Bangladesh emerged as an independent and sovereign country in 1971 following a nine month war of liberation. It is one of the largest deltas of the world with a total area of 147,570 sq. km. With a unique communal harmony, Bangladesh has a population of about 142.32 million, making it one of the densely populated countries of the world. The majority (over 89%) of the people are Muslim. Over 98% of the people speak in Bangla. English, however, is widely spoken. The country is covered with a network of rivers and canals forming a maze of interconnecting channels. Being an active partner, Bangladesh plays vital role in the international and regional forum, particularly in the UN, Commonwealth and South Asian Association of Regional Cooperation (SAARC).
|Official Name:||The People’s Republic of Bangladesh|
|Political system:||Parliamentary democracy|
|Time zone:||GMT + 6 hours|
|Major cities:||Dhaka, Chittagong, Khulna, Rajshahi, Sylhet, Barisal, Rangpur|
|Principal rivers:||Padma, Meghna, Jamuna, Brahmaputra, Teesta, Surma and Karnaphuli.(total 310 rivers including tributaries).|
|Principal industries:||Readymade garments, pharmaceuticals, cements, garment accessories, chemicals, fertilizers, newsprint, leather and leather goods, paper, sugar, jute, ship building.|
|Principal exports:||Readymade garments, frozen foods (shrimps), leather, leather products, jute, jute products, tea, ceramic, textile fabrics, home textile, chemical product, light engineering products including bi-cycle.|
|Location:||Between 200 34′ and 260 38′ north latitude and between 880 01′|
and 920 41′ east longitude.
South: Bay of Bengal
East: India and Myanmar
|Area:||56,977 sq. miles or 147,570 sq. km.|
|Territorial water:||12 nautical miles|
|Main seasons:||Summer (March-May), rainy season (June-September) and winter (December-February)|
|Principal seasonal crops and fruits:||Paddy, jute, wheat, tobacco, pulses, oil seeds, spices, vegetables, jack-fruit, banana, mango, coconut, pineapple etc.|
|Natural resources:||Natural gas, coal, lime, white clay, granite, glass sand.|
1. Positive tangible and intangible attributes, internal to an organization.
2. They are within the organization’s control.
3. Excellent geographic location.
4. Relative stability of the country’s economic fundamental.
5. Effort for mainstreaming women into development.
6. Bangladesh has a fairly good and expanding stock of both physical and human capital, and with favorable policies, the upgrading potential of both capital is bright.
7. The remittances from overseas workers have already become a great source of strength and this can be increased manifold with right policies.
8. The country’s vulnerability to natural disasters has significantly declined that used to inhibit greater investment flow and reduce its productivity and return in the past.
1. That is within an organization’s control that detracts from its ability to attain the desired goal.
2. Which areas might the organization improve?
3. Health and Education indicators are low.
4. High corruption.
5. Economic an administrative cost of securing business is high.
6. One uncomfortable feature is that Bangladesh is one of the few countries where income poverty is falling slowly even though economic growth has picked up.
7. The absolute size of the population, despite success in lowering the growth rate, is increasing fast that creates tremendous pressure on resources as well as on provision of essential services.
- External attractive factors that represent the reason for an organization to exist and develop.
- What opportunities exist in the environment, which will propel the organization?
- Identify them by their “time frames”.
- Active investment destination.
- Great opportunity in pharmaceuticals and tourism industry.
- A higher demand for skilled workers can create an incentive for better training and education.
- Services sector development including export of skilled manpower is a real possibility.
- There is a promising private sector and the dynamism of this sector, especially in information communication technology (ICT), can be an important opportunity.
- The organization may benefit by having contingency plans to address them if they should occur.
1. External factors, beyond an organization’s control,
2.which could place the organization mission or operation at risk.
3. Classify them by their “seriousness” and “probability of occurrence”.
4. Oil price hike.
5. Cutback from globalization.
6. The efficiency in use of resources, and a political strategy for stability, equity, and growth is of greater priority in the coming years than it is now.
7. The failure to enhance the supply of quality education and good health is likely to create another threat.
8. The threat is that governance would become worse and economic decisions would further concentrate wealth, fund capital flight, and increase social tensions.
Efforts to achieve Bangladesh’s macroeconomic goals have been problematic mostly due to various factors including the country’s large population, corruption within the government, power shortages etc. The privatization of public sector industries has proceeded at a slow pace—due in part to worker unrest in affected industries—although on June 30, 2010, the government took a bold step as it closed down the Adamjee Jute Mill, the country’s largest and most costly state-owned enterprise. The government also has proven unable to resist demands for wage hikes in government-owned industries. Access to capital is impeded. State-owned banks, which control about three-fourths of deposits and loans, carry classified loan burdens of about 50%.
The IMF and World Bank predict GDP growth over the next 5 years will be about 6.5%, well short of the 9-10% needed to lift Bangladesh to Mid Income Nation level, within that time period. The initial impact of the end of quotas under the Multi-Fiber Arrangement has been positive for Bangladesh, with continuing investment in the ready-made garment sector, which has experienced annual export growth in excess of around 20%.Downward price pressure means Bangladesh must continue to cut final delivered costs if it is to remain competitive in the world market. Foreign investors in a broad range of sectors are increasingly frustrated with the politics of confrontation, the level of corruption, the slow pace of reform and privatization and deregulation of the public sector and the lack of basic infrastructure e.g. roads.While investors view favorably recent steps by the interim government to address corruption, governance, and infrastructure issues, most believe it is too early to assess the long-term impact of these developments.
Most Bangladeshis earn their living from agriculture. Although rice and jute are the primary crops, maize and vegetables are assuming greater importance. Due to the expansion of irrigation networks, some wheat producers have switched to cultivation of maize which is used mostly as poultry feed. Tea is grown in the northeast. Because of Bangladesh’s fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas. Due to a number of factors, Bangladesh’s labor-intensive agriculture has achieved steady increases in food grain production despite the often unfavorable weather conditions. These include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks. With 28.8 million metric tons produced in 2005-2006 (July–June), rice is Bangladesh’s principal crop. By comparison, wheat output in 2005-2006 was 9 million metric tons. Population pressure continues to place a severe burden on productive capacity, creating a food deficit, especially of wheat. Foreign assistance and commercial imports fill the gap, but seasonal hunger (“monga”) remains a problem.
Manufacturing & Industry
Many new jobs – mostly for women – have been created by the country’s dynamic private ready-made garment industry, which grew at double-digit rates through most of the 1990s. By the late 1990s, about 1.5 million people, mostly women, were employed in the garments sector as well as Leather products specially Footwear (Shoe manufacturing unit). During 2001-2002, export earnings from ready-made garments reached $3,125 million, representing 52% of Bangladesh’s total exports. Bangladesh has overtaken India in apparel exports in 2009, its exports stood at 2.66 billion US dollar, ahead of India’s 2.27 billion US dollar.
Eastern Bengal was known for its fine muslin and silk fabric before the British period. The dyes, yarn, and cloth were the envy of much of the pre-modern world. Bengali muslin, silk, and brocade were worn by the aristocracy of Asia and Europe. The introduction of machine-made textiles from England in the late eighteenth century spelled doom for the costly and time-consuming hand loom process. Cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Those who had earned their living in the textile industry were forced to rely more completely on farming. Only the smallest vestiges of a once-thriving cottage industry survived.
Other industries which have shown very strong growth include the chemical industry, steel industry, mining industry and the paper and pulp industry.
Bangladesh’s textile industry, which includes knitwear and ready-made garments along with specialized textile products, is the nation’s number one export earner, accounting for 80% of Bangladesh’s exports of $15.56 billion in 2009. Bangladesh is 3rd in world textile exports behind Turkey, another low volume exporter, and China which exported $120.1 billion worth of textiles in 2009. The industry employs nearly 3.5 million workers. Current exports have doubled since 2004. Wages in Bangladesh’s textile industry were the lowest in the world as of 2010. The country was considered the most formidable rival to China where wages were rapidly rising and currency was appreciating.
After massive labor unrest in 2006the government formed a Minimum Wage Board including business and worker representatives which in 2006 set a minimum wage equivalent to 1,662.50 taka, $24 a month, up from Tk950. In 2010, following widespread labor protests involving 100,000 workers in June, 2010, a controversial proposal was being considered by the Board which would raise the monthly minimum to the equivalent of $50 a month, still far below worker demands of 5,000 taka, $72, for entry level wages, but unacceptably high according to textile manufacturers who are asking for a wage below $30. On July 28, 2010 it was announced that the minimum entry level wage would be increased to 3,000 taka, about $43.
ECONOMIC GROWTH & POVERTY
The World Bank has praised Bangladesh for the way it has ensured 5.9% of the GDP growth in 2009 despite a global economic downturn- GDP is expected to grow by 5.7% in 2010. The country’s limited exposure to global markets meant it was not as badly hit by the global economic recession as other countries, although the downturn affected textile exports and foreign aids. In April 2009, the Awami League (AL) government announced a $500 million stimulus package to spur export driven sectors and placed emphasis on public and private partnerships .
Despite achieving an economic growth in recent years, around 40% of the country’s 160 million populations are still under the poverty line. High rates of inflation in the price of food, resulting from global commodity prices and rice shortages, have worsened problems in Bangladesh where the majority spends more than 70% of their income on food. An estimated 20,000 workers rioted near Dhaka in 2008 over the cost of rice, which soared due to two floods and Cyclone Sidr in 2007. Government imported 4 million tons of rice from India during 2007-2008 to tackle food crisis in that time. In Bangladesh, the rice availability at affordable prices becomes the politically destabilizing issue.
A key challenge for AL government is to curtail inflation, which reached 9% in February 2010, but in June 2009 the inflation was only 2.3%. Experts predict that inflation in Bangladesh will be 8.6% for financial years 2010/2011.
|$100.00 bn (at current prices 2010-11)|
|GDP per capita:||$664 (at current prices 2010-11)|
|GDP growth rate (%):||6.0 (at constant prices 2009-10)|
|Total exports:||$16.20 bn (2009-10)|
|Total imports:||$23.74 bn (2009-10)|
|Total FDI:||$0.913 bn (2010)|
|Forex reserves:||$10.700 bn (Nov 2010)|
|Currency:||BDT (1 BDT=$0.01438) (avg 2009-10)|
GDP at current price
|GDP (bn taka)|
|GNI* (bn taka)|
|Per capita GDP (in taka)|
|Per capita GNI (in taka)|
|Per capita GDP (in US$)|
|Per capita GNI (in US$)|
*P=provisional GNI=Gross National Income
Mid-term macroeconomic forecast 2011-2015
|GDP at current price (bn US$)|
|GDP growth at current price (%)|
|GDP growth at constant price (%)|
|GDP deflator (%)|
|Total investment (% GDP)|
GDP growth diagram at 2050
Bangladesh – Economic development
The major objectives of planned development have been increased national income, rural development, self-sufficiency in food, and increased industrial production. However, progress in achieving development goals has been slow. Political turmoil and untamed natural hazards of cyclone and flooding have combined with external economic shocks to persistently derail economic plans. Bangladesh’s first five-year plan (1973–78) aimed to increase economic growth by 5.5% annually, but actual growth averaged only 4% per year. A special two-year plan (1978–80), stressing rural development, also fell short of its projected growth target, as did the second five-year plan (1980–85), which targeted 7.2% annual growth. The third five-year plan (1985–90) had a5.4% annual growth target though only 3.8% was actually achieved.
In 1991, with the reinstitution of elected government, a new economic program was initiated that included financial sector reform and liberalization measures to encourage investment, government revenue improvement efforts (realized largely through implementation of a value-added-tax), and tight monetary policy. Income transfer measures, Food-for-Work, and other programs were also implemented to help protect the poorest segments of the population from the transitional effects of structural reform. Political turmoil from 1994 to 1996 helped reduce the final average annual growth rate under the Fourth Five Year Plan (1990–1995) to 4.15% (short of the 5% target), albeit the best performance so far under an economic plan. The 1996 elections brought renewed economic stability. Exports grew 14% 1996, and GDP growth for 1996/97 rose to 5.5% as the economy rebounded. Floods during 1998 and 1999 caused some economic slowdown but this was balanced by unprecedented growth in gas production and electricity production sectors. Average annual GDP growth under the Fourth Five-Year Plan rose to 5.3%.
Fiscal year 2000 was marked by a sharp increase in monetary expansion due to unprecedented borrowing from the banking sector (though the sale of treasury bills) to cover budget shortfalls due. Domestic borrowing increased primarily due to the reduced availability of external concessional financing. Historically, Bangladesh has received foreign aid disbursements equivalent to about 6% of GDP, have lately declined to amount equaling 3–4% GDP. Moreover, according to the IMF, much of the domestic borrowing was being used to cover recurrent expenses such as wage and salary increases. The revenue to GDP ratio rose in 2001 from 8.5% to 9.4%, but this improvement was more than offset by expenditure to GDP ratios of 14.4% and 14.1%, creating budget deficits amounting to 5.9% and 5%, in 2000 and 2001 respectively. The drain on foreign reserves from domestic borrowing contributed to reducing the foreign exchange cover for imports to imprudent levels of two months in 2000 and one-anda-half months in 2001.
