Economy Development in Bangladesh
Bangladesh is a developing country. In fact Bangladesh is under developing country. Still we behind from our neibour country. There are various reasons for this situation. It is not possiable to make change Bangladesh over night. But if we can take and do some pragmatic job step by step than it will possible to transform Bangladesh into a progressive country. As a Bangladeshi civilian we should do it.
To build Bangladesh as a progressive country we have to keep eyes and make improve must those are show in below:-
Agriculture : Bangladesh is primarily an agrarian economy. Agriculture is the single largest producing sector of economy since it comprises about 30% of the country’s GDP and employing around 60% of the total labor force. The performance of this sector has an overwhelming impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security. . The crop sub-sector dominates the agriculture sector contributing about 72% of total production. So we have to develop this sectors for developing our country. To develop this sector we need to take some important step like:-
1. Improve technology: At first we have to improve agricultural technology. Because without it it is really hard to increase production.
2. Supply high quality fertilizer: Without high quality fertilizer it is not possible to production high amount.
3. Agriculture bank : Most of the farmer of our country are poor. They have not much money to do any thing . If we setup some agriculture bank who will provide loan for cultivation.
4. Direct supply by government : This is the common scenery of our country that the wholesalers who collect crops from farmer they get more profit by storage. If government collect crops from farmer directly than they will get more profit.
Education : Education is the backbone of a nation . There is no single country developed without education. In Bangladesh many people are uneducated . To build Bangladesh as a100 percent educated country we can take some important step like :-
Full free up to secondary level : If we can full free up to secondary level for all class people than it will possible to educate many people. Because poverty is the main problem people do not want to take education.
Education for old people : All class people can contribute in economy by income or experience . Old people are not out of this boundary , so they also need education.
Improve study policy: Our education system is not standard that much. So this is needed to improve study system.
Buildup more institution : Bangladesh is a populated country so we have to buildup more educational inistitution.
Increase GDP growth : The growth of GDP in the current fiscal year which is estimated to be6.2 percent is slightly lower than previous year’s growth. But the deceleration in growth is still satisfactory compared to many countries in Asia. Based on recent macro-economic indicators, we may reasonably expect that Bangladesh will achieve 6.5 percent growth in FY 2008-09 assuming that that there would be no major natural disaster. We have to more productive than we increase growth rate of GDP. Every depand on GDP for a country .So make a progressive as Bangladesh we must increase GDP growth.
Control inflation :
In the wake of lower production of food grains in FY 2007-08 coupled with soaring price of food grains in the international market, I would not hesitate to admit that food inflation has significantly affected the life of the common man. In December 2007, the inflation reached a high of 11.6 percent on a point to point basis. However, it is heartening to note that there has been a downward trend of inflation in Bangladesh of late. We have to bear in mind that there exists a high inflationary trend across the world, including our neighboring countries. The Government has been implementing different measures to curb inflation. Short-term measures included ‘Dal-Bhat Programme’ of BDR, open market sale of food grains at subsidized price, withdrawal of customs duty on the import of food grains and edible oil, increasing the amount of food grain imports, lowering of interest rate against import credit of food grains, regular monitoring of markets, and fixation of maximum retail price for edible oil. So this is most important thing we have to control inflation with hardly.
Capital Market :
Up to January 2007, market capitalization of all listed securities in the Dhaka Stock Exchange was Tk. 31,709 core (7 percent of GDP). This increased more than double to Tk. 88,195 crore (16.4 percent of GDP) by May, 2008. In January 2007, the share price index in Dhaka Stock Exchange was 1582, which climbed to 3168 by the end of May 2008. Government has started the process of off-loading the shares of a number of State Owned Enterprises from the energy, telecommunication and industrial
sectors in the capital market. It is expected that this initiative would positively contribute to employment generation and industrialization in the country.
The total revenue for the FY 2008-09, has been estimated at Tk. 69,382 crore which is 11.3 percent of GDP. Out of this, the NBR revenue has been targeted at Tk. 54,500 crore which is 8.9 percent of GDP. Non-tax and Non-NBR
revenues have been estimated at Tk. 12,593 crore (2.1 percent of GDP) and Tk 2,289 crore (0.4 percent of GDP) respectively. It may be mentioned that following the corporatisation of T&T Board, non-tax revenue collection may decline in the following years. We can charge highly on fashionable goods.
Increase export :
To make a country progressive export is most important thing. If we can increase export than the income will increase for country. To increase export we can take some necessary step like :-
Buildup more EPZ :
To increase export we have to increase EPZ (export pressing Zone) . Because we have to create export environment in our country.
Produce high raw materials : If we can produce high qualities raw materials than there is no need to buy raw materials from abroad .
Reward : We can offer a reward that we will awarder top 10 high productive company for every year .
