| http-equiv="Content-Type" content="text/html; | | | | was due to Bangladesh’s leaders move to |
| charset=utf-8"> | | | | employ and accept United Nations expertise in |
| Executive summary | | | | reinventing and rejuvenating its economic |
| Presently, Bangladesh is witnessing a sustained | | | | framework and policies. Bangladesh leaders |
| growth rate in the region with increasing foreign | | | | liberalized its markets in 1990s enhancing free |
| investments in the country and a shift from | | | | foreign trade this move saw the volume of |
| agricultural based economy to industry based | | | | Bangladesh foreign trade increase. In addition all |
| economy. The macro economic polices being | | | | legal blockades on private trade and also the on |
| undertaken and the political stability has been a | | | | manufacturing sector were removed, and the |
| driving force in this recent phenomenon. Though | | | | government halted all subsidies on previous state |
| the current growth rate is only rated at 5.6% it is | | | | owned companies, while at the same time |
| expected to be better with time. This report will | | | | permitting foreign importation to the market in so |
| thus try to underscore the current Bangladesh | | | | as to remove the monopolies enjoyed by state |
| economic growth through taking a close look at | | | | firms. (UNDP, 2005) |
| the economic growth indicators and finally highlight | | | | This move created competition among the |
| the reason of this development growth of | | | | industries and those firms which had competitive |
| Bangladesh. | | | | advantage survived and became more successful |
| Geography | | | | while those which could not compete collapsed. |
| Bangladesh is found in the South Asia part and it | | | | The public also had it winners and losses, among |
| bounders India in almost all its borders apart from | | | | those who gained were the university educated |
| a small part of the border that is borders with | | | | entrepreneurs who got jobs to manage the |
| Burma. The boundary of Bangladesh was | | | | increased inflow of foreign investments capital, |
| established way back in 1947. Bangladesh declared | | | | become overseas agents among other |
| its independence form Pakistan in 1971 following a | | | | opportunities. On the other hand the poor and the |
| liberation war. Despite its liberation account, | | | | elderly suffered as they had depended on state |
| development of Bangladesh has been filled with a | | | | incomes. |
| lot of political chaos having been seen fourteen | | | | Bangladesh’s economic reinvention resulted |
| various presidents and about four military | | | | in high inflation of double—digit mark, |
| takeovers. Bangladesh is a highly densely | | | | however, the economy experts put into action |
| populated country with high level of poverty. | | | | macroeconomic machinery in the economic |
| According to the World Bank records, it notes | | | | strategy which curbed and stabilized the inflation |
| that in the recent past the Bangladesh has made | | | | within a period of only three months. The |
| noteworthy advancement in human growth and | | | | government had to admit that even though the |
| development in sectors of gender parity, literacy, | | | | economic transformation resulted in a new |
| in education, and decrease of population growth | | | | economic class which mostly consisted of the |
| rate. (Baxter, 1997) | | | | rural poor, the economic structural adjustment |
| | | | was a significant aspect that it was willing to |
| Table 1: General information about Bangladesh (as | | | | implement to as suggest by the global powerful |
| at 2007) | | | | economies. Thus, the government was forced to |
| Source: Bangladesh Bureau of Statistics | | | | undertake the following macroeconomic measures |
| | | | to being down the inflation; |
| Capital | | | | 1. Letting prices of commodities to fluctuate; |
| Dhaka | | | | 2. The government raised interest rates to be |
| Official languages | | | | very high |
| Bengali (Bangla) | | | | 3. Increased/ introduced taxes |
| Government | | | | 4. Highly reduced government subsidies given to |
| Parliamentary republic | | | | many industries, and |
| President | | | | 5. Massively reduced welfare spending (UNDP, |
| Lajuddin Ahmed | | | | 2005) |