Problems and recommendations of Economy
Vast Population: Bangladesh being a small country has around 150 million populations. This figure is growing rapidly day-by-day. In order to achieve and maintain a recognized standard of living for them, the basic needs of this vast population have to be met first. Then education and employment has to be ensured for every citizen in order to maintain social law and order. This is a huge task for a developing country like Bangladesh. With required international assistance, Bangladesh needs to turn this vast population into ‘Population Resource’ by following:
- Introducing technical education and skill development training.
- Creating job facilities for all.
- Facilitating vast migration as skilled manpower to Europe and Middle Eastern countries.
- Developing awareness for family planning and ensuring medication for all in order to ensure good standard of national health.
- Ensuring social justice and democracy.
Population Growth: The population growth (1.47% as per Census 2001) has to be kept controlled within the capacity of national economy so that the later can support the development of ‘Human Resource’.
Terrorism: Terrorism is growing as a serious concern in Bangladesh not only for the Govt. but also for all levels of citizen. Hundreds of killings by several bomb blast has shaken the stability of the society. Even foreign ambassador and the opposition Party Leaders have been made target by anti-state elements. Govt. can ensure security of all by adopting following:
- Establish strong intelligence network throughout the country to monitor the terrorists.
- Ensure adequate protection for any diplomat and political gatherings.
- Ensure arrest of leaders of any terror organization.
- Strong vigilance along the border to prevent infiltration and infiltration of any terror group.
- Ensure recovery of all illegal weapons.
- Effective check of arms smuggling.
- Finding out suspects of all bomb attacks.
- Ensuring exemplary punishment for terrorists and illegal arms holders.
- Seek international support where necessary.
- Raising people’s awareness against terrorism through media propagation.
- Countering terrorism and separatist movement in CHT.
Unemployment: Every year around 12 to 14 lakh students appear at each SSC and HSC Exam. Our traditional school and college education system produce young generation who are not qualified on any trade. An employer cannot expect any skilled performance from these passed out youths. Again there is no employment opportunity created in the country by the govt. Almost all the products available in the market are imported, very few items are produced within own country. Even Ball Pens are also imported. So unemployment causes poverty, drug-addiction, social crime etc which destabilizes the law and order situation throughout the country. To solve this problem, our Govt. can do the following:
- Introduce practical oriented education system which will facilitate employment just after passing out.
- Introduce massive 5 year program to train the unskilled youths in any skillful subject.
- Introduce law for banning import of items which are easily produced within the country, such as gems clip, blade, steel lock, bye- cycle tyre/ tube, ball pen etc.
- Undertake short-term and long-term policies to establish small and large industries for production of common commodities. Agricultural and communication sector’s machines should be produced within the country which will have a large market within the country itself. Reduce import gradually.
- Facilitate training and higher education at home and abroad for students at a large scale.
- Facilitate foreign employment.
- Encourage self-employment business by providing loan with min tax and other support required.
- International organizations can be invited to train our youths by establishing various training institutes.
- Private entrepreneurs can be encouraged for establishing various training institutes and industries.
- .Conduct survey all over Bangladesh to identify feasibility for establishing cottage, small and large industries.
Poverty Reduction: This problem cannot be solved by nights. Our Government can reduce the poverty level by undertaking a long-term and short-term national strategy by following:
- Massive industrialization in small and large scale industries sectors, thus ensuring massive employment.
- Ensuring free education not only for girls but also for poor boys.
- Introducing technical education in both traditional schools and madrasas.
- Arranging foreign employment and facilitating large scale migration for skilled workers.
Political Unrest: Political conflict and lack of tolerance for opposite opinion is a serious problem for national unity and development. Recent introduction of bomb culture has complicated the issue to a greater extent. Following can be done:]
- Steps to be taken for national unity by the ruling alliance and opposition parties.
- Opposition parties’ participation to be included in nation building programs.
- Strike should be band unanimously.
- Law and Order Maintenance Committee should be formed at each Upa-zila level by combining both ruling and opposition party leaders who will identify criminals and ensure action by law and order authority.
- Muscle power and use of excessive money should be restricted in election.
- Terrorists should not be sheltered by any party.
Religious Fundamentalism: Due to frequent occurrence of religious violence in neighboring India, Bangladesh also may suffer from the spillover effect created by any extremist group. Our Govt. needs to do following:
- Remain vigilant and firm to prevent such occurrence.
- Propagate religious tolerance and peaceful coexistence through media.
Illiteracy: As education is the backbone of a nation, our national backbone is weak due to large scale of illiteracy. The definition of literacy needs to be evaluated. Only education of traditional method does not provide any fruit in the practical field. So any person trained and skilled in any particular profession should be recognized as ‘literate’. Nursery, cow fattening, poultry firming etc need no pen and paper education but practical training on those aspects is perfect and effective training for them. In Bangladesh, more than 2500000 middle class families possess house servants who are girls or boys, these poor fellows remain illiterate and learn no technical job other than house cleaning or cooking. Allowing such a large number of young people illiterate, how can a nation overcome poverty? Our Govt. can solve this illiteracy problem by:
- Arranging practical education for respective professionals who are aged such as farmers, fishermen, poultry farmers etc.
- Effecting law for ensuring attendance of children in schools.
- Introducing penalty for not sending house workers to school. Some Child labor-watch-dogs should be employed for checking this.
- Introducing Education Loan from banks for any student who applies.
Child Labor: More than 5000000 child labors work in different houses, small industries and on footpaths. Their working time is never maintained by employers though every year ‘May Day’ is observed in our country. Their salaries also vary from employers to employers. A nation cannot prosper by neglecting such a large number of populations of younger age. Our Govt. can solve these human right violations by:
- Introducing an ‘age-limit’ for employment in any household or outside work.
- Introduce a ‘minimum wage’ rate for any worker in any job.
- Introduce ‘maximum time limit’ for work and ‘over-time’ system for their extra time labor.
Prostitution: Every year thousands of Bangladeshi women and children are trafficked to foreign countries for working in sex industries. Also more than lacs are engaged in such inhuman trade within the country. This creates not only human miseries for those unfortunate women and children but also risking the spread of AIDS, drug addiction and related crimes in the country. Bangladesh Government with the support of neighboring/foreign countries and UNO can solve this tragedy by:
- Ensuring economic emancipation of common mass.
- Ensuring awareness.
- Ensuring severe penalty for traffickers.
- Ensuring border control for illegal trace pass.
- Arranging proper rehabilitation of victims.
- Taking support of neighboring and destination countries.
- Taking assistance of UN body.
Violence Against Women: This a serious social curse that women are subjected to torture, divorce, trafficking, rape, acid attack, killing, burning, abandoning by husband, unequal treatment etc. The Govt. can implement following:
- Pass and implement harder law against for such act of inhumanity.
- Raise social consciousness against such torture.
- Introduce awareness through academic syllabus at school , college and university level.
Cast of Dowry: Every year hundreds of women are to face torture and divorce or even murder for the demand of dowry. Raise of social hatred and punishment can be introduced against such demand.
Gender Inequity: Male and female ratio in our country is 103.8: 100 as per Census 2001. Around half of the population of the nation is women, so by keeping themselves aloof from nation building activities, country cannot prosper. Govt should ensure following:
- Equal facility for education and employment.
- Equal wage rate and social-treatment should be ensured.
- Raise awareness through media and education system.
Violence in Educational Institutions: Almost all the public universities are badly affected by so-called ‘student politics’. Frequent strikes and terrorist activities in these universities hamper the educational process. This creates session jam and unnecessary sufferings of poor students. As a result, every year thousands of Bangladeshi students get admitted in India. Our Govt can solve this problem by:
- Introducing academic and disciplinary systems so that no student gets chance to get involved in student politics.
- Ensure ousting of outsiders from student campus and halls.
- Ensure strong surveillance to detect illegal arms and take drastic measures against terrorists.
- Establish minimum one university in every district and reduce student numbers in each university.
- Ban professor’s politics
- Ban all types of political gathering and procession within and near university area.
- Facilitate establishment of private universities and develop their standard.
- Facilitate large number of students’ admission in developed countries.
- Introduce ‘last age limit’ for students to continue study in universities so that no student can remain in university more than years required for Honours and Masters Degree at a stretch.
- Introduce strong disciplinary measures for students staying in different halls such as morning and evening roll call, in-out checking, compulsory study and rest period, restriction on guests etc.
Hostility by big Neighbor and Need for Deterrent Defense: Survival of this country as a sovereign political entity is under threat from her big neighbor by which it is geographically surrounded. Neheru’s ‘One India Doctrine’ is still being pursued by the Govt. of India which dreams reunification of Pakistan and Bangladesh with India. In order to deter any military misadventure by India’s Forces, Bangladesh needs to:
- Maintain a sizable force compatible to any potential invader.
- Possess modern armament (with effective anti-Tank and anti-aircraft defense system) and equipment to effectively deter any aggressor.
- Maintain adequate number of troops to counter any internal separatist movement like Chakma Tribal’s insurgency in Chittagong Hill Tracts (CHT).
Lack of Skill Education Policy: Our education policy is not capable of meeting the challenges of practical needs. In order to make the education fruitful to the development of the country, Govt. needs to:
- Introduce practical oriented subjects which will be helpful for the student’s employment.
- Education to be made complementary to the needs of the country. Student should be developed as a skilled force for the development of the country.
Massive Corruption: Bangladesh has become number 1 corrupted country in the world thrice. This has seriously affected country’s image and foreign investment in the country. Govt. needs to:
- Identify weaknesses and measures to control the corruption at all levels.
- Ensure strict law and punishment for bribe takers, human traffickers, smugglers, illegal stockholders etc.
- Introduce moral education in all institutions.
- Assign responsibility for each sector to control corruption within particular period.
Slum Dwelling: Approximately 1 million people live in slums in DhakaCity. They get minimum level of health, hygiene and sanitation and dwelling facilities in those slums which is inhuman. Our Govt. NGOs and international organizations should come forward to reduce miseries of these poor people by:
- Providing dwelling facilities.
- Rehabilitating by creating employment.
- Arrange training for youths on different skills.
- Arrange education for children.
- Establishing cottage, small and large industries in the rural areas to encourage repatriation and stop further migration to cities.
- Arrange distribution of newly raised islands in the south of the country and create administrative, medical and communication facilities to encourage poor people for settling there.
Micro Financing: Present system of micro financing with high rate of interest only enriches the NGOs and making the credit holders poor to poorer. Govt. banks, NGOs and international grant authorities should provide more micro credits to poor people so that they can do some income generating activities and also return the loan easily. Our Govt. should:
- Fix a minimum interest rate for all micro lending by NGOs and save the poor from suppression.
- Banks to provide loans with easer terms.
- Stop middlemen’s interference and illegal profit.
Lack of Adequate Mineral Resources: There are limited quantities of mineral resources available which are not adequate to fulfill the long-term requirement of the gradually increasing vast population. In order to preserve and ensure optimum utilization of country’s meager mineral resources, our Govt. needs to:
- Conduct unbiased survey of all types of mineral resources.
- Develop own exploration organizations and avoid dependence on foreigners.
- Ensure access of all citizens to gas and solar power in order to reduce deforestation.
- All vehicles to be converted to CNG system.
- Preserve the gas and oil resources for future generations.
Lacking Behind in Satellite Communication:Bangladesh needs to have own satellite for communication, media, survey and intelligence requirement. Dependence on foreign satellites may not serve the purpose in time of need. If our nearby orbit is captured by other countries then we will not get orbit to place our satellite. In order to be independent on this aspect, Bangladesh needs to :
- Educate own researchers and scientists at home and abroad on space technology.
- Establish a research center for conducting research and development.
- Undertake plan to possess own satellite.]
Hazardous Transportation System There are lacks of transports ply in the country. Due to lack of wide road, poor traffic system and different types of unfit transports, road accidents and traffic jam causes many deaths and loss of countless working hours every day. In order to streamline our traffic system, Govt. needs to:
- Widen the roads throughout the country.
- Ensure fitness of all transports ply on road. Ban unfit vehicles.
- Authorize scientific designs for body construction of different types of vehicles.
- Convert all motor engines into CNG system.
- Introduce traffic system in educational curriculum.
- Ensure modern driving training and licensing system.
- Facilitate extension of DhakaCity.
- Shift max Govt. offices, from center of cities.
- Construction of new super markets and high raised buildings beside narrow roads to be restricted.