Health & Medical : Adequate and planned investment in the health sector is fundamental to human resource development. To this end, the Government is implementing a seven-year (2003-2010) Health, Nutrition and Population Sector Programme (HNPSP) at an estimated outlay of Tk. 32,450 crore.. As a step towards updating the existing polices and laws, we are revising our National Health Policy, rules relating to hospital waste management, private medicare laws and the Essential Drugs Lists. The Government is laying emphasis on increased involvement ofprivate initiative in the health sector.Implementation of a programme isunderway to outsource the management of 342 community clinics and 130Union Health and Family Welfare Centres and Hospitals tothe privatesector. So we have to ensure health and medical for Bangladeshi people.
Commerce & Industry: In 1972-73, the export earnings of the country totaled US$348.33 million, of which 90% came from the jute export sector. The other major export producing items were tea and leather. Since then, the country has been widening its export base. The situation has now vastly improved with addition of non-traditional items like readymade garments, shrimps, fish, finished, leather, newsprint chemical fertilizer, handicrafts, naphtha, ceramic products, fresh fruits, flowers and vegetables, etc. As a result, the export earnings increased, estimated to be US $ 5020 million during 1997-98.
The major importable items include raw cotton, textile fabrics and accessories cotton yarn, petroleum products, capital machinery, automobiles including spares and accessories, industrial chemicals and dyes, pharmaceutical raw materials, milk food, edible-oil, coal, ferrous and non-ferrous metals, cement, etc. The value of imports during 1997-98 has been estimated to be US$ 7525 million.
In line with the global trend, the government has steadily liberalized its trade barriers and significant progress has been achieved in recent years in reducing or eliminating non-tariff restrictions, rationalizing tariff rates and raising export incentives. The county was one of the major exporters of textiles, silk and sugar till the eighteenth century but the industrialization process was subsequently halted during the 200 years of colonial exploitation. As a result, Bangladesh inherited a narrow industrial base when it became independent in 1971.
It has a good number of large, medium and small-sized industries in both public and private sectors based on both indigenous and imported raw materials. Among them are jute, cotton, textile, fertilizer, engineering, shipbuilding, steel, oil-refinery, paper, newsprint, sugar, chemicals, cement and leather. Jute Industry has traditionally played an important role in the national economy. But in recent years, Ready Made Garments Industry has replaced Jute as the principal export-earner for the country. Considerable progress has been attained in the past few years in industries such as leather, ceramic, shrimp, fish, pharmaceuticals and frozen food.
With the development of infrastructures, supportive policies for trade and investment and comparative advantage in labour-intensive Industries, excellent prospects for investment exist in Bangladesh today. Industrial growth was recorded at 81% during 1997-98. Foreign investors are pouring into the country in greater numbers everday, especially in the export processing zones special facilties existing at Dhaka and Chittagong.
To attract local and foreign investors, the present government has introduced a number of perks and incentives. These include provision for setting up export processing zones in the private sector, initiatives to set up new EPZs in the public sector, tax holiday for export-oriented industries, scope for 100 percent foreign investments and repatriation of profits. etc.
Due to the present economic necessity and past experiences, privatization of state-owned enterprises are being geared up by the present government. So we have to build up more industries.
The Armed Forces are the national pride and the ever-vigilant sentinels of the country’s independence. The primary task of the Armed Forces is to defend the national independence, sovereignty and territorial integrity of Bangladesh. It also assists the civil administration in maintaining internal peace and security in times of emergencies. Other important assignments like disaster management and UN peace-keeping missions are also carried out by them when required. There are three main branches of Bangladesh Armed Forces, namely, the Army, the Navy and the Air Force. Paramilitary forces such as Bangladesh Rifles, Bangladesh Police, Ansars and the Village Defence Party also exist in the country. We have to maintain those forces for our betterment.
Stop corruption :
We have to stop corruption at first , without it we can not be a progressive country. Mostly our political leader are doing this very much. Role and police commission who maintain our country they are not out of this boundary.. We are the champion five times for this. This is not positive sign for a country, so we like prothomalo slogan we have to say ‘’Bodle gao, bodle dao” .
In our country there are about 15 core people. Day by day the percentage is increasing. Population growth rate 1.59%, Birth rate: 25.12 births/1,000 population, Death rate: 8.47 deaths/1,000 population, Net migration rate: -0.75 migrant(s)/1,000 population(2002 est.). To control this growth rate we have to take some step like:-
Make Awareness : We have to make awareness among the people that more children is curse for a family. Two children is enough either male or female.
Civilian Facilities : We offer among the people like that who will take two or one children for whole life he and she will get civilian facilities from government.
Occupationally, 75 percent of the civilian labour force, which is currently estimated at 56 million, is directly or indirectly engaged in agriculture. Only 12 percent is engaged in industry. Unemployment is estimated at around 18.5 percent. In terms of age structure, it is more youthful than in the western countries. Heavy pressure of population on scarce land has no doubt created an extremely unfavourable land-man ratio.
