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Bangladesh Building Collapse: A Deficit of Governance

The recent building collapse in Bangladesh shines a light on glaring governance problems plaguing Dhaka.

By Ahsan Barkatullah and Ankit Panda for

The recent building collapse in Bangladesh reflected both the best and the worst of humanity. On the one hand, there were the city-dwellers living on less than two dollars a day who dug into their own pockets to provide biscuits and saline water to the injured. On the other, there was the nefarious, multimillionaire factory owner who allegedly attempted to flee to India.

This horrific incident has brought to center stage just how connected the developed world is to these workers toiling away in a distant and impoverished land. Many of the garments Americans and Europeans wear are the products of labor in some of the most inhumane conditions imaginable. But the traditional image of starving, red-eyed workers in damp, poorly lit sweatshops being harassed in a variety of wicked ways fails to do justice to a very important and central concern.

It is not just that workers are exposed to conditions that progressively reduce their well-being. In fact, as this tragedy highlights, they are often forced to take on unreasonable risk to their personal safety. This, in turn, reflects what we call the “governance deficit”, which means one or both of: [1] A failure of the relevant agencies to routinely detect and monitor workplace safety conditions and issue appropriate recommendations or directives to law enforcement; [2] An inability of the regulatory framework, including but not limited to the local police force, to promptly and efficaciously act on the reports of the monitoring agencies.

Dhaka’s governance deficit is chilling, and means that we may have to condition ourselves for further preventable human tragedies. Yet constructive solutions could be forged without demonizing the export-oriented textiles sector of what is, after all, an impoverished country. As Benetton CEO Biagio Chiarolanza has said, commercial partnerships between Bangladeshi factories and Western multinationals represent a very potent, market-based approach to achieving economic prosperity. However desirable this prosperity may be, it cannot come at the expense of the lives of those with the least bargaining power in the global marketplace.

Given these concerns, one approach to addressing the governance deficit in Bangladesh would be a foreign-donor/trade partner-led initiative. Essentially, Western trade partners would set up a monitoring agency in Bangladesh, much like a credit rating agency, which would inspect factories and other workplaces and provide a comprehensive rating of the treatment of workers and the conditions that they face. This would tackle the first horn of the governance deficit. Recognizing that sovereignty over enforcement cannot be surrendered to a foreign agency, we propose that principal foreign trading partners pass a law prohibiting the entry of goods manufactured in factories that do not meet a pre-defined ratings threshold.

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This scheme would require importers to certify that their suppliers exceed the threshold rating and that there would be random checks of supply chains and substantive fines for violators. By passing both the monitoring and enforcement problem onto wealthier, foreign nations with more efficient and meritocratic bureaucracies, our proposal can be viewed as a form of “global governance assistance” in the same league, in spirit, as other, more direct forms of aid from the Western world.

The stringency of this scheme should be expected to incentivize factory owners to meet high workplace safety standards. Instead of being just fined, local owners who do not comply would be unable to sell their output in global markets. Given the fixed costs of business, the owners must decide to either close shop or accept lower profits and provide suitable work conditions in safe environments. It is not unreasonable to assume that even after paying the costs of providing workers with safety, owners would still find their businesses profitable. This would protect both jobs and the safety of those in them. Since most of these factories cater to foreign markets, Darwinian selection should ensure that only factories that respect human life survive.

But there are other benefits. Applying global standards will promote knowledge and awareness of options to improve the workplace. Assuming that the agency makes its ratings public, and that local civic society is sufficiently mobilized, other types of factories, even those not catering to international markets, would be motivated to adopt better standards for their workers. Finally, local government officials may learn from global experts and, more importantly, the shame of having some of their functions delegated to foreigners may compel them to become more active in fulfilling their duties.

We acknowledge that the proposal is controversial. After all, the legacy of colonialism persists in the Bangladeshi national identity and so any perception of foreign involvement in domestic affairs is likely to be politically problematic. Training Bangladeshi authorities could ease the long-term costs for foreign donors, and could yield improvements in governance. Similarly, there is the matter of convincing Western importers that they ought to bear the costs of setting up such an agency. It is evident that the moral incentives here are well in line with the norms governing domestic labor in most of the OECD. Apart from normative compatibility, repurposing future aid money for Bangladesh into this initiative could offset the financial costs. 

Another potential issue arises with the recent influx of Chinese interests into Bangladesh. Our solution would not effectively condition or constrain profit-seeking Chinese firms who might be willing to tolerate the risks of irresponsible labor conditions for short-term gain. Ultimately, Bangladeshi suppliers that are uninterested in complying with what may be perceived as overly stringent labor regulations might be tempted to court these other clients to preserve their bottom lines.

Those who might find this proposal too cumbersome and subject to too many political obstacles might consider an alternative approach that leverages the private sector and civil society in tandem to address the governance deficit. The recent initiative by firms such as Walmart, Gap, and H&M is a promising first step towards a feasible implementation of better monitoring and safeguards. Private monitoring immediately raises concerns of potential conflicts of interest. We would argue that civil society groups monitoring labor conditions, with many already active in Bangladesh, could provide an impartial yardstick for acceptable labor conditions that private firms could incorporate into their decision-making when doing business in Bangladesh.

Ultimately, the fact that this most recent tragedy has galvanized policy interest across the world in improving labor standards in Bangladesh should be encouraging. The U.S., EU, ILO, and even the Pope have condemned the negligence and disregard for human safety on display. Of course, this governance deficit is unlikely to be resolved anytime soon. It and its buttressing ideologies, constructs, incentives and institutions are deeply entrenched and self-reinforcing in developing countries. That does now mean, however, that we can simply accept the risk that similar human tragedies will take place in the future. Development and prosperity may be inherently amoral, but both are built on the backs of real human laborers who deserve to have their dignities and livelihoods protected.

Ahsan Barkatullah is a PhD candidate in Government at Harvard University, and a JD candidate at the Yale Law School. Ankit Panda (@nktpnd) is a researcher at the Woodrow Wilson School of Public and International Affairs at Princeton University.