- Establishment of new industry within the city to be restricted.
- Hawker stalls to be removed from roadside.
- Develop modern residential areas and markets at outskirts of the city to encourage shifting of people and reduce pressure on existing unplanned city.
Food Shortage: Every year several million metric tons of food grains are to be imported by spending lots of foreign currencies. Food production may be increased by:
- Providing modern agricultural technologies to our farmers.
- Proving agricultural loans to farmers at easier terms.
- Undertaking flood control measures.
- Ensuring water reservation by digging canals, ponds, excavating rivers, constructing embankments and ensuring due water share from India.
- Ensuring pesticides and fertilizer at affordable prices to farmers.
- Arrange cultivation of huge newly raised islands.
- Arrange agricultural education packages for farmers to raise their production skills.
- Ensuring high productive seeds in time.
- Establishing agricultural institutions in all districts.
- Restricting food stacking and ensure adequate supply.
Impact of Globalization: Due to revolution in communication technology, rise of world level corporate giants, political and economic interests of developed countries, impact of globalization is an unavoidable reality in today’s world. In order to survive as an independent and sovereign nation, Bangladesh needs to achieve independence on economic sector. To sustain negative impact of globalization, Bangladesh needs to:
- Encourage Foreign Direct Investments (FDI) and facilitate establishment of EPZs.
- Increase production and value adding capability to meet internal and export-target requirement.
- Increase diplomatic and trade relation with developed and ASEAN countries.
Trade Deficit: Every year Bangladesh suffers a trade deficit of around 35000 crore Taka with India. Again Indian good of worth 40000 crore Taka are smuggled into Bangladesh. Bangladeshi markets are flooded with Indian goods. Besides these, barriers put by India against our export to that country affecting the very survival of our industries. In order to reduce the trade deficit with India and other countries, Bangladesh needs to:
- Pursue stronger diplomacy.
- Put ban on import of goods which can be produced within own country like food grains, fish, clothes, cycle parts, pens, office stationeries etc.
- Ensure effective border checking for smuggled goods.
- Patronize establishment of various industries within own country and enrich own export basket.
- Raise patriotism by media for use of own products.
- Increase export to ASEAN and Islamic Economic Zones.
Lack of Foreign Direct Investment (FDI): Bangladesh needs to encourage the world nations and international financing organizations to invest more in social, economic and infrastructural development of the country. Political stability, improved law and order situation and managerial efficiency is required for attracting and proper utilization of FDI which needs to be ensured by the Govt.
Dependency on Foreign Technology and Goods: No country can be real independent if it remains dependent on foreign countries for its every kind of technology. Bangladesh being a country of 15 crore population, is dependent on foreign countries for its agricultural, transportation, industrial, defense and all other types of technologies. Even after 33 years of independence, no research institute has been established for technological research and development. To be independent on technological side, Bangladesh needs to:
- Establish a ‘Research and Development Organization’ for all kinds of technological research and development.
- Establish industries for producing transportation equipments like-Motor Cycle, CNG Taxi, car, Van etc.
- Produce all agricultural machineries like power pump, trailer, tractor etc within own country.
- Be self reliant in producing certain categories of arms and ammunitions within own country as Bangladesh may be cut off from rest of the world in times of any invasion by potential neighbour.
- Emphasis on introducing technology oriented education in all educational institutions.
Poor Water Management.Bangladesh has no water management policy to meet the water demand of her vast 15 crore population. In the cities, villages and hilly areas, people suffer from inadequate supply of water. Lack of water for irrigation causing food shortage in the country. Tista Barrage itself is going ineffective due to siltation in TistaRiver. To overcome this, our Govt needs to:
- Prepare a water management plan for the country.
- Ensure preservation of water by digging ponds and canals and building embankment around haors/bills of Sylhet and Rajshahi etc.
- Dazing of rivers for maintaining water transportation.
- Encourage forestation by loan.
Insignificant Trade with ASEAN Countries:Bangladesh has become dependent on Indian goods as it she did not develop trade relation with other neighboring countries of Asia from where we can meet our demand easily. Present initiative of the Govt. for improving relation with ASEAN countries may reduce our dependence on India. Our Govt. needs to:
- Develop and maintain diplomatic relation with ASEAN countries.
- Establish road communication with Myanmar and then with China and Thailand.
- Encourage tourism to and from these countries.
- Study needs of those countries and e encourage our entrepreneurs and exporters to increase trade with those countries.
- BuildKarnophuliBridge over River Karnophuli immediately to facilitate export –import with those countries.
Lack of adequate Patronization for IT Revolution: Though few steps taken by the Govt. for IT development, there needs more initiative to keep the pace with the modern world. IT Revolution does not mean distribution of few computers in few schools. To mean a real revolution, our Govt. needs to:
- Arrange to create required numbers of IT instructors to meet countrywide demand.
- Arrange distribution of required number of computers in every school, college, Madrasa and university.
- Arrange purchase of computer by every student with long-term credit.
- Ensure production of adequate units of current.
- Ensure supply of current and solar power in all rural areas.
- Arrange higher education on specialized subjects of IT.
- Arrange employment of IT specialists at home and abroad.
- Promote development and export of Software.
Dependency on Primitive Technology in Agriculture, Transportation and Industrial Sector: To boost our economy, we need to adopt modern technology. Our Govt. needs to:
- Provide modern equipments for agriculture along with its training.
- Develop roads throughout the country and introduce modern transportation along with training.
- Introduce modern technology in industrial sector to improve production level.
- Arrange training on different technologies to develop skilled manpower to operate modern machines.
Flood and Poor Disaster Management System: Flood has become every year’s tragedy for the people of Bangladesh. This is not a natural but a man-made disaster as India releases huge quantity of upper-stream rain water through Farakka Barrage opening all the gates suddenly. As due to Farakka Barrage all the river’s bed has became filled up with silt. This has reduced water containing capacity of the rivers. Even our maritime transportation system is also becoming ineffective due to raise of several islands in the rivers. To solve this, our Govt. needs to:
- Arrange gradual release of water through Farakka Barrage by India.
- Digging of canals, dredging of river beds to increase river’s water containing capacity.
- Arrange early warning for people.
- Introduce floating seed fields and vegetable fields.
- Arrange adequate measures for protection of fisheries so that fishery projects are not overflowed by flood.
- Preserve adequate amount of medicine and relief materials stacked for distribution with immediate effect.
- A National Disaster Management Policy should be undertaken taking Govt and opposition parties’ representatives.
- International communities to be involved in surveying the effect, estimate the damage and providing assistance for rehabilitation.
Probability of Earth Quake:Bangladesh is located within a dangerous perimeter of earth-quack zone. Around every year, earth quack is traced here. An earth-quack of greater. Any earth quack within the Dhaka or ChittagongCity area is likely to cause devastating effect on people’s lives and property. To reduce the damage, our Govt. needs to:
- Undertake a national policy to manage the disaster.
- Ensure abidance of engineering design for construction of buildings.
- Ban present system of gas supply for household use by pipeline as this gas line will cause fire and burning of lives and properties. Govt. should introduce cylinder compulsorily for house-hold purpose.
- The electricity supply line also should be made under surface to avoid people’s death by electrification.
- A reserve of emergency food and medicine should be maintained to manage big level crisis.
Part – Three
Millennium Development goals
Rostow’s Development Model
The Harrod-Domar Model
Millennium Development goals (MDG)
In September 2000, world leaders endorsed the Millennium Declaration, a commitment to work together to build a safer, more prosperous and equitable world. The Declaration was translated into a roadmap setting out eight time-bound and measurable goals to be reached by 2015, known as the Millennium Development Goals (MDGs): They include goals and targets on poverty, hunger, maternal and child mortality, disease, inadequate shelter, gender inequality, environmental degradation and the Global Partnership for Development.
List of countries which received UN MDG Awards in 2010
Nepal has received a Millennium Development Goal (MDG) Award for significantly improving maternal health. Nepal was selected for the award from among 49 Least Developed Countries (LDC)s for the outstanding national leadership, commitment and progress towards achievement of the MDG goal related to improving maternal health. Cambodia has been presented with a Millennium Development Goals Award for its national leadership, commitment and progress towards achievement of Goal 6 – Combating HIV, malaria and other diseases. Cambodia has been honored within the ‘Government’ category of the annual Awards initiative, presented at a high-profile event in New York City. Sierra Leone received the United Nations Millennium Development Goal ( MDG ) Award in recognition of President Ernest Koroma ‘s remarkable leadership commitment and progress towards achieving the Millennium Development Goals (MDGs) Goal Six. Liberia has been named as the winner of this year’s prestigious Millennium Development Goal Three (MDG 3) award for outstanding leadership, commitment and progress toward the achievement of the MDG-3 through the promotion of gender equality and women’s empowerment across the country.
It is difficult to define the level of development as there is a continuum from more to less developed and so they are relative concepts.
There are 4 main areas for defining development:
- Economic progress
- Technological improvement
- Social, cultural & political freedom
Measures of Development
- % of people in each sector of industry
- GNP per person
- Birth rate / death rate / infant mortality rate
- Number of doctors per 1000 people.
- % of urban population
- Life expectancy
- Manufacturing workforce.
The most common measure of development is the Human Development Index (HDI).
However it is difficult to measure development, particularly cultural & political factors. There are also some problems with the measurements:
- Data from country to country may not be comparable.
- The data is not necessarily reliable
- There may be variations within a country making the average unreliable.
The results are very dependent on what indicators are used & their relative importance.
Gross National Product (GNP)
A measure of the wealth of a country. It is the total amount of money made from products & services by companies from a particular country. However there are some problems:
- Doesn’t include income inequalities.
- Don’t show regional variations.
- Does not take into account the cost of living.
- Fails to pick up the social & environmental impacts of development.
Gross Domestic Product (GDP)
This is instead a measure of the output of goods & services produced in that country which may not necessarily all belong to that country. The difference between GNP & GDP is likely to increase as a result of the rise in foreign owned companies & TNCs.
Purchasing Power Parity (PPP)
Relates the average earnings to the ability to buy goods. PPP therefore raises the GNP for developing countries & lowers it for developed countries. However it still doesn’t take into account regional variations or the social & environmental costs of development.
Rostow’s Development Model
Creator: Walt Whitman Rostow 1916-2003 was an American economist who proposed his five stage model of development in the 1950’s, the ideas of which stemmed from modern free trade and Adam Smith. Rostow’s model does not deny John Maynard Keynes in that it allows for a degree of government control over domestic development not generally accepted by some ardent free trade advocates. Although empirical at times, Rostow is hardly free of normative discourse. As a basic assumption, Rostow believes that countries want to modernize as he describes modernization, and that society will assent to the materialistic norms of economic growth.
Purpose: requires a country to identify its distinctive or unique economic resources. The model puts forth the idea that a country can develop economically by concentrating on resources in short supply to expand beyond local industries to reach the global market and finance the country’s further development.
The Five Stages of Development:
1. Traditional Society- Refers to a country that has yet to begin developing, where a high percentage of people are involved with agriculture and a high percentage of the country’s wealth is invested in activities such as the military and religion, seen as “nonproductive” by Rostow. These are societies which have pre-scientific understandings of gadgets, and believe that gods or spirits facilitate the procurement of goods, rather than man and his own ingenuity.
2. Transitional Stage- AKA the preconditions for takeoff. Under the model, the process of development begins when an elite group initiates innovations economic activities. Under the influence of these well-educated leaders, the country starts to invest in new technology and infrastructure, such as water supplies and transportation systems. These projects will ultimately stimulate an increase in productivity likely increasing the GDP. There is a limited production function, and therefore a limited output. There are limited economic techniques available and these restrictions create a limit to what can be produced. Increased specialization generates surpluses for trading. There is an emergence of a transport infrastructure to support trade. External trade also occurs concentrating on primary products.
3. Takeoff- Rapid growth is generated in a limited number of economic activities, such as textiles or food products. These few, takeoff industries achieve technical advances and become productive, whereas other sectors of the economy remain dominated by traditional practices. After take-off, a country will take as long as fifty to one hundred years to reach maturity. Globally, this stage occurred during the Industrial Revolution. Industrialization increases, with workers switching from the agricultural sector to the manufacturing sector. The level of investment reaches over 10% of GNP. The growth is self-sustaining as investment leads to increasing incomes in turn generating more savings to finance further investment.