Coupled with this is the problem of unequal distribution and heavy fragmentation of land in the rural areas. This is expected to improve with more vigorous efforts at poverty alleviation and raising of educational and social consciousness. Sluggishness of the agricultural sector has resulted in its increasing dependence on the whims of nature and the per capita daily availability of food grains coming down to low level of 432 gram. Nearly 45% of the people live below the poverty line.
As the country steps to the 21st century, it aims at accelerated economic growth, human resource development and self-reliance. Central to all the efforts to reach those targets will be poverty alleviation, rural development, involving women in all national activities and creating a well-educated healthy nation to be able to face up to the challenges of a fast moving technologically advanced global society.
Foreign Aid :
The government is aware of the fact that because of the existing international economic environment the amount of foreign aid so essential for developing countries like Bangladesh is fast dwindling. The conditionalities of aid are also becoming stringent. The government has, therefore, taken appropriate initiatives for proper utilization of foreign aid. The country’s development partners at the same time, ought to acknowledge that Bangladesh not only needs more aid but also better aid.
The government has given the highest priority to implementing with utmost efficiency the annual development programme (ADP) which allocates domestic and foreign resources to different sectors of the economy. From the economic and social points of view, agriculture is the country’s most important sector as it contributes 32.4 percent of GDP and about 75 percent of its 120 million people are directly or indirectly dependent on it for their livelihood. But because of declining growth in agriculture in the past the standard of life of the small and marginal farmers had been going down forcing the nation to become increasingly dependent on food imports.
The government has, therefore, decided to increase allocation for agriculture substantially and offer a wide range of incentives to the farmers including liberal credit to raise production and generate on-farm and off-farm employment for the rural poor. An Agriculture Commission has also been set up to recommend long-term policy reforms to boost the sector.
Foreign direct investment (FDI) is direct investment by a company in production located in another country either by buying a company in the country or by expanding operations of an existing business in the country. Foreign direct investment is done for many reasons including to take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive for to gain tariff-free access to the markets of the country or the region. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.
Inward FDI to the middle-income countries has the evidence as a major stimulus to the economic growth; conventionally at export-oriented manufacturing sector. In point of fact, basic macro fundamentals like as growth of gross domestic capital formation, foreign reserve, infrastructure etc. accelerates the FDI inflows. This study reviews the long-run trend on the time scale of FDI to Bangladesh over the period 1975- 2006 and major factors determining foreign companies’ decisions to invest, in associated with economic growth. Contents of the paper describe the theoretical development and extensive literature review to find out the appropriate variables to deter the foreign direct investment from time series data. On the basis of intricate link between foreign direct investment and growth, all explained determinants enhance the facilitation, turnover, and return in FDI concentrated sectors that promote long-term sustainable growth with specific shortcomings, directly or indirectly, in our labor-intensive economic activity. Reduced government’s ineffectiveness along with supporting policy framework makes Bangladesh as an attractive destination of FDI, that has a positive spillover and significant impacts affect over time through dynamic effects on economic growth.
Bangladesh has an agrarian economy with 32% of GDP coming from the Agriculture Sector. Major agricultural products are rice, jute, wheat, potato, pulses, tobacco, tea, sugarcane, etc. The country is the largest exporter of jute and jute goods in the world. Readymade garments are among the most exportable items. Tea, frozen shrimps, fish, leather goods and handicrafts are also major exportable commodities.
The country has under gone a major shift in its economic philosophy and management in recent years. On its birth, it embraced socialism as the economic ideology with a dominant role for the public sector. But since the mid-seventies, it undertook a major restructuring towards establishing a market economy with emphasis on private sector-led economic growth.
During the nineties, the country has completed a major stabilization program which has reduced inflation as well as fiscal and current account deficits and established a healthy foreign exchange reserve position with low and sustainable debt-service liabilities. With a modest economic growth, the basic indicators related to health, education and poverty have all shown sustained improvement
According to a World Bank estimate, Bangladesh has the 36th largest economy in the world in terms of GNP based on purchasing power parity method of valuation, and 55th largest in terms of nominal GNP in U.S. Dollars. However, because of the population size, per capita income was US$ 280 in 1998(1 US$=Taka 48.50).
Bangladesh has pursued the path of planned development since independence. Short term Annual Development Programs. Medium term Five-year Plans and Long term perspective plans have been used for the purpose. The First-Five year plan (1973-78) was launched in 1973, while the Fourth-Five year plan concluded in June. 1995.
The Fifth Five Year Plan has been launched by the previous government covering the period 1997-002 in order to enable the country to face the challenges of the 21st century. Export-led economic growth through a liberal free market approach, alleviation of poverty and empowerment of the poor, industrialization, agricultural growth and human resource development have been attached topmost priority in recent Development Plans.