| Area | | | | The aim of the above measures was to |
| 147,570 km2 | | | | compress the in built inflation pressure out of the |
| Population | | | | country’s economy in order for the |
| 150,448,340 (2007) | | | | manufactures to start making reasonable |
| GDP | | | | decisions concerning manufacturing, pricing and |
| US$ 360.9 | | | | also investment, as an alternative of overusing |
| Per capita | | | | resources. The manufactures were supposed to |
| US$2,270 | | | | create a market instead of being central planners |
| Government | | | | determining prices, the market was supposed to |
| Bangladesh government system is a | | | | determine the price by itself. In the resulting |
| parliamentary democratic system where Islam is | | | | product mix and output levels, the economic |
| the national religion. There is a general election | | | | restructuring resulted to an inducement structure |
| which is held after every five years which | | | | in the Bangladesh economy in which risk and |
| involves all the citizens who are above 18 years, | | | | efficiency were rewarded while punishing |
| to elect members of the parliament. The | | | | carelessness and wastage. The government thus |
| parliament consists of 345 members representing | | | | set a mark for all other economic reforms which |
| different constituencies. The country has a Prime | | | | was controlling hyperinflation. (UNDP, 2005) |
| Minister who is the leader of the government, he | | | | Economic policies that led to better economic |
| constitutes the cabinet in which he heads and | | | | growth |
| manages the daily affairs of the state. The | | | | The growth of Bangladesh economic has been |
| president elects the prime mister who has to be | | | | motivated by changes in economic policies which |
| a member of parliament and commands a big | | | | were undertaken by the government that has |
| following and confidence of the majority of the | | | | continuously resulted in greater market force. |
| parliamentary members. The president is elected | | | | Economic transformation was first witnessed in |
| by the members of parliament and he is largely | | | | the agriculture sector, before it was extended to |
| ceremonial. (Baxter, 1997) | | | | other industry and other sectors. The |
| The uppermost judicial organ is the Supreme | | | | government abolished the controls placed on the |
| Court, the president appoints the judges. It has | | | | market in 1990s, while implementing competitive |
| been observed that the judicial system and law | | | | laws which were meant in unifying the market. |
| enforcement establishments are not strong. | | | | The economic policies were meant to allow |
| However, division of powers between the judicial | | | | foreign direct investment in Bangladesh. The |
| and executive was at last separated in 2007, | | | | economic environment policies that were |
| November to try and reform the judiciary and | | | | formulated resulted to high savings rates as the |
| make it stronger and also impartial. Bangladesh. | | | | government encouraged more savings and less |
| (Development Policy Review, 2007) | | | | borrowing through increasing the interest rates. |
| Economic | | | | This has resulted to economic growth that is |
| In spite of constant local and international | | | | being witnessed in Bangladesh presently. At the |
| attempts to develop Bangladesh economic and | | | | same time the capital stock also experienced |
| also demographic developments, the country has | | | | rapid increase due to the large amount of money |
| remained as developing country. Its national per | | | | that was being invested in the capital market. High |
| capita earnings in the 2006 was US$2300 | | | | public investment and low borrowing has also |
| contrasted to the global average which is | | | | assisted in creation of an urban society since |
| supposed o be $10,200. (Bangladesh Bureau of | | | | many Bangladesh people continue to move from |
| Statistics, 2007) | | | | rural areas to the urban areas. (Economy watch, |
| Jute product was at one time the economic | | | | 2007) |
| backbone of the Bangladesh Its market share on | | | | High investment in the economy has increased |
| the global market export market reaching its | | | | the assets which are available to every employee |
