were already using ICT and did not increase usage during the crisis (55 percent). By the end of the second wave, about 90 percent of firms were using digital technologies for their business and almost one-third of firms had either started using or increased their use during the pandemic (Figure 2).
A higher intensity in the use of digital technologies could already contribute to a faster recovery. It could induce productivity gains and reduce the persistent productivity gap previously found between European and U.S. firms. However, digital technologies are complex and heterogeneous and can affect the opportunities of growth and convergence across different firms and local economic contexts unevenly.
For digitization to spur a productivity-driven recovery, it must concentrate on business functions with the highest potential to spur upgrade and firm growth (according to recent World Bank research). In these three countries, we find that digitization has concentrated in business functions such as marketing, sales, and business administration (Figure 3), which can be considered low-hanging fruits with less potential for spurring productivity at the firm level. So far, digitization is making very limited inroads in areas such as production and supply chain management, which require complex organizational changes.
More opportunities await firms with the possibility of expanding and incorporating digital technologies toward optimizing production capacity and more efficient supplier management. Given these findings, in our next blog, we will address the question of what could be preventing firms from expanding the use of digital technologies.
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South Africa after COVID-19—light at the end of a very long tunnel
In this time of crisis, we are often reminded of a famous quote attributed to Winston Churchill during World War II: “If you’re going through hell, keep going.” While South Africa is not in the middle of a physical war, it is battling the COVID-19 crisis in full force. Like most other countries, South Africa could not escape the pandemic. It suffered the loss of lives and livelihoods. At the time of writing, in early July 2021, more than 64,000 South Africans have lost their lives. The third wave is hitting the country very hard and infections keep rising every day. But there is also light at the end of a very long tunnel.
The government responded swiftly and strongly to the crisis while also spearheading an international alliance for the distribution of vaccines in Africa. If the South African government would carry out with the same determination long-standing economic reform as it was fighting the pandemic, COVID-19 could serve as a turning point in reenergizing South Africa’s economy and labor market. While South Africa is set to emerge from the crisis weaker than it was going into it, the World Bank’s South Africa Economic Update argues that the reasons for low growth and high unemployment do not lie in the government’s crisis response. Instead, the pandemic has exposed long-standing structural weaknesses that have progressively worsened since the global financial crisis of 2008–09.
For 2021, the World Bank projects a gross domestic product (GDP) growth of 4 percent, followed by 2.1 percent in 2022 and 1.5 percent in 2023. South Africa’s weak recovery is putting pressure on public finance. For the first time ever, public debt is now at almost 80 percent of GDP and under the current trajectory debt levels will not stabilize before 2026. However, the current global recovery is helping South Africa, especially the strong rebound in China and the United States—two of its key trading partners. As other emerging markets are recovering faster, South Africa’s economy could have benefited more in 2021 if integration with the rest of the world was stronger (Figure 1).
Figure 1. South Africa’s contraction in 2020 was deep, and recovery in 2021 will be moderate
The crisis has exposed South Africa’s biggest challenge: its job market. Even in the best of times, the labor market has been marked by high levels of unemployment and inactivity. Out of a working-age population of almost 40 million people, only 15 million South Africans are employed, which includes 3 million jobs in the public sector. The COVID-19 crisis has made a difficult situation worse because low-wage workers suffered almost four times more job losses than high-wage workers. In 2021, we saw a modest job recovery, but it is at risk due to the third wave.
Against the odds, there are also positive developments in the labor market, and young entrepreneurs are one of South Africa’s best hopes to solve the jobs crisis. There are an increasing number of startups, especially in the digital sector, which are growing fast and could in the future become an engine of jobs growth. Cape Town alone, the “tech capital of Africa”, has over 450 tech firms and employs more than 40,000 people. In 2020, a total of $88 million (1.2 billion rand) disclosed investments went into its tech startups.