4. Drive to maturity- Modern technology, previously confined to a few takeoff industries, diffuses to a wide variety of industries, which then experience rapid growth comparable to the takeoff industries. Workers become more skilled and specialized. The economy is diversifying into new areas the economy is producing a wide range of goods and services and there is less reliance on imports
5. High Mass Consumption- AKA age of mass consumption. The economy shifts from production of heavy industry such as steel and energy, to consumer goods, such as motor vehicles and refrigerators. Of particular note is the fact that Rostow’s “Age of High Mass Consumption” dovetails with (occurring before) Daniel Bell’s hypothesized “Post-Industrial Society.” The Bell and Rostovian models collectively suggest that economic maturation inevitably brings on job-growth which can be followed by wage escalation in the secondary economic sector (manufacturing), which is then followed by dramatic growth in the tertiary economic sector (commerce and services).
Main Points & Examples:
Rostow’s development model was based on two factors. First, the developed countries of Western Europe and Anglo-America? had been joined by others in Southern and Eastern Europe and Japan. Second, many LDCs contain an abundant supply of raw materials sought by manufacturers and producers in MDCs. In the past, European colonial powers extracted many of these resources without paying compensation to the colonies, as core countries do to periphery. In a global economy, the sale of these raw materials could generate funds for LDCs to promote development.
– According to the model, each country is in one of these five stages of development. With MDC’s in stage 4 or 5, whereas LDCs are in one of the three earlier stages. The model asserts that today’s MDC’s passed through the other stages in the past. For example, the U.S. was in stage 1 prior to independence, stage 2 during the 1st half of the 1800’s, stage 3 during the middle of the 1880’s, and stage 4 during the late 1800’s, before entering stage 5 during the early 1900’s. The model assumes that LDCs will achieve development by moving along from an earlier to a later stage.
A country that concentrates on international trade benefits from exposure to consumers in other countries. To remain competitive, the takeoff industries must constantly evaluate changes in international consumer preferences, marketing strategies, production engineering, and design technologies.
Examples of countries adopting this method of development include areas in East/Southeast Asia and Arabian Peninsula.
In Southeast Asia, a group of countries, Singapore, Taiwan, South Korea, and the former British colony of Hong Kong came to be known as the “four dragons” after adopting the international trade approach. They were lacking in natural resources so they promoted development by concentrating on producing a handful of manufactured goods, especially clothing and electronics. Low labor costs enabled these countries to sell products inexpensively in MDCs.
The countries of the Arabian Peninsula, which includes Saudi Arabia, Kuwait, Bahrain, Oman, and the United Arab Emirates, went from LDC’s to some of the wealthiest countries almost overnight due to increased petroleum prices during the 1970’s. Arabian Peninsula countries have used petroleum revenues to finance large-scale projects, such as housing, highways, airports, universities, and telecommunications networks.
1: Rostow is ‘historical in the sense that the end result is known in the outset and is derived from the historical geography of developed society.
2: Rostow is mechanical in the sense the underlying motor of change is not disclosed and therefore the stages become little more than a classificatory system based on data from developed countries.
3: His model is based on American and European history and aspiring to American norm of high mass consumption.
4: His model represents a “non-communist manifesto” or we can say a “capitalist manifesto”.
Rostow’s thesis is biased towards a western model of modernization, but at the time of Rostow the world’s only mature economies were in the west, and no controlled economies were in the “era of high mass consumption.” The model de-emphasizes differences between sectors in capitalistic vs. communistic societies, but seems to innately recognize that modernization can be achieved in different ways in different types of economies.
The most disabling assumption that Rostow is accused of is trying to fit economic progress into a linear system. This charge is correct in that many countries make false starts, reach a degree of transition and then slip back, or as is the case in contemporary Russia, slip back from high mass consumption (or almost) to a country in transition. On the other hand, Rostow’s analysis seems to emphasize success because it is trying to explain success. To Rostow, if a country can be a disciplined, uncorrupt investor in itself, can establish certain norms into its society and polity, and can identify sectors where it has some sort of advantage, it can enter into transition and eventually reach modernity. Rostow would point to a failure in one of these conditions as a cause for non-linearity.
Another problem is that Rostow’s work considers mostly large countries: countries with a large population (Japan), with natural resources available at just the right time in its history (Coal in Northern European countries), or with a large land mass (Argentina). He has little to say about small countries, such as Rwanda, which do not have such advantages. Neo-liberal economic theory to Rostow, and many others, does offer hope to much of the world that economic maturity is coming and the age of high mass consumption is nigh.
Many development economists argue that Rostows’s model was developed with Western cultures in mind and not applicable to LDCs. It addition its generalized nature makes it somewhat limited. It does not set down the detailed nature of the pre-conditions for growth. In reality, policy makers are unable to clearly identify stages as they merge together. Thus as a predictive model it is not very helpful. Perhaps its main use is to highlight the need for investment. Like many of the other models of economic developments it is essentially a growth model and does not address the issue of development in the wider context.
Rostow’s thesis is biased towards a western model of modernization, but at the time of Rostow the world’s only mature economies were in the west, and no controlled economies were in the “era of high mass consumption.” The model de-emphasizes differences between sectors in capitalistic vs. communistic societies, but seems to innately recognize that modernization can be achieved in different ways in different types of economies.
The most disabling assumption that Rostow is accused of is trying to fit economic progress into a linear system. This charge is correct in that many countries make false starts, reach a degree of transition and then slip back, or as is the case in contemporary Russia, slip back from high mass consumption (or almost) to a country in transition. On the other hand, Rostow’s analysis seems to emphasize success because it is trying to explain success. To Rostow, if a country can be a disciplined, uncorrupt investor in itself, can establish certain norms into its society and polity, and can identify sectors where it has some sort of advantage, it can enter into transition and eventually reach modernity. Rostow would point to a failure in one of these conditions as a cause for non-linearity.
Another problem that Rostow’s work has is that it considers mostly large countries: countries with a large population (Japan), with natural resources available at just the right time in its history (Coal in Northern European countries), or with a large land mass (Argentina). He has little to say and indeed offers little hope for small countries, such as Rwanda, which do not have such advantages. Neo-liberal economic theory to Rostow, and many others, does offer hope to much of the world that economic maturity is coming and the age of high mass consumption is nigh. But that does leave a sort of ‘grim meathook future’ for the outliers, which do not have the resources, political will, or external backing to become competitive.
China, India and most African and Eastern European countries adopted this strategy at one time. The idea is to protect local, fledgling businesses from large, international competition. This also helps to make your country independent of the MDCs and not at the whim of TNCs.
Elements of self-sufficiency approach – Import limitation
-Higher taxes on imported goods (tariffs)
-Set quotas on imports
India once did all of these and even made it illegal to exchange their money on
The government wanted businesses to produce for India only (local businesses that is). If private companies could not make a profit, the government subsidized them.
What Does Okun’s Law Mean?
The relationship between an economy’s unemployment rate and its gross national product (GNP). Twentieth-century economist Arthur Okun developed this idea, which states that when unemployment falls by 1%, GNP rises by 3%. However, the law only holds true for the U.S. economy, and only applies when the unemployment rate falls between 3-7.5%. Other version of Okun’s Law focus on a relationship between unemployment and GDP, whereby a percentage increase in unemployment causes a 2% fall in GDP.
Graph of US quarterly data (not annualized) from 1947 through 2002 estimates a form of the difference version of Okun’s law: %Change GNP = .856 – 1.827*(Change Unemployment Rate). R^2 of .504. Differences from other results are partly due to the use of quarterly data.
In economics, Okun’s law is an empirically observed relationship relating unemployment to losses in a country’s production first quantified by Arthur M. Okun. The “gap version” states that for every 1% increase in the unemployment rate, a country’s GDP will be at an additional roughly 2% lower than its potential GDP. The “difference version”  describes the relationship between quarterly changes in unemployment and quarterly changes in real GDP. The accuracy of the law has been disputed. The name refers to economist Arthur Okun who proposed the relationship in 1962.
Okun’s law is more accurately called “Okun’s rule of thumb” because it is primarily an empirical observation rather than a result derived from theory. Okun’s law is approximate because factors other than employment (such as productivity) affect output. In Okun’s original statement of his law, a 3% increase in output corresponds to a 1% decline in the rate of unemployment; a .5% increase in labor force participation; a .5% increase in hours worked per employee; and a 1 % increase in output per hours worked (labor productivity).
Okun’s law states that a one point increase in the unemployment rate is associated with two percentage points of negative growth in real GDP. The relationship varies depending on the country and time period under consideration.
The relationship has been tested by regressing GDP or GNP growth on change in the unemployment rate. Martin Prachowny estimated about a 3% decrease in output for every 1% increase in the unemployment rate (Prachowny 1993). The magnitude of the decrease seems to be declining over time in the United States. According to Andrew Abel and Ben Bernanke, estimates based on data from more recent years give about a 2% decrease in output for every 1% increase in unemployment (Abel and Bernanke, 2005).
There are several reasons why GDP may increase or decrease more rapidly than unemployment decreases or increases. As unemployment increases,
- a reduction in the multiplier effect created by the circulation of money from employees
- unemployed persons may drop out of the labor force (stop seeking work), after which they are no longer counted in unemployment statistics
- employed workers may work shorter hours
- labor productivity may decrease, perhaps because employers retain more workers than they need
One implication of Okun’s law is that an increase in labor productivity or an increase in the size of the labor force can mean that real net output grows without net unemployment rates falling (the phenomenon of “jobless growth”).As a relationship between changes in the unemployment rate and economic growth, Okun’s law predicts that growth slowdowns typically coincide with rising unemployment. The recent experience of 2006 shows, however, that this is not always the case. This article has documented several reasons for this. First among these is that Okun’s law is not a tight relationship. There have been many exceptions to Okun’s law or instances where growth slowdowns have not coincided with rising unemployment. This is true when looking over both long and short time periods. This is a reminder that Okun’s law—contrary to connotations of the word “law”—is only a rule of thumb, not a structural feature of the economy. This article has also documented that Okun’s law has not been a stable relationship over time. Part of this variation is related to the state of the business cycle: The relationship between output and unemployment is different in recessions and expansions, and recent expansions have been longer than average. Additionally, the data suggest that a weakening of the contemporaneous relationship between output and unemployment has coincided with a stronger relationship between past output growth and current unemployment.
The Harrod-Domar Model
Main Prediction: GDP growth is proportional to the share of investment spending in GDP.
1. Assume unemployed labor, so there is no constraint on the supply of labor.
2. Production is proportional to the stock of machinery.
Growth Rate of GDP
We want to determine the growth rate of GDP, which is defined as:
G(Y) = (change in Y) / Y where Y = GDP
To do this, we estimate the Incremental Capital-Output Ratio (ICOR), which is a measure of capital efficiency.
ICOR = (change in K) / (change in Y) where K = capital stock
A high ICOR implies a high increase in capital stock relative to the increase in GDP. Thus, the higher the ICOR, the lower the productivity of capital.
Since capital is assumed to be the only binding production constraint, investment (I) in the Harrod-Domar model is defined as the growth in capital stock.
I = (change in K)
But investment is also equal to savings (S), which is equal to the average propensity to save (APS) times GDP (Y). Denote APS = s
I = S = APS * Y = s*Y
ICOR = (s Y) / (change in Y)
G(Y) = (change in Y) / Y = s / ICOR
Growth Rate of GDP per Capita
The growth rate of GDP per Capita is defined as
G(Y/P) = G(Y) – G(P) where G(P) = the population growth rate
G(Y/P) = s / ICOR – G(P)
Thus, a 1 percent increase in population growth will cause the growth rate of GDP per capita to decrease by 1 percent. The empirical question is whether policy makers can achieve a constant marginal product of capital when the centralize investment decisions.
1. Assume that a country has a savings/investment rate of 4 percent of their GDP and an ICOR of 4, they will have a growth rate of 1 percent. But if the population growth rate were also 1 percent, then the country would have zero GDP growth per capita. These assumptions imply that for a country to develop, it needed to have an investment rate of around 12-15 percent of GDP, which would result in a GDP growth rate of 3 percent. The country in our example, however, only invests 4 percent. The difference between the required investment rate (12 percent) and the country’s own investment (4 percent) is what development economists call the financing gap. Foreign aid by Western countries fills this financing gap in order to attain the target growth for the country. However, unless the investment is used productively, there is no guarantee that it will generate the desired change in output.
2. The Harrod-Domar model assumes fixed coefficients:
Y = F(K,L) = min (AK,BL) where
A and B are positive constants. With fixed proportions, if the available capital and labor happen to fit AK=BL, then all workers and equipment are fully employed. However, if AK>BL, then only BLA⎛⎞⋅⎜⎟⎝⎠ of the capital is used and the rest is unemployed. If AK<BL, then only AKB⎛⎞⋅⎜⎟⎝⎠ of the labor is used and the rest is unemployed.
3. Assume that Shanistan producers cigars with a fixed coefficient technology:
Y = min (1/4K, 1/2L)
Currently, Shanistan has 80 units of K and 100 L. What is the feasible output?