During the l990s, the government policy has focused on strengthening the government’s role in social and infrastructure development, with the private sector playing the leading role in directly productive activities. The roles of the government are mainly confined to regulatory and promotional ones.
Foreign Relations :
The Constitution embodies the basic principles of foreign Policy; that says, the state shall base its international relations on the principles of respect for national sovereignty and equality, non-interference in the internal affairs of other countries, peaceful settlement of international disputes and respect for international laws and principles as enunciated in the United Nations Charter.
Bangladesh pursues a forward-looking foreign policy based on friendship with all and malice towards none. As an active member of the UN, the Non-Aligned Movement, the OIC, the Commonwealth and various international organizations, Bangladesh promotes global peace, stability, co-operation and development. Bangladesh pioneered the formation of SAARC-a regional co-operation forum comprising seven South Asian countries-Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Bangladesh has vigorously pursued the cause of enhancing economic co-operation in the region. One of the outcome has been the formation and implementation of SAPTA or South Asian Preferential Trading Arrangement.
Since assumption of office in 1996, the present Government has been pursuing an active and aggressive foreign policy mainly for economic ends. It is a matter of pride that as many as eight outstanding statesmanof the world visited Bangladesh during the inaugural year of the present Government. Prime Minister Sheikh Hasina addressed the 51 st session of the UN General Assembly in October, 1996.
During the World Food Summit held in Rome the same year, her call to build a poverty-free world earned praise all over the world. Her chairing the World Microcredit Summit in Washington D.C. in February, 1997 has been a matter of great honour for Bangladesh. Among her foreign visits, trips to Saudi Arabia. China and India were tremendous diplomatic successes.
In the bilateral front, longstanding dispute with India on sharing the Ganges waters has been tinally resolved by signing the historic 30-year Water-sharing Treaty in December, 1996. Other outstanding issues with neighbouring countries are also being gradually addressed.
Efforts for strengthening South Asian Regional Co-operation through the SAARC got a new momentum due to the pragmatic role played by Prime Minister Sheikh Hasina at the Male and Colombo summits held in 1997 and 1998 respectively. The scope for regional cooperation for economic growth has been further widened through Bangladesh joining the BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperaton) and D-8 (Developing eight countries-Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey) economic groupings.
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:”A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed.”
Economic growth (rise in GDP) is always deemed to be desirable as an outcome. Economic growth means more output, employment, income and, in consequence, more wellbeing for the people. That is why most nations strive to reach the higher growth path. Economists used to “worship” growth once, till they realized that growth could not be an end in itself; it was a means to an end. In other words, economic growth is necessary but not sufficient for people’s welfare.
Bangladesh is believed to have performed well over the years as far as the indicators are concerned. Economic growth rate crossed the 6 percent mark in recent years from a feeble 4 percent or below in the 1980s and 5 percent plus in the second half of the 1990s. Under a business as usual scenario, reaching the target of 7 percent growth rate does not seem to be too difficult. By and large, the per-capita income grew roughly at 4 percent per year in a regime of falling population growth rate.
Bangladesh is now trying to establish itself as the next rising star in South Asia for foreign investment. The government has implemented a number of policy reforms designed to create a more open and competitive climate for private investment, both foreign and local.
The country has a genuinely democratic system of government and enjoys political stability seen as a sine qua non for ensuring a favorable climate for investment and sustained development.
Bangladesh has been quick to undertake major restructuring for establishing a market economy, with the major thrust coming from the private sector. The country enjoys modest but steady economic growth. Its current development strategy is based on the premise that the creation and distribution of wealth occurs through the acceleration of growth driven by competitive market forces, with the government facilitating growth and making a clean break from the practices of a controlled economy where private investment is constrained. With this end in view. The government has been gradually withdrawing its involvement in this industrial and infrastructure sectors and promoting private sector participation.
The government has moved speedily to translate its policy pronouncements into specific reforms. It has been consistently pursuing an open-door investment policy and playing a catalytic rather than a regulatory role.
Regulatory controls and constrains have been reduced to a minimum. The government has steadily liberalized its trade regime. Significant progress has been achieved in reducing non-tariff restrictions on trade, rationalizing tariff rates and improving export incentives. The introduction of VAT has helped rationalization of the import tariff and domestic tax structures. The tariff structure and the import policy are kept under constant review to identify areas where further improvements are called for.
On the legal and administrative front, the government has initiated measures to give greater autonomy and independence to the judiciary – a pre-requisite as viewed by investors, for the restoration of confidence in the judicial system.
A permanent Law Reform Commission has already been set up to ensure greater transparency and predictability in the way rules and regulations are made and implemented.An Administrative Reform Commission to rationalize existing rules, regulations and procedures has also been set up.