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A focus on young entrepreneurs would also help South Africa to close its large gap in self-employment (own-account workers with own businesses, freelancers), which represents only 10 percent of all jobs—compared to around 30 percent in most upper-middle-income economies such as Turkey, Mexico, or Brazil (Figure 2). If South Africa were to match the self-employment rate of its peers, it could potentially halve its unemployment rates.
Figure 2. Self-employment—South Africa’s biggest opportunity to create jobs
South Africa’s economy would benefit from measures to preserve macroeconomic stability, to revitalize the jobs market by improving the investment climate to build a better and more inclusive economy after the pandemic. There is a risk that the recovery leaves behind most of the potential economically active population, particularly young job seekers, which would mean that the pandemic permanently impaired the country’s long-term development prospects. Conversely, if South Africa were to engineer a broad-based recovery, this decade could bring new prosperity.
Addressing structural constraints to growth behind and at the border could support exports and higher growth, and so preserve the sustainability of public finances. The experience of major emerging economies shows that the two most potent factors for reducing public debt-to-GDP ratios are economic growth and primary surpluses. The implied priorities are self-evident: a better climate for investment and trade, and prudent fiscal policy.
To generate employment, South Africa would have to address three chronic problems in its labor market: extremely high rates of inactivity, high rates of unemployment, and low levels of self-employment. Along with enacting carefully chosen regulations to improve the business climate and investing in the workforce through better education, the government can implement reforms to encourage self-employment and support the growth of micro- and small enterprises.
Argentina: Mercosur, in intensive care
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Do Households Expect Inflation When Commodities Surge?
Reuven Glick, Noah Kouchekinia, Sylvain Leduc, and Zheng Liu
COVID-19 and poverty’s impact on electricity access in sub-Saharan Africa
On June 14, the United Nations released its 2021 Sustainable Development Goals (SDG) Report, which examines the world’s progress toward accomplishing the SDGs. The most recent edition placed special emphasis on the COVID-19 pandemic given its role in reversing many SDG gains. More specifically, the authors note that years or even decades of progress have been halted or reversed due to the pandemic.
For example, countries have made major progress relating to SDG 7—ensure access to affordable, reliable sustainable and modern energy for all. While the electricity sector has increased and renewable energy has improved, millions of people still find themselves without power and many major improvements are under threat. While 46 percent of sub-Saharan Africa’s population now has access to electricity—up from 33 percent in 2010—the region is far behind the global average of 90 percent (Figure 1). Indeed, 97 million people in urban areas and 471 million in rural areas are still without access to electricity.
Figure 1. Proportion of population with access to electricity, 2010 and 2019 (percentage)
Source: The Sustainable Development Goals Report 2021, United Nations.
Moreover, according to United Nations Department of Economic and Social Affairs Statistics Division, the COVID-19 pandemic could reverse progress in some countries. In fact, in developing countries in Africa, the number of people without electricity increased in 2020 (after declining over the past six years) and basic electricity services are now unaffordable. Moreover, the cost of electricity services in sub-Saharan Africa remains among the highest in the world—and those who can afford electricity often face unreliable service. As poverty levels increase., countries will be forced to scale back to basic electricity access because citizens will not be able to afford formal electricity bundles.
These persistent gaps in access to energy are also colliding with the increasing threat of climate change, forcing policymakers to navigate a complex, difficult policy environment. As such, many countries are looking to increase their reliance on renewable energy sources. However, least-developed countries receive only a small amount of international financing for renewable energy. In fact, that number is decreasing: In 2018, financial flows to developing countries for climate change and renewable energy were 35 percent lower than in 2017 (Figure 2).
Figure 2. International financial flows to developing countries in support of clean and renewable energy by type of technology, 2010-2018 (billions of dollars at 2018 prices and exchange rates)
Source: The Sustainable Development Goals Report 2021, United Nations.