Y = 20
What is employment? (1/2) 80 = 40
Divide both sides by L to get per capita output:
y = min (Ak, B)
If k< B/A, then K is fully employed and output y = Ak
For k> B/A, then Y = BL and capital would be unemployed, so y = B.
(In the graph, below, we derive y and k when 0<K<30 and L = 10).
Limitations of the model:
1. Economic growth and economic development are not the same. Economic growth is a necessary but not sufficient condition for development
2. Harrod Domar model was formulated primarily to protect the developed countries from chronic unemployment, and was not meant for developing countries.
3. Practically it is difficult to stimulate the level of domestic savings particularly in the case of LDCs where incomes are low.
4. It fails to address the nature of unemployment exists in different countries. In developed countries, the unemployment is ‘cyclical unemployment’, which is due to insufficient effective demand; whereas in developing countries, there is ‘disguised unemployment’.
5. Borrowing from overseas to fill the gap caused by insufficient savings causes debt repayment problems later.
6. The law of diminishing returns would suggest that as investment increases the productivity of the capital will diminish and the capital to output ratio rise.
The Harrod-Domar model of economic growth cannot be rejected on the ground of above limitations. With slight modifications and reinterpretations, it can be made to furnish suitable guidelines even for the developing economies.
Part – Four
Young Visionaries of Bangladesh
Four wheels of economic growth
Sector wise Visions
Additional Challenges and Recommendations
About Bangladesh Development Initiative
Six Point policy
- One of the top 30th largest economies in the world
- Upper Middle Income Country (UMIC) with per capita GNI of around $4000
- One of the Economic Tigers in Asia
- Accounting for around 1% of the world’s GDP
Goal 1: High FDI INFLOW (2011-2050 will be around 80 billion)
Building an enabling environment to spur FDI & domestic private investment
The need for a more positive Brand Bangladesh
Goal 2: Higher Market Capital to GDP ratio: Market capital to GDP Ratio will reach a level around to 95% – 100% to support the accelerated growth scenario.
Privatization of state owned enterprises (SOEs) to secure higher efficiency & profit.
Mandatory enlistment of local & multinational companies in the capital market
Favorable investment climate for foreign investors
Deepen the capital base
Goal 3: FINANCIAL MARKET WITH STABILITY & DEPTH: to support the accelerated growth to industries, the assets base of financial sector of the country will increase substantially.
Introduction of advanced financial instruments like bonds, debentures, derivatives etc
Promotion of good financial market governance
Goal 4: INCREASED GOVERNMENT REVENUE: Government revenue will be 22-25% of the total GDP
Broadening the taxpayer base. Currently we have 22.5 million people are eligible to pay tax but only 1.2 million people is willingly given tax.
Tax structure reforms
Goal 5: HIGHER INWARD FLOW OF REMITTANCE: Inward remittance flow to Bangladesh will reach a level of around 55 billion US$ per year
Initiatives: inward remittance flow to Bangladesh will reach a level of around 55 billion us$ per year
Goal 6: INCREASED CONTRIBUTION OF INDUSTRIAL SECTOR TO GDP: the industrial sector will contribute around 50% of the GDP
Expectations: industrial contribution to the GDP from 29.95% to around 50% lessening the service sector from 49.9% to around 42%
Key importance to improve manufacturing productivity
Adjusting energy constraints
Lowering the trade barrier
Building human capital
Initiatives: textile Industry, readymade garments, jute industry, pharmaceutical, frozen foods, ship building industry, light engineering, high tech industry, SMEs, PPP
Goal 7: ONE OF THE TOP OUTSOURCING NATIONS IN THE WORLD: Bangladesh will have one of the top 10 outsourcing destinations in the world & earn at least USD 25 billion in revenues per year.
Bangladesh will be one of the top 10 outsourcing destinations in the world \7 earn at least USD 25 billion US$ in revenues per year
To increase the number of qualified relevant human capital in business administration, English, pharmacy, law & computer engineering at both graduate & under graduate level.
To develop joint ventures with credible global players in the field of custom software development 7 maintenance, multimedia software & website development.
The NRB’s should be encouraged to set up IT enterprise in BD through various incentives
Goal 8: FAVORABLE ENVIRONMENT TO DO BUSINESS: Bangladesh will be one of the top 20 countries in the Ease of Doing Business Index
Lower the hustle of starting a business
Reducing the time lag deriving out from the licensing procedure
Relax the property registration process
Initiative to get better credit facility
Initiative to protect investors from potential losses.
Goal 9: TECHNOLOGY BASED AGRICULTURE: Bangladesh will have enhanced productivity based on modern technology, diversified types of agricultural outputs, & commercialized agricultural produce. The economy of Bangladesh is primarily dependent on agriculture about 84 percent of the total population live in rural areas and is directly or indirectly engaged in a wide range of agricultural activities.
- Agriculture sector is the single largest contributor to GDP.
- Crop production system is highly labour intensive and there is an abundance of labour supply in the country.
- Agriculture is the largest source of employment for skilled and unskilled labour.
- Favorable natural environment generally exists throughout the year for crop production.
- Wide range of bio-diversity exists for different crops.
- Agriculture is dependent on the vagaries of nature and is risky.
- Availability of cultivable land is decreasing.
- Lack of proper land use planning.
- Widespread poverty among the population engaged in agriculture.
- Lack of required capital for agricultural activities.
- Agricultural commodities are rapidly perishable and post harvest losses are too high.
- Inadequacy of appropriate technology considering farmers’ socio-economic conditions.
- Decreasing yields of different crops due to slow expansion of modern technology as well as unplanned use of soil and water.
- Uncertainty of fair price of agricultural due to underdeveloped marketing system.
- Very weak backward-forward linkage in agriculture.
Supply seeds & fertilizers
Innovative technology based productions
Better land usage
Increasing domestic milk production
Increasing the cold storage facility
Poultry & dairy medical services
Removing the role of intermediate agent
Overcoming the shortage of working capita
Goal 10: SUSTAINABLE POWER & ENERGY: Bangladesh will generate around 30,000 MW electricity per year, and explore new possible & probable COAL & Gas reserve to substrate Bangladesh’s energy demand for at least 100years.
Generation of electricity from proven gas reserve
Proven coal reserve 7 nuclear power plant
The government should encourage the entrepreneurs to invest in the captive power generation by waiving the renewal fee
Concentrated & coordinated efforts by Govt.
Goal 11: DEVELOPED INFRASTRUCTURE: Bangladesh will have an advantage over other competing nations to boosts its economy
Waterway: DREDGE AROUND 120 ALMOST EXTINT RIVERS
Inland ports: ESTABLISH AT LEATS 100 INLAND MINI RIVER PORTS
Railways: increase the length of rail track from 2835 km to 7000 km
National highway: increase from 3478 km to 9000 km
Regional highway: increase from 4222km to 12000 km
- Port facility
- Highway & railway & airway
Goal 12: SUBSTANTIAL EXPORT EARNINGS: Bangladesh will be earning 990 billion US$ per year from a current earnings of 15.81 billion US$
need to develop a strategies to minimize the growing trade gap with the south Asian counties
need to abort the product diversification
consider eliminating CD on capital machineries imported for export purpose
the huge flow of FDI will play an important role in Bangladesh in the long run
there should be investment in diversification including high end items which has a huge exporting opportunities
Goal 13: ASIA’A NEXT BIG TOURIST DESTINATION: Bangladesh will attract more than 1 crore tourists per year by 2030 to earn around bdt 80 billion per year by promoting its “BEST KEPT SECRET IN ASIA” slogan
Tourism master plan
Establishing world class hotels
World class medical tourism
Young Visionaries of Bangladesh
The Dhaka Chamber of Commerce and Industry (DCCI) organized a conference in 2010, namely Bangladesh 2050: Strategy for Growth. At the conference, DCCI projected that Bangladesh can be one of the 30th largest economies of the world by 2050 if concerted efforts are taken based on the fundamentals of vision 2021 announced by the government. In preparing this 20 years’ vision, DCCI also involved young visionaries throughout the country to present and share their thoughts with us on how they would like to see Bangladesh be one of the 30th largest economies by 2050.
In order to involve future leaders of the country in developing the strategies for 2050, DCCI held a Young Visionaries Competition Award for university-based students to participate. They were required to develop implementable and sustainable business plans for the economic growth of the country. It was a nationwide event where all public and private universities participated. This was an initiative to widen the vision of young students in the light of existing realities and to come up with innovative ideas for the overall growth of the economy. The winners of the competition got a chance to attend the conference and present selected proposals in front of the business leaders as well as the whole nation. Besides, the winners were financially awarded.
DCCI also planned a vision dialogue to keep the debate alive and shared the same with the opinion leaders and think tanks all over the country.
Competitors initially registered to attend the Young Visionaries Competition as a group where the group leader was from the university faculty. They attended a workshop where DCCI showed their views on how they would like to get their business plans with an eventual goal to integrate the selected plan to be included in the national plan/strategy. About forty university representatives from Dhaka, Chittagong & Khulna attended the workshop. Helpful information sources were presented and a dedicated website was created to provide detailed information. The preliminary rounds took papers and short power point presentation from the participating team. The proposal and presentation were revised by an expert jury board who determined the best 20 ideas and selected them to go for the final round.
The Competition concentrated on the following questions:
- How do Bangladesh’s current macro fundamentals propel it into the Next Trajectory for growth? And what are the major policies that will lead Bangladesh to attain high GDP growth rates?
- What is the “Road Map” in attaining high growth scenario – short term, midterm and long term?
- In order to aim for double digit GDP growth rates what sort of additional resource mobilization is required for the economy? And where and how will such resources be generated and sourced?
- What are the comparative and competitive advantages of Bangladesh? What are the sectors that will dominate the economy and help build the foundation for accelerated growth?
- In different GDP growth projections up to 2030 (low – average – high – very high), what do the economic indicators reveal – economic data such as GDP, GNI, FDI, imports, exports, remittances, GDP composition and other economic data? And out of the four scenarios, which growth scenario do you estimate for Bangladesh – explain with justification.
- What are the priorities and pre-requisites for accelerated growth scenarios? List under priority basis for short term, mid term and long term with proper justification. Also, identify the major risks, challenges and opportunities in short term, mid term and long term prospective.
- In a SWOT Analysis where does Bangladesh stand among other nations in the world in major socio-economic terms (GDP and GDP growth, GNI, FDI, competitiveness, Trade – export and import volume)?
- What are the areas to instill food security and maximize earning through commercialization of agriculture? How to establish a critical mass of human resources to integrate Bangladesh with the knowledge world of the 21st century?
Some ideas derived from the best three participants are as follows:
They have mentioned four visions (Economic Vision, Socio-Political Vision, Environmental Vision and Science & Technological Vision). In the economic vision, they have set a target to be one of the 25 largest economies in the world. In the socio-political vision, they have highlighted a country with a stable & effective parliamentary democratic system, single digit poverty rate, reduced income inequality, included in the top 20 non-corrupt countries list, high HDI rating, good governance, food security for all, high employment rate, planned urbanization, etc. In the environment vision, they projected Bangladesh to be one of the 30 least polluted countries, meeting the energy demand of around 80% households through efficient green energy. In the science & technological vision, they want Bangladesh to be a 100% ICT oriented country; employ around 100,000 ICT knowledge- based workers. Bangladesh will face some challenges like: controlling inflation, provision of adequate energy & power, reducing the unemployment rate, coping with climate change effects, tackling corruption, etc. Bangladesh has some competitive advantages like: a huge low cost labor, geographic location, global quality local business conglomerates.
The opportunities of Bangladesh in the near future are: being a major emerging market, attractive investment destination to the MNCs, higher remittance inflow, being Asia’s best kept secret, diversified agro-business sector, global hub of eco-friendly products, turning into a major outsourcing nation. At the end of 2030, they have projected GDP at current price US$ 315 bn, GDP growth rate 10.8%, per capita GNI $4208, aggregate FDI $65 billion, exports $92 billion, imports $65 billion and Govt. revenue 23.33% of GDP. The prospective new sectors of Bangladesh are: nanotechnology, mechatronics engineering, generic engineering, automobile industry, airplane components industry, biotechnology and carbon trading. The prospective existing industries are: shipbuilding industry, tourism, ready made garments (RMG), pharmaceuticals, software export and outsourcing. Bangladesh has some prospective agriculture innovations, i.e. vertical farming method (VFM), supplement of urea from kitchen waste, rainwater harvesting system (RWHS), bio-fertilizer & bio-pesticide from Neem.
Bangladesh will become a prosperous middle income country which dominates respectable global market share in a broad range of industries and is a favorable place to live for citizens; where governance and planning, capacity development and quality of life will be ensured for citizens. They have recommended the policies to be spread out over different phases while each phase will be of five years.
From 2011-15, they have set a vision to ensure effective and efficient government functioning, promote light engineering enterprises, increase agricultural production and invest in Research & Development capacity.