| peak in the 1970s earning about 70% of the | | | | in the market sector thus acting as a boost for |
| country total net exports. Nonetheless, | | | | the labour productivity annual growth. This has |
| polypropylene goods started to replace the jute | | | | also helped in improving the economy has the |
| products global making the jute market to begin | | | | production on the urban workers is more than |
| declining. Bangladesh agriculture sector produces a | | | | that of agriculture workers. (Economy watch, |
| vast amount of rice and tea which it exports. | | | | 2007) |
| Though, the country’s population is mostly | | | | |
| farmers comprising about two thirds, the garment | | | | Strong and stable macroeconomic |
| industry accounts for more of the | | | | The strong private sector growth has put an |
| country’s foreign earnings than the | | | | emphasis on maintaining of a stable |
| agriculture sector. The garment industry started | | | | macro-economy environment, most important |
| attracting a lot of foreign investments in the | | | | being the stabilization of prices. Monetary policies |
| 1980s owing to the inexpensive labour and low | | | | of Bangladesh currently are sound and have |
| production costs in the country. | | | | allowed the expansion of the economic growth in |
| | | | Bangladesh. The government have been able to |
| Economic indicators | | | | reduce its expenditure especially by cutting the |
| GDP; purchasing power parity (PPP) $203 billion | | | | amounts spend on the public welfare, while at the |
| GDP; real growth rate; 5.3% | | | | same time being able to increase the amount of |
| GDP; per capita; $1,570 | | | | revenue being collected. The inflation rate has |
| GDP; composition by segment; | | | | been able to be brought down from 8% in the |
| · Agriculture; 30% | | | | 1996 to a small devaluation in the year 2002. |
| · Industry; 18% | | | | However, inflation rates have continued to |
| · Services; 52% | | | | fluctuate, which means that the country’s |
| Population under poverty level; 32.6% | | | | monetary policy has not been always successful |
| Household earnings or expenditure by percentage | | | | controlling inflation. (Economy watch, 2007) |
| amount; | | | | On the international scene the competitiveness of |
| · Lowest 10%; 3.9% | | | | Bangladesh still continues to and the volume of its |
| · Highest 10%; 28.6% | | | | exports is increasing. On the local scene, the |
| Inflation rate (consumer product prices); 5.8% | | | | macroeconomic prospects remain good. Credit |
| Labour force; 64.1 million | | | | and profits are high, thus the volume of |
| Labour force; by sector; | | | | investment in China is expected to continue while |
| · Agriculture 63% | | | | the consumption rate is anticipated to remain solid. |
| · Services 26% | | | | Even though inflation is inhibiting consumption |
| · Industry 11% | | | | growth, the GDP is expected to reach 6.3% in |
| Unemployment rate; 32.2% | | | | 2008 to remain steady in 2009. Current data |
| Budget: | | | | show that the economic activities remain buoyant |
| Revenues; $4.9 billion | | | | and trade continues to grow. (Loren B, et al, |
| Expenditures; $6.8 billion | | | | 2007) |
| Industries; | | | | |
| Cotton textiles, garments, jute, tea processing, | | | | Regional problems |
| cement, paper newsprint, chemical fertilizer, sugar | | | | Bangladesh witnessed slow growth of economy in |
| and light engineering | | | | 1990s which led to other people to show fear |
| Industrial manufacturing growth rate; 6.1% | | | | over the competitive abilities of the Bangladesh |
| Electricity production; 12.06 billion kWh (1999) | | | | industries. Bangladesh industries were faced with |
| Electricity - production by source: | | | | hard times with the changes of government |
| · Fossil fuel: 93.7% | | | | through military coup that occurred in the 1990s. |
| · Hydro; 6.3% | | | | Bankruptcies of big financial institutions worsened |
| Agriculture products: rice, tea, jute, wheat, | | | | the recession that was there. This coupled by the |
| potatoes, sugarcane, tobacco, pulses, oilseeds, | | | | Asian economy crisis saw profits of all industries |
| spices, fruit; milk, beef, poultry | | | | going down. Currently the Asian economy has |
| Exports; $5.9 billion | | | | recovered which have helped the economy of |