According to the report, countries with the lowest levels of electricity access tend to be least-developed countries, which are largely found in sub-Saharan Africa, and these same countries receive far less energy funding than the global average. Moreover, not only did financial flows for such projects decrease overall in recent years, the financing that was given tended to be concentrated in specific countries. For example, 46 of the least-developed countries combined together received only 20 percent of commitments over this time while Nigeria, Turkey, Pakistan, India, and Argentina combined for 30 percent.
Experts maintain that increasing electricity access will have knock-on effects in terms of economic growth and overall well-being. Indeed, lack of access to electricity severely limits adoption of emerging and potentially transformative technologies in sectors such as banking, education, agriculture, and finance that could otherwise alleviate some of the core challenges facing Africans, such as low productive employment opportunities and limited health care.
For more on electricity access in sub-Saharan Africa see, “Figure of the week: Increasing access to electricity in sub-Saharan Africa.” For more on the debate around the role of the SDGs in Africa, see “The SDG’s are our compass for bolstering Africa’s long-term COVID recovery” and the opposing viewpoint, “Africa faces a hard choice on the SDGs under COVID-19.”
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Africa in the news: COVID-19 spreads, Jacob Zuma sentenced, and climate change mitigation efforts enhanced
COVID-19 cases continue to rise while countries double down on expanding vaccine capacity
Reported COVID-19 cases continue to surge in Africa, increasing by almost 200 percent from June to July and surpassing the region’s second-wave peak at the beginning of this year. Countries like Rwanda, Kenya, and Uganda have reported the presence of the Delta variant, which is becoming the most dominant strain of the virus. As of July 7, the positivity rate in Rwanda stands at 9.6 percent, with 16 reported deaths that day—the highest number since March 2020. South Africa has been hit hardest and contains nearly a third of Africa’s current active cases. The recent outbreak has led to “level four” containment measures announced by South African President Cyril Ramaphosa in late June that include an extended curfew, no social gatherings, and no leisure travel in densely populated regions.
Other African countries are quickly looking to implement new measures to mitigate the spread. For example, this week Uganda introduced a plan to spend $1.1 billion to vaccinate 22 million citizens, nearly half of its population, before reopening the economy and is set to purchase 2 million Johnson and Johnson vaccines. Kenya has also set an ambitious vaccination plan that targets 26 million of its citizens to be fully vaccinated by the end of June next year and has just been approved for a $31.1 million grant from the Global Fund to support their efforts. Meanwhile, current vaccination rates remain stagnant with approximately 1 percent of African citizens fully vaccinated and 2.5 percent having received their first dose according to the Africa Centers for Disease Control and Prevention (Africa CDC). African politicians like Ugandan President Yoweri Museveni view an overreliance on vaccine imports from North America, Europe, and Asia as part of the issue and have pushed for local production facilities.
Indeed, local capacity building for fighting the virus is on the rise. In addition to recent announcements of future vaccine manufacturing facilities, training has begun across 12 African Union member states on SARS-CoV-2 sequencing that is aimed to provide rapid and representative data on the variations of the virus. The Africa CDC has also launched a campaign with media groups to encourage people to continue practicing preventative measures like wearing masks, washing hands, and social distancing.
Former South African President Zuma handed prison sentence
On Wednesday, former South African President Jacob Zuma turned himself in to local authorities to begin serving his 15-month prison sentence, the result of a ruling by the nation’s Constitutional Court that held Zuma in contempt of court for not complying with its instructions to produce evidence in his high-level corruption case. Zuma’s case before South Africa’s highest court stems from two corruption charges related to his time in office. The first alleges that Zuma, while president, illegally conspired with several wealthy businessmen. A separate corruption charge relates to a $5 billion arms deal with Thales, a French defense firm, while Zuma was deputy president in 1999. Zuma denies these allegations, describing them as a “politically motivated witch-hunt.” The former president’s legal defense has appealed the Constitutional Court to repeal his sentence, which will be heard on July 12, 2021, although Zuma will be eligible for parole after four months.