From 2016-2020, they have set a vision to have citizen card, education improvement, increase investment inflow, stable food prices, manpower skill development, ensure rural connectivity and development and improve rule of law.
From 2021-2025, they have projected to utilize critically important persons to keep them in the country, mandatory internship program for business and engineering students, outsource tourism development and expand medical access.
From 2026-30, they have set a vision to encourage FDI by Bangladeshi companies, manufacture heavy machinery, outsourcing hub and host Olympics 2028. Things that might favor Bangladesh are: growing economy, sports-crazy citizens and previous experience. Faridpur, the newly developed industrial city of Bangladesh can be the host city for Olympics in Bangladesh. They have also projected the power sources: 39% from coal, 25% from biomass, 12% from natural gas, 5% from wind, 5% solar and 1% others.
They have prepared a SWOT analysis showing strengths: geographical location, creditability, labor force and FDI; weaknesses: inefficiency, energy problem and governance; opportunities: unexplored market, natural resources, entrepreneurial innovation; threats: climate change, gap between rural and urban development and political instability. They have shown estimation that GDP growth rate of Bangladesh will be 12%, exports US$ 264 billion, imports US$ 328 billion in the year 2030.
They have also identified some challenges and opportunities of some thrust sectors. IT sector challenges: lack of infrastructure, low technical know-how, knowledge gap. IT sector opportunities: joint venture, high market growth and favorable government initiatives. Textiles sector challenges: labor strike, load shedding and low working condition. Textiles sector opportunities: bilateral agreement, backward integration and favorable policy regime. Leather sector challenges: water pollution, industry moving to savar, lack of logistic support. Its opportunities are: quality raw materials, tariff and quota free market, tax holiday and duty free import of machinery.
Challenges of energy sector: high demand-supply gap, high system loss and low generating capability. Opportunities are: renewable energy, govt. initiatives and encouraging FDI and private investment. Challenges of shipbuilding sector: low technical know-how, environmental pollution and inability to build large ships. Its opportunities are: simple import facilities, cost effective HR and high value market.
They have also mentioned a road map to achieve the vision 2030. Short run goals for manufacturing sector: favorable policy regime, privatization, promotion of SMEs and expansion of agro-based industry. Mid-run goals: import substitution, import of technology, PPP for infrastructure and fiscal support for industries. Long-run goals: independent investment corporation, venture capital investment, fiscal and monetary policy coordination and nurturing promising industries.
Road map for service sector short run: promotion of IT, real estate, hotel business and financial services; orientation of flexible labor regulation and boosting tourism. Mid-run goals: hospital services in all urban areas, improved transport facilities, modern financial services. Long-run goals: modern hospitals in semi-urban areas, real estate facilities and modern transportation facilities across the country. They also mentioned that the mobilization of financial resources, public and private resources and external resources is necessary for achieving double digit GDP growth rates.
Four wheels of economic growth
The concern for policy and action planning guideline for human resources development in Bangladesh stems from the recognition that the economic progress of the past several decades, notable as it has been, has not led to the eradication of widespread poverty in the country. This is due, in part, to the limited attention paid to human resources as a crucial means as well as the ultimate end of development.
We can consider the following issues in guiding policies and planning for human resources development: (a) sequential and long-term approach; (b) assessment of the efficacy of formal and non-formal approaches; (c) strengthening of political and administrative infrastructure for promoting and supporting popular participation; and (d) ensuring adequate levels of resources.
The principal resources of Bangladesh are the fertile soils of the delta region, the long growing season, and the heavy rainfall suitably distributed over the year for growing rice and jute. The nation’s abundant water supplies are used to produce hydroelectric power and for irrigating farmlands during the dry season. Although minerals have traditionally been economically unimportant, the country has large reserves of natural gas and some petroleum deposits. Natural gas is piped into Dhaka and CHITTAGONG for industrial use. There are also large deposits of low-grade coal, mined at Jamalpur.
I must add that Bangladesh’s natural resource is huge in terms of low-cost artisans, sea-farers and empowered women with tailoring skills. Her rieverine and coaster fish and sea food resourcebase is very substantial. All these including the fertile soil is as yet untapped/ underutilized in terms of potential production and more imoportantly productivity growth due to lack of adequate investments, inadequate opening up to foreign investments, land reforms besides political instability, terroism and corruption.
“foreign capital” means capital invested in Bangladesh in any industrial undertaking by a citizen of any foreign country or by a company incorporated outside Bangladesh, in the form of foreign exchange, imported machinery and equipment, or in such other form as the Government may approve for the purpose of such investment;
“foreign private Investment” means investment of foreign capital by a person who is not a citizen of Bangladesh or by a company incorporated outside Bangladesh, but does not include investment by a foreign Government or an agency of foreign Government;
“industrial undertaking” means an industry, establishment or other undertaking engaged in the production or processing of any goods, or in the development and extraction of such mineral resources or products, or in the providing of such services, as may be specified in this behalf by the Government.
The socio-economic setting necessary for successful implementation of Science and Technology (S&T) policies in a developing country has been discussed and the concept of “technology culture” introduced. It is posited that the absence of technology culture in a given socio-economic setting makes implementation of S&T policies problematic. Technological resource base in Bangladesh and the low S&T achievement indices for the country, as worked out by some international organizations, are also presented. In discussing the status of existing R&D institutions it has been stated that, with the notable exception of agricultural research, there is absence of organized and well-planned research management systems in several areas. It is argued that even though individuals, national organizations and institutions continue to make commitments to development of S&T, the relative strength of such commitments vary significantly.
Sector wise visions
Scientific & Technological Vision
- A 100% ICT oriented country
- The regional Center of Excellence in scientific & technological research 7 innovation
- A country with enhanced productivity & efficiency through science & technology
- A country employing around 100000 ICT knowledge based workers in its CYBER CAPITAL
Goal 1: A TECHNOLOGY BASED SOUND NATION: Bangladesh will be a nation having 100% access with enhanced productivity & efficiency
The 5E Initiative:
- Provide online interaction
- Access to government information to citizen
- Secure transaction with high level of authorization
- Decentralization of government through dial up internet
- Divisional town administration units should be empowered
- Introducing e-police
- Ensuring the interent based transaction
- Establishing proper infrastructure to support the ultimate objectives
- Special emphasis on enabling interbank electronic fund transfer systems
- 100% computer based education
- Ict based curriculum
- Ensure education over internet
- Have proven procedure
- Publish all the text books over internet.
- Intelligent vehicle highway systems
- Advanced traffic management
- Driver research for intelligent vehicle
- Advanced driver information systems
- Automated vehicle control systems
Goal 2: SPECIAL EMPHASIS ON RESEARCH & INNOVATION: Bangladesh will have at least 7 regional centers of excellence with world class scientific research facilities.
- Will turn into the regional center of excellence
- Genetic engineering
- Mechatronics engineering
- Molecular engineering
A research based combination between the pure areas & the application based scientific areas
To ensure the proper combination
Applied basic scientific areas
Long Term Goal 3: EXTENSIVE INSUDTRY – INDUSTRY LIKNAGE: the country will have extensive industry – university linkage to spur local technological innovations
Initiatives: U & I Initiates’:
There will be formal initiative agreement between the unadvertised & universities to commercialized an investors to the university library
Long Term Goal 4: ESTABLISHING A CYBER CAPITAL: Bangladesh will have a sophisticated geographic area, like the Multimedia Super Corridor of Malaysia, where local & multinational IT companies will set up their plants.
Cyber center initiatives:
- Own software & hardware industry
- Plants & offices of the Global IT Companies
- A huge base of outsourcing workers
Scientifically Advanced Bangladesh by 2050
We feel the necessity of a online magazine named simply ” Bangladesh 2050″ or Scientifically advanced Bangladesh, 2050 with the following vision :
Vision Ultimate : Making Bangladesh a scientifically advanced country by 2050.
Vision intermediate : Making Bangladesh a scientifically developing country by 2025
Vision immediate: Making science and technology an issue in election 2013.
Vision right now: To put pressure on and help govt. to make deliberate decision on scientific research for meeting immediate needs of the nation.
The magazine Should have the following sections:
1. School section: focus on science at school level
2. College and university : focus on science at college and university level
3. Research organisation : focus on issues for making our research organisations world class.
4. Professional organisations: focus on activities and performances of professional organisations of scientists.
5. National and International: Focus on What should we do at national and international level for scientific advancement of Bangladesh .
RENEWABLE ENERGY POLICY OF BANGLADESH
Energy is one of the basic ingredients required to alleviate poverty and socio-economic development. GOB has issued its Vision and Policy Statement in February 2000, to bring the entire country under electricity service by the year 2020 in phases, in line with the direction of the Article 16 of ‘The Constitution of the People’s Republic of Bangladesh,’ to remove the disparity in the standards of living between the urban and rural areas through rural electrification and development. The energy prospect is generally assessed on the basis of available commercial sources of energy i.e., fossil fuel like gas, coal, oil etc. Worldwide, there is a major transition underway in the energy sector. It is happening due to the following three major reasons:
(i) A decline in fossil fuel availability, their predicted gradual extinction in the next few decades and the resultant price volatility due to demand-supply gap.
(ii) The need to drastically cut global emissions for mitigating climate change (80% reduction by 2050).
(iii) The need for energy security.
In Bangladesh efficient utilization of renewable energy resources is yet to assume commercial dimensions and hence rational policy dissemination on renewable energy usage is essential. The renewable energy includes solar, wind, biomass, hydro, geothermal, tidal wave etc.
Renewable energy in the form of traditional biomass is the main source of primary
energy in the country comprising some 35-60% percent of total primary energy use. The size and economic potential of the renewable energy resources (e.g., solar photovoltaic, solar thermal power, wind power, biogas, etc.) in Bangladesh are yet to be determined and th capacity of renewable energy development is presently low. Although investment costs of renewables are generally higher compared to fossil fuel alternatives, this option becomes economically viable when all externalities (e.g. environmental cost, health hazards etc.) and lower operating cost are taken into consideration.
The major sources of renewable energy are:
Solar photovoltaic: Solar photovoltaic (PV) systems are in use throughout the country with over 200,000 household-level installations having capacity of about 12 MW (June 2008). Scaling-up of solar PV systems assisted by the development partners are being implemented through the Rural Electrification Board (REB), Local Government Engineering Department
(LGED), Bangladesh Power Development Board (BPDB) and other agencies implementing solar energy program. Renewable Energy Research Centre of the University of Dhaka has installed a model 1.1kW grid connected photovoltaic system. There is a strong potential for solar energy within the country.
Solar Thermal Power/Concentrating Solar Power (CSP):
The technology involves harnessing solar radiation for generation of electricity through a number of steps finally generating mechanical energy to run a generator. This technology needs to be disseminated in the country to supplement the power supply.
Wind Energy has also made some inroads but its potential is mainly limited to coastal areas, and offshore islands with strong wind regimes. These coastal settings afford good opportunities for wind-powered pumping and electricity generation. Presently there are 2 MW of installed wind turbines at Feni and Kutubdia.
Bangladesh has strong potential for biomass gasification based electricity. More common biomass resources available in the country are rice husk, crop residue, wood, jute stick, animal waste, municipal waste, sugarcane bagasse etc. This technology can be disseminated on a larger scale for electricity generation.
Biogas mainly from animal and municipal wastes may be one of the promising renewable energy resources for Bangladesh. Presently there are tens of thousands of households and village-level biogas plants in place throughout the country. It is a potential source to harness basic biogas technology for cooking, and rural and peri-urban electrification to provide electricity during periods of power shortfalls.
Microhydro and minihydro have limited potential in Bangladesh, with the exception of Chittagong and the Chittagong Hill tracts. Hydropower assessments have identified some possible sites from 10 kW to 5 MW but no appreciable capacity has yet been installed. There is one hydro power plant at Kaptai established in the 1960s with installed capacity of 230 MW.
Other renewable energy sources include bio-fuels, gasohol, geothermal, river current, wave and tidal energy. Potentialities of these sources are yet to be explored.
The objectives of renewable energy policy are to:
(i) Harness the potential of renewable energy resources and dissemination of renewable energy technologies in rural, peri-urban and urban areas;
(ii) Enable, encourage and facilitate both public and private sector investment in renewable energy projects;
(iii) Develop sustainable energy supplies to substitute indigenous non-renewable energy supplies;
(iv) Scale up contributions of renewable energy to electricity production;
(v) Scale up contributions of renewable energy both to electricity and to heat energy;
(vi) Promote appropriate, efficient and environment friendly use of renewable energy;
(vii) Train; facilitate the use of renewable energy at every level of energy usage.
(viii) Create enabling environment and legal support to encourage the use of renewable energy.
(ix) Promote development of local technology in the field of renewable energy.