| Exports products; garments, jute, leather, | | | | Bangladesh to grow. (Rahman, 2004) |
| seafood and frozen fish | | | | Reason of present growth |
| Exports partners; USA 31.2%; Germany 9.95%; | | | | The current government has attempted to enact |
| UK 8.06%; France 5.82%; Italy 4.42% | | | | privatization and foreign- investment laws which |
| Imports; $8.1 billion | | | | are aimed at stimulating the economy. Though, |
| Imports commodities; machines and equipments; | | | | some of this laws effectiveness in ambiguous, |
| chemicals; steel; textiles, raw cotton; food; crude | | | | economy has been observed to respond to them. |
| oil; petroleum products and cement | | | | Bangladesh economic growth can be attributed to |
| Imports partners; India 12.2%; Singapore 7.8%; | | | | the neo-liberations of markets and globalization |
| Japan 6.7%; China 6.4%; US 5.3% | | | | which has attracted more foreign investors in the |
| External Debt; $17 billion | | | | country which has lead to high growth rate. The |
| Economic aid recipient; $1.575 billion ( | | | | opening up of the markets also has improved the |
| Exchange rates; taka for each US dollar; 54.000 | | | | competition in the market and lead to high |
| (Bangladesh Bureau of Statistics, 2007) | | | | production. These measures has equally resulted in |
| | | | increasing the number of industries in the country |
| Human poverty level in Bangladesh | | | | and has seen the foreign exchange products |
| | | | increasing and export shifting from agricultural |
| The Human Development Index determines the | | | | products to industry products particular garments |
| average growth of the country in terms of | | | | products. |
| human development progress. Human Poverty | | | | Conclusion |
| Index (HPI-1) is used to measure the human | | | | Bangladesh is a developing country which in the |
| development in the developing countries. The | | | | recent past has been experiencing better |
| index looks at various aspects such as education | | | | development growth with can be attributed to |
| level, living standards and even access to clean | | | | improved political stability that the country is |
| water. The table below gives a summary of | | | | currently witnessing. The macro economy policies |
| Bangladesh human poverty levels; the country is | | | | which has been formulated by the government |
| ranked as 90th amongst 110 developing countries | | | | and has seen foreign investors trooping in the |
| (UNDP, 2005) | | | | country and building up more industries, the net |
| Table 2: particular indicators of human poverty for | | | | effect has been increased exports and a shift |
| Bangladesh (2004) | | | | from agricultural products based economy to |
| Human Poverty Index | | | | industry based economy. Neo-liberation and |
| (HPI-1) | | | | globalization has also increased the much required |
| 2004 possibility of not surviving past age 40 | | | | development as it has opened up new markets |
| (%) | | | | and improved the technology and infrastructure in |
| 2004 Adult illiteracy rate | | | | the country. |
| (%ages 15 and older) | | | | Reference: |
| 2004 populace without access to an improved | | | | Bangladesh Bureau of Statistics |
| water source | | | | Bangladesh. Development Policy Review (2007) |
| (%) | | | | Bangladesh Bank (2005) Annual Report |
| 2004 Children underweight for age | | | | 2004—2005 |
| (% ages 0-5) | | | | Baxter, C (1997): Bangladesh, From a Nation to a |
| 2004 | | | | State. West view Press |
| 40.5 | | | | Begum, N (2001): Enforcement of Safety |
| 16.4 | | | | Regulations in Garment sector in Bangladesh, Proc. |
| 52.5 | | | | Growth of Garment Industry in Bangladesh: |
| 26 | | | | Economic and Social dimension |
| 48 | | | | Economy watch (2007): Bangladesh economy: |
| Source: UNDP (2005) | | | | Retrieved from; Accessed on 16/10/07 |
| | | | Macarena, A (1986): Bangladesh: A Legacy of |
| Macro economics policies | | | | Blood. Hodder & Stoughton, London |
| Economic growth of Bangladesh has tried to sped | | | | Rahman S (2004): Global Shift: Bangladesh |
| up to its economic growth in the current 21st | | | | Garment Industry in Perspective; Asian Affairs 26 |
| century, attaining 5.2 in 2005. (UNDP, 2005) This | | | | UNDP (2005): Human Development Report. |