More climate financing for Africa and tree growth in Uganda
This week, BlackRock Inc, the world’s biggest asset manager, announced it has raised over $250 million out of a targeted $500 million for its climate financing fund since its inception in September of 2018. This fund, called Climate Finance Partnership, was created to invest in select countries in Africa, Asia, and Latin America to aid in renewable power generation, energy strorage solutions, and electrified transportation services. The Climate Financing Partnership is composed of 10 investors including France, Germany, and Japan. This investment is timely as the U.N. Sustainable Development Report 2021 recently highlighted the need for substantial investment and international financing for renewable energy in the developing world. Moreover, according to Bloomberg, with energy demand in emerging markets on target to double by 2050, the world continues to require significant capital for improving climate infrastructure, such as renewable power, to help reduce carbon emissions, especially in less developed regions.
In other climate news, new data released by Uganda’s state-run National Forestry Authority (NFA) in May showed that the proportion of the country covered by trees rose from 9 percent in 2015 to 12.4 percent in 2017. Reuters reported on Thursday that by helping people grow their own trees to cut down instead of clearing valuable rainforest, Uganda has found a way to reverse deforestation. In Uganda, tree loss exacerbates disastrous weather patterns in the country, resulting in more than 700,000 Ugandans living near water sources being displaced due to unusually severe flooding from heavy rain. The goal of the NFA is to have 24 percent of Uganda’s territory covered with trees by 2040.
Bangladesh’s remarkable development journey: Government had an important role too
This year, as Bangladesh celebrates the 50th anniversary of its independence, a plethora of writings have tried to explain its remarkable transformation from a country known for famines and natural disasters to one of the fastest-growing economies in the world. The narratives repeat the same themes, i.e., Bangladesh’s impressive performance on several social indicators, the success of its garment exports, remittances by migrant workers, the spread of microfinance, and the remarkable role of NGOs.
Lost in these narratives is the important role of government. In some writings, government is the villain—the impressive performance of Bangladesh is said to have happened “despite the government.” Those who do mention government, say government helped development by staying out of the way, by granting NGOs the space to deliver social services long considered the responsibility of government.
Government has been a major player in the development journey of Bangladesh since independence in 1971.
But government has been a major player in the development journey of Bangladesh since independence in 1971. By ignoring this perspective, most narratives on Bangladesh have missed an opportunity to demonstrate how a government, weak in many respects, can nonetheless make strategic contributions to development over a prolonged period.
Take, for example, the government’s investment in rural road construction in the late 1980s and the 1990s. By the mid-1980s, the country had a good network of roads linking the medium-sized cities to the larger ones, including the capital Dhaka and the major port city, Chittagong. However, rural Bangladesh suffered from poor connectivity. Most roads linking the villages with one another, and with the cities, were not paved and not accessible throughout the year. This situation was remarkably transformed within a span of 10 years, from 1988 to 1997, with the construction of the so-called feeder roads. In 1988, Bangladesh had about 3,000 kilometers of feeder roads. By 1997, this network expanded to 15,500 kilometers. These “last-mile” all-weather roads helped connect the villages of Bangladesh to the rest of the country.
The origins of this transformative road construction program may be traced to a 1984 paper by the Bangladesh Planning Commission. The paper, “Strategy for Rural Development Projects,” took a hard look at past rural development projects. It concluded that these projects had failed to achieve their professed goal of alleviating rural poverty. The reason: too much focus on agricultural growth, ignoring the importance of rural infrastructure. The strategy paper argued that future rural development efforts should also include physical infrastructure such as roads, storage facilities, and marketplaces. This helped catalyze the rural road infrastructure program mentioned earlier.
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Something else was brewing at that time, which had a far-reaching impact in rural Bangladesh. After ups and downs in the 1960s, the production of rice, the country’s main crop, moved to a trajectory of modest, but sustained, growth from 1972. Use of high-yielding varieties (HYV) of rice, first introduced in the 1960s, expanded. Also, aided by irrigation, there was a significant expansion of rice cultivation in the dry winter months.