(x) Promote clean energy for CDM; and
(xi) Policy sets targets for developing renewable energy resources to meet five percent of the total power demand by 2015 and ten percent by 2020.
3.1 An independent institution, Sustainable Energy Development Agency (SEDA), shall be
established under the Companies Act, 1994, as a focal point for sustainable energy development and promotion, ‘sustainable energy’ comprising renewable energy and energy efficiency. SEDA Board will comprise of representatives of stakeholders
including business community, academics and/or representative from Bangladesh Solar Energy Society, NGOs, financial institutions and implementing agencies.
The responsibilities of SEDA as a company shall be to:
(i) Provide coordination of sustainable energy planning, including action plans linking together the activities of several agencies or organizations;
(ii) Promote awareness of renewable energy and other clean energy technologies and integrate their development within overall national energy policy and development;
(iii) Support demonstration of new technologies and new business models for
renewable energy and other clean energy technologies;
(iv) Support establishment of small and medium renewable energy enterprises and providers;
(v) Enable systematic development of renewable energy projects and opportunities through energy audits;
(vi) Create market opportunities and start-up business models for sustainable energy technologies in Bangladesh, such as energy services companies and rural energy providers;
(vii) Develop financing mechanisms and facilities by using grant, subsidy and/or carbon/CDM fund for public and private sector investments in all forms of sustainable energy;
(viii) Collect data and assess the renewable energy resource base, especially in the context of rural energy master plan;
(ix) Provide fund for the development of standardized renewable energy configurations to meet common energy and power applications, such as solar, biogas and bio-diesel for mechanical irrigation and improved community practices for forest management and conversion and use of fuel wood by using grant, subsidy and/or carbon/CDM fund;
(x) Stimulate market development for sustainable energy technologies, such as improved cook stoves and household biogas digesters;
(xi) Provide financial support in the research and development of renewable energy technology;
(xii) Implement policies for mitigation of environmental issues arising out of use of Renewable Energy; and
(xiii) Solicit and processing of grid connected renewable energy projects.
Resource, Technology and Program Development
a) SEDA in conjunction with the Power Division of the MPEMR shall be responsible for determining the priorities for renewable energy technology development and program implementation.
b) SEDA shall support capacity building, technology development, and market development sufficient to boost the share of electricity generated from renewable energy technologies.
c) All power utilities, LGED and other agencies are to develop renewable energy development program for implementation throughout the country.
d) Electricity generated from renewable energy projects, both in public and private sectors may be purchased by power utilities or any consumer through mutual agreement (up to 5 MW).
e) Renewable energy project sponsors may use existing electricity transmission and distribution systems, if there is adequate capacity, to supply electricity to its customers through mutual agreement between the project sponsor and the owner of transmission/distribution facilities. The sponsor will require to pay a wheeling charge to the owner of transmission/distribution facilities. The wheeling charges shall be determined by BERC in consultation with GOB.
f) In addition to electricity generation, renewable energy for solar heating and biogas or other means like cooking, etc shall be developed.
g) SEDA will encourage human resource development and local production of renewable energy equipment, facilitate and monitor quality of renewable energy equipment, and will assist to setup quality control laboratory to test the renewable energy equipment.
h) For large biomass electricity projects (i.e. greater than 1 MW) the project developer must demonstrate that the biomass is being sustainably harvested and that no adverse social impact will result from that development.
i) Production and use of bio-fuels may be encouraged but it shall not jeopardize the existing crop and shall not be a replacement of existing crop.
Investment and Fiscal Incentives
a) A renewable energy financing facility shall be established that is capable of accessing public, private, donor, carbon emission trading (CDM) and carbon funds and providing financing for renewable energy investments.
b) Power Division, MOF and SEDA will formulate a detailed program for providing fiscal incentives including customs and VAT exemptions for import and domestic manufacture of sustainable energy equipment.
c) In addition to commercial lending, a network of micro-credit support system will be established especially in rural and remote areas to provide financial support for purchases of renewable energy equipment.
c) GOB will facilitate investment in renewable energy and energy efficiency projects. SEDA, in co-operation with local government offices, will set up an outreach program to develop renewable energy programs.
d) SEDA will consider providing subsidies to utilities for installation of solar, wind, biomass or any other renewable/clean energy projects.
e) Private sector participation including joint venture initiatives in renewable energy development will be encouraged and promoted. GOB/SEDA may assist in locating the project(s) and also assist in acquiring land for renewable energy project(s).
f) Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for a period of 15 years.
g) Renewable energy project investors both in public and private sectors shall be allowed to get the fiscal incentives provided in (i) SRO.73-Law/97/1700/Custom, Date: 19/03/1997; and (ii) SRO.100-Law/2000/1832/Custom, Date: 18/04/2000.
h) Accelerated depreciation up to 80% may be allowed in the first year.
i) An incentive tariff may be considered for electricity generated from renewable energy sources which may be 1.25 times the highest purchase price of electricity by the utility from private generators.
j) To promote solar water heaters, rates of both electricity and gas may be reaffixed to discourage electricity and gas use for water heating.
a) Renewable energy project(s), to sale electricity from plants shall be required to get power generation license from BERC if the capacity of the project(s) is 5 MW or more.
b) GOB and SEDA, in consultation with BERC will create a regulatory framework encouraging generation of electricity from renewable energy sources.
c) BERC shall approve the energy tariff in consultation with GOB/SEDA as per the provision of the BERC Act 2003 if the capacity of renewable energy project(s) is 5 MW or more. Electricity distributors may offer “green energy” tariffs, which provide consumers an opportunity to co-finance through their electricity bills the development of new renewable energy sources.
POWER SECTOR 2050
To alleviate poverty in the face of resource limitations and high population density, Bangladesh requires an economic growth rate of 6-7% p.a. to provide employment to its rapidly growing labor force that cannot be absorbed by agriculture. In order to achieve this growth rate, availability of a reasonably priced and reliable source of electricity is a prerequisite. Starting’ from a small base, the power sector in Bangladesh has grown significantly. The installed generation capacity has increased to about 3700 MW (as of June 2000) from a meager 88 MW in 1960. Electricity generation grew at about 7% p.a. during last ten years, compared with average annual GDP growth rate of about 5.5%. Notwithstanding the progress made to date, Bangladesh’s per capita electricity generation of 120 kWh p.a. is still among the lowest in the world. About 20% of the population have access to electricity, which is also low compared to many developing countries. This implies that there is scope for significant growth in power sector. Given the huge investment requirement for power development in the country, Bangladesh would be looking forward to various sources of finance. The Government has already opened the power sector for private investment and “The Private Sector Power Generation Policy” has been formulated in 1996. The Government is also committed to reforms of the power sector for achieving efficiency of the sector.
The power sector of Bangladesh is presently organized as follows
(i) Bangladesh Power Development Board (BPDB)
BPDB is responsible for generation, transmission and distribution of electricity. Its distribution jurisdiction covers mainly urban areas except Metropolitan City of Dhaka. There are a number of Independent Power Producers (IPP) who generate and sell power to BPDB. BPDB’s retail sale accounts for about 40% of total retail sales.
(ii) Power Grid Company of Bangladesh (PGCB)
PGCB, established under the Company’s Act, 1994 is wholly owned by BPDB. It is presently responsible for operation of a small part of the grid network and implementation of 100 Km new 230 kV transmission line including related substations.
(iii) Dhaka Electric Supply Authority (DESA)
DESA is responsible for distribution of electricity in greater Dhaka area. It purchases power from BPDB at 132 kV.DESA’s (including DESCO), retail sale accounts for about 39% of total sales.
(iv) Dhaka Electric Supply Company (DESCO)
DESCO, established under Companies’ Act of 1994 is responsible for distribution of electricity in Mirpur area of the Metropolitan City of Dhaka in Greater Dhaka. DESCO purchases power from DESA.
(v) Rural Electrification Board (REB)
REB is responsible for distribution of electricity in rural areas through a system of co-operatives known as Palli Biddyut Samities (PBS). It purchases power from BPDB and DESA at 33 kV. REB’s retail sale accounts for about 21% Of total retail sale.
Future Generation Scenario
BPDB has carried out a Power System Master Plan Study in 1995 to identify least cost power development plan up to 2015. In the PSMP, the benchmark load forecast was based on 8% growth rate. However, due to shortage in generation capacity, the actual demand could not be supplied. The minimum demand served so far is 2823 MW (27.07.2000). The Government’s Vision is to provide affordable and reliable supply of electricity to all of the year 2020. therefore, the electricity development is required to be accelerated to increased access and attain economic development. The desirable economic growth rate would be about 6-7% p.u. Considering these aspects, it would be logical to use the high forecast of demand as given in the PSMP-95. Based’ upon the High Forecast from FY2003 onwards, the anticipated peak demand would be about 6071 MW in FY2007 and 11439 MW in FY2015. According to this Forecast, the average growth rate between 2000-2007 is 9.83% and 8.98% between 2000-2015. Generation Capacity expansion. In order to meet the projected demand reliably, various generation and transmission projects along with distribution expansion have been identified. These are under various stages of implementation. The generation capacity (including existing, under construction and planned capacity) would be about 7463 MW by 2007. Out of which IPP capacity would stand at 2050 MW (existing 380 MW and new 1670 MW).
Generation Capability, Peak demand, Firm capacity and Reserve margin
up to 2007 is shown in the Table below with graphical representation.
4.0 INVESTMENT REQUIREMENT
The investment requirement for the next ten years for power sector would be in the range of $5 to 6 billion. However, it is difficult to mobilize such huge amount of fund in the public sector alone. Therefore, Bangladesh will be looking forward to bilateral and multilateral financing and also private investment for the power sector development.
5.0 POWER SECTOR POLICY
The Government’s vision:
“To provide access to affordable and reliable electricity to all by the Year 2020”.
Realization of the vision would call for large addition to generation capacity over time, expansion of grid and distribution of network. To meet the projected demand, the enervation capacity will have to be increased five fold to a benchmark estimate of about 15000 MW. Fortunately, the gas resource of Bangladesh, one of the cleanest and efficient fuels for power generation, provides a special window of opportunity. Availability of capital, particularly from external sources, would be critical in ensuring the stipulated growth and expansion. Therefore, policies and practices that ensure such capital flows must be in place.
Power Sector Reforms
To set out the overall framework for the improved performance of the sector, the Energy Policy was prepared and adopted in 1996. The policy, among others, provides the broad guidelines for power sector reform including the evolving structure of the industry and its regulation.
Ongoing Reform Measures
In pursuance of the Energy Policy and in order to create appropriate and enabling conditions for improved public sector performance, attracting private and multilateral capital flows on a sustained basis and giving value for money to customers, GOB has undertaken a series of reform measures. Some of the specific measures are presented below:
• To introduce competition, induct foreign capital and more importantly, to increase power supply to alleviate the acute shortage, Private Power Generation Policy was developed and adopted in 1996. This policy has set out the transparent modality for implementation of private generation projects as well as incentives for the investors. In pursuance of this policy, 1158 MW of capacity has been contracted with IPPs through competitive bidding, offering some of the lowest tariffs in the world.
• The transmission segment is in the process of unbundling and J – separation. Power Grid Company of Bangladesh (PGCB) has been set up in 1996 under Companies Act 1994 and made operational in stages. PGCB is a public sector enterprise of BPDB.
• A distribution company named Dhaka Electric Supply Company (DESCO) has been created in 1996 under the Companies Act, 1994, with public ownership. Distribution assets of Mirpur area from DESA has been handed over to DESCO about a year ago.
• To setout a level playing field for all stakeholders and ground rules for participation, draft legislation has been prepared for setting up of a Regulatory Body. This draft has been approved in principle by the Government and it is expected that it will be enacted by the parliament soon.
The guiding principles for the reform strategy for the future will be pragmatism based on the experiences gained from the ongoing measures, reliance on the empirical findings about the best practices and giving due consideration to the socio economic and governance context. The pace and sequence of reform should be tailored to solve problems and deliver results rather than be driven by any fixed notion. This would help mobilize support for the programs both within and outside the concerned organizations and thereby contribute to their success.
6.0 Initiatives Taken by BPDB
In line with the Government’s policy on power sector reforms, BPDB has already initiated actions which would separate functional responsibilities so as to enable evaluation of each segment and thereby achieve accountability and improved performance. These are the intermediate steps which will help in the eventual formation of corporatized entities under BPDB.
Management Efficiency for Generation
The following steps have been taken and are being taken to improve the management efficiency for generation:
• Steps have been taken to corporatize Ashuganj Power Station (728 MW).
• Haripur Power Station (100 MW; to be enhanced to 209 MW) has been converted as Autonomous Strategic Business Unit to ensure efficiency and accountability. This has been done as per recommendations contained in the report of the Special Assistance for Project Implementation (SAPI) for the extension of Haripur Power Plant. The above report was prepared by M/S. Tokyo Electric Power Co. Inc. funded by JBIC.