As the transformative potential of irrigation and HYV rice got recognized, the government started liberalizing agricultural input markets in the 1980s. It removed certain restrictions on the import of pumps and small diesel engines used for irrigation, and privatized the distribution and import of fertilizer, a key input for HYV rice cultivation. While experts recommended bolder reforms, the government initially moved slowly with small, incremental reforms. However, a slowdown of agricultural production in the mid-1980s led to a government review that recommended more substantial reforms. These started in the late 1980s and continued in the early 1990s.
Meanwhile, in the industrial sector, two policy innovations in the mid-1980s—the back-to-back letter of credit and duty-drawback facilities through bonded warehouses—removed two major constraints for the country’s fledgling garment industry. The first allowed a garment manufacturer to obtain letters of credit from domestic ban4ks to finance its import of inputs, by showing letters of credit from foreign buyers of garments. The second reimbursed manufacturers the duty paid on imported inputs on proof that the inputs, stored in bonded warehouses, had been used to manufacture the exports.
These policy actions had a significant economic impact. The long-run trend in crop production shows a major inflection point around the late 1990s-early 2000s. Experts have attributed this to the agricultural input liberalization policies of the 1980s and early 1990s (see this and this), as well as to the rural road construction program (see this and this). Similarly, after modest growth in the early 1980s, garment exports accelerated significantly from the second half of the 1980s. The transformative policy and public investment actions of the 1980s and 1990s expanded the horizons of Bangladeshi entrepreneurs, from the small farmers to the garment exporters.
The acceleration in garment exports helped the country earn valuable foreign exchange and maintain macroeconomic stability. But, because the bulk of the garment workforce was rural women, this also resulted in a huge infusion of funds to rural Bangladesh. This was complemented by remittance inflows from migrant Bangladeshi workers, which increased sharply from the start of the century, from $1.7 billion in 1997 to over $15 billion in 2014. The increased incomes in rural Bangladesh also supported the growth of rural nonfarm activities, which expanded significantly alongside agricultural growth.
This story of policy actions leading to transformative change has continued in subsequent decades. For example, liberalization of telecommunications starting in the early 1990s has led to mobile phone subscriptions exceeding population size by 2019; a power sector program after 2010 has helped increase power generation capacity from 3,700 megawatts in 2007 to 13,000 megawatts in 2019; and a 2011 regulatory reform allowing mobile financial services has led to a fifteenfold increase in the value of mobile monetary transactions between early 2013 and the end of 2020.
The government in Bangladesh does not score well on conventional indicators of transparency or effectiveness. And yet, successive governments have shown an uncanny ability to respond to nascent developments in the economy with policy actions that triggered transformative change. In many cases, the liberalizing policy actions by an administration served to undo what previous administrations had done years, decades, or even centuries ago. For example, it was the government that took on the responsibility to procure and distribute agricultural inputs in pre-independence times, and it was the government that did away with this monopoly in the 1980s. Nonetheless, the willingness of different administrations to move away from well-entrenched policies that they had inherited is commendable.
Some policy actions of the Bangladesh government were influenced by development partners through their conditionalities, advice, and persuasion, but often not at the speed desired by the external actors. This had frustrated the latter and had created an image of a government that is slow to reform. However, successive governments in Bangladesh seemed to have been inspired by Frank Sinatra’s immortal song—they chose to do things their own way. There have not been any big-bang reforms in Bangladesh but no serious reversals either. The approach has been that of incremental, but steadily deepening, reforms. The government took some actions, saw what the market response was, and took further actions. This approach may not have been appreciated at all times, but its results are now being recognized.
What may set Bangladesh apart from many other developing countries is the supply response to policy actions. Such supply responses by a variety of economic actors, such as farmers, industrial firms, and traders, in turn, generated demand for further policy actions which were often forthcoming. Such synergy between public policy actions and the entrepreneurial activities of economic actors has played out again and again in the last few decades. This is an important, but underappreciated, part of the story of Bangladesh’s remarkable development journey.