• Other plants are planned to be corporatized in phases so that all the power plants will be subsidiaries of a national corporatized generating entity owned by BPDB.
• Efficient corporate management culture will be developed in all the power plants.
Management Efficiency for Distribution
It is recognized that distribution part of the electricity industry in Bangladesh is the weakest link with unsatisfactory commercial performance. Hence, management efficiency for distribution is vital for achieving the overall viability of the power sector.
The steps taken/being taken by BPDB for enhancing management efficiency in distribution are:
• Existing four distribution zones have been reorganized into eight distribution zones.
• Restructuring the distribution function by creating 23 Autonomous Strategic Business (SBU) Units.
• SBUs are to achieve optimum operational efficiency.
• Management and staff are to be motivated to perform through effective incentive packages.
• Accountability to be ensured.
• Management Information System being improved.
• Introducing computerized billing and accounting system to all (260) Electric Supply Units (ESUs). Presently-this system is in practice in 15 ESUs.
Consumer committee in each ESU has been established with participation of consumer representative to ensure satisfactory consumer service and accountability of ESU management
7.0 BPDB’s Views on Implementation of Reform Program
7.1 The Government of Bangladesh is committed to power sector reform. Its vision and long term goals with regard to power development, objectives of reforms and main components of reform have been highlighted in the vision and policy statement. However, implementation of any reform program is a difficult and painful task. It must also be ensured that during implementation of reform program, the services being provided is not retarded or disrupted. Therefore, the implementation program should be so designed that the transition to the reformed structure of the power sector is as smooth as possible. For this to happen adequate preparations should be made and all the relevant issues should be addressed and above all, on implementation of the reform program, the objectives should be attained.
7.2. Necessary steps
It has been envisaged in the Vision/Policy Statement of the Government that the power sector of Bangladesh would be restructured through segregation of generation, transmission and distribution functions and management of these functions through corporatized entities; The following steps are considered necessary before creation of the various corporatized entities so that after establishment, these entities can function properly and achieve the objectives of restructuring.
(1) Study to be made to identify the assets and liabilities of all individual power station complexes.
(2) To develop institutional framework for operation of the individual power plant complexes as profit centre’s of the corporatized national generation entity. These will include identification of functions of the corporatized entity.
(3) Study to assess the technical characteristics of the power plants.
(4) To prepare business plan for the corporatized entity.
(5) Study to prepare employees transfer schemes including Human Resource Development studies
(6) The existing generation units to be transformed into a new corporatized entity (named as National Generation Company) to be incorporated under Companies Act, 1994.
Transmission: The transmission company named Power Grid Company of Bangladesh (PGCB) has already been created. However, its business plan, its functions and institutional framework, staff transfer scheme etc. are required to be developed. Lineless its functions and responsibilities are clearly identified and formally known by the other entities, proper functioning of the sector will be affected.
Distribution: Steps necessary to transform existing distribution system of BPDB and DESA into a number of new corporatized entities are:
(1) Carry out area demarcation and rationalization study.
(2) Study to identify the assets and liabilities of distribution Zones/Circles/ Divisions/ESUs
(3) Study to develop institutional framework for operation of individual distribution units as profit centers of the corporatized distribution entities.
(4) Study to assess the technical features of the distribution networks.
(5) To prepare business plan for the corporatized entities.
(6) Study to prepare employees transfer schemes inducing Human Resource employment Study.
(7) On the basis of area demarcation and rationalization study, transform distribution Zones /Circles into a number of corporatized entities by incorporating under Companies Act, 1994.
7.3 Priority area for reforms
In the Policy Statement, it has been highlighted that performance improvement in distribution functions would be at the top in the agenda for reforms. Therefore, in preparation of the implementation program for power sector reforms, priority should put on reforms and restructuring of distribution functions. It cannot be over emphasized that unless and until the performance of distribution segment is improved, reforms in other segment such as generation and transmission will not achieve significant improvement in the overall situation of the power sector, particularly in respect of consumer service standards and financial viability.
7.4 Employees Issues
There exists a great deal of uncertainty and apprehension among the employees in the sector, with regard to the Reform. The Policy Statement has mentioned that the employee’s interests and rights will be protected in the reform process. Therefore, the employees have to be kept informed of the implementation plan for reforms, including staff transfer schemes so that the employees have no undue apprehension and are motivated by the benefits that will be accrued to them as well as to the country through reforms.
7.5 Lessons from ongoing reform measures
Some reform measures have already been implemented. DESCO and PGCB have been established in 1996. It may be useful to evaluate their performance and identify the deficiencies, while designing the implementation program for power sector reform.
7.6 Regulation of the Sector
For creating a competitive environment and a level playing field in the power sector, attaining desired efficiency and improving consumer service standards, the role of the Regulatory Commission would be critical. Therefore, ‘the Regulatory Commission should be independent and established as soon as possible.
7.7 Commercial Relations between entities
While designing the reform program, development of clear and transparent commercial relations between the emerging entities should be given due importance.
7.8 Preparation of a reform road map
A clear road map for implementation of Reform Program should be prepared, including various steps and a realistic time frame.
Additional Challenges and Recommendations
While BDI recommends six priority areas for the new administration’s attention, several additional areas must also be addressed: Improve the Image of Bangladesh in the International Community: Bangladesh should establish a positive image by highlighting its reform and opening up, the growth of the media, cable television, the rapid expansion of the cellular phone network (the subscriber base should cross 50 million by the end of the year), and technological improvements and reforms in the communications and the ICT sectors. Developments in the ship building, pharmaceutical, textile and RMG sectors also need to be projected. It is also important to communicate widely the on-going initiatives to combat corruption, install regulatory reforms and make improvements in the business climate in the country. Compete in an increasingly competitive global environment: Bangladesh must continue the strategy of emphasizing trade over aid; it should also take advantage of the foreign investment funds flowing into its dynamic regional neighbors, India, Vietnam, and China. Remittances and Diaspora: It is important to build bridges with the Non-Resident Bangladeshi (NRB) population.
NRBs can contribute most significantly to the national economy of Bangladesh, especially in terms of investments. Thus Bangladesh should promote investment facilities for the NRBs. These investments can help increase the foreign reserves of the country, as well as promote its gross productivity. It is highly likely that if the policies are convenient to NRBs, they will be keener to invest in Bangladesh. Moreover, the diaspora population could potentially allow access to the global economic and financial chain, as they may have linkages with foreign trade channels. Respond to the global economic crisis: Bangladesh must continue the easy money policy until there are clear signs the economic trends have turned positive. Policy makers must also provide a large fiscal stimulus to modernize the nation’s infrastructure and protect the economy from the global economic slowdown. Reduce regional disparities: To sustain development and gain political support for fundamental reforms, citizens residing in different parts of the country should all experience an improved living standards and quality of life.
Maintain price stability: Since food and energy prices have come down substantially in world markets, the overall inflationary pressures should remain in check in the foreseeable future. The public must be apprised of the global price scenario through media releases. Improve Bangladesh-India Bilateral Relations: There are still many unresolved issues in the Bangladesh-
India bilateral relations. The proper way to mitigate these problems is to pursue an effective and consistent foreign policy. Apart from the regular diplomatic initiatives such as arranging regular summit level meetings, public diplomacy can also play an important role to solve many of these problems. The government of Bangladesh should try to promote public diplomacy; that is, to promote interaction among the people of both the countries.
Strengthen Regional Cooperation in South Asia: Among the most noteworthy achievements of Bangladeshi diplomacy has been the creation of SAARC. As such, our diplomacy should continue focusing on strengthening SAARC as a platform for peace and prosperity in the region. Regional cooperation in the energy sector has become vital for maintaining security and development in the region. A comprehensive and integrated trade facilitation framework needs to be adopted in our foreign policy incorporating: promoting integrated transport infrastructure including transit and transshipment of goods; facilitating and promoting development and modernization of Chittagong and Mongla sea ports as regional hubs; pursuing economic diplomacy to remove non-tariff barriers in trade between Bangladesh, India, Pakistan, Nepal, Bhutan, and Sri Lanka; promoting regional customs cooperation; and promoting regional energy cooperation. Bangladesh should also pursue market access in different parts of the world. Through economic diplomacy, Bangladesh should develop and maintain close linkages with the OIC, ASEAN, EU, and the Commonwealth, while strengthening relations with the global powers — the USA, Japan, Britain, Russia, and China. BDIs priorities and recommendations were reached independently. Some elements may echo ideas being floated by political parties, think tanks or NGOs. To the extent that their ideas also reflect BDI positions, we welcome them; to the extent that they don’t, we encourage meaningful dialogue. But, as an institution, BDI remains resolutely non-partisan.
About Bangladesh Development Initiative (BDI)
BDI is a USA-based non-profit organization comprised of independent scholars associated with institutions of higher education in the United States and involved in scholarly exchanges between the United States and Bangladesh through establishing educational programs, publishing an academic journal, sustaining a book publication program to archive indigenous knowledge, and organizing conferences that debate policy prerogatives for Bangladesh and its various sectors. BDI also includes professionals who are involved in supporting social development initiatives in Bangladesh. BDI was founded in 1988, headquartered in Pennsylvania, USA, to promote the production of high-value-added products such as durable and capital goods in Bangladesh. Equipped with an understanding that Bangladesh’s economic development problem lies on the demand side of the equation rather than the supply side, instigated by an anomalous tax structure, BDI has always advocated the establishment of an environment of fair competition in Bangladesh so as to allow the domestic producers a fair chance to market their products and in turn improve their products through research and development (R&D). BDI feels that the establishment of the production of durable and capital goods, supported by domestic R&D, is the preferred way to increase the labor productivity of Bangladeshi citizens to a desired level. More can be learned about BDI on its web site.
Six Point policies
The six recommendations, outlined below, are designed to help develop a bold and clear vision, formulate detailed policy, and ensure a bright future for Bangladesh:
1. Ensure human rights, establish democratic values and practices, improve governance, and establish rule of law;
2. Generate employment;
3. Achieve adequate and long-term food security;
4. Increase investment in infrastructure and energy;
5. Invest in education and develop human resources; and
6. Manage the nation’s health and population
Policy Recommendation #1: Ensure human rights, establish democratic values and Practices, improve governance, and establish rule of law:
In order to achieve a prosperous and progressive society, a clear policy statement must emanate from the government that addresses the most fundamental concerns: (i) human rights (ii) democratic values and practices,
(iii) governance and (iv) rule of law. No nation can progress without satisfactorily addressing these fundamentals. The Constitution of Bangladesh stipulates that all power of Bangladesh belong to its people. We recommend its full implementation in letter, spirit and practice and urge the elected public representatives to remain pledge-bound to this sacred trust. It is particularly important for the new government to make a clear statement about Bangladesh’s stance on its secular values. At the very least, it must emphasize and reiterate its tolerance and respect for “all” faiths and creeds, giving them the assurance that, as citizens, their legitimate rights will have equal protection. The people of Bangladesh have also been historically deprived of democratic values and practices that have been replaced by despotic and dictatorial regimes. Re-establishment of democratic values must become a priority of the present government: from the party, to the community, to the national level. Lack of democratic values and practices leads to disregard and neglect of the people’s wishes. Policies thus need to be articulated to guarantee that:
(1) people have the right to question any elected official,
(2) such questioningnot be considered as “conspiracies,”
(3) competition to represent the people not be considered a “threat,”
(4) freedom of speech would protect one’s right to oppose and protest.
Mismanagement and poor governance are also major obstacles to development in Bangladesh. The bureaucracy must be made responsive to the needs and demands of the public. To this end, civil service reforms need to be seriously and vigorously pursued so that the imbalance and inequity between an under-trained, under-compensated, and unmotivated bureaucracy and a smart, well-trained and well-compensated military is mitigated. The present government has a huge opportunity to train and modernize the bureaucracy and public service agencies to carry out their service and regulatory roles to best serve the public. This is important to reshape the belief that the military can run the country better than the bureaucrats and the politicians.
The contributions of the military, however, need to be recognized. They have demonstrated in the past that they are often better at bringing stability to unstable situations. The recent and successful voter drive by the military is also noteworthy. Political leaders, bureaucrats and the military must work together so that their unique strengths are not frittered away in tensions and conflict. The rule of law has to be established immediately. To plan the transition to a modern economy, policy makers must create a 21st century regulatory framework. No one in Bangladesh must be above the law, and the current government must ensure not only that this becomes reality, but also that the people of the country come to believe that the rule of law has been firmly established. This would be a historic achievement for the government and serve as a linchpin for governance. The government’s authority must be exercised legitimately only in accordance with written, publicly disclosed laws that serve the Constitution of the nation. Due process must also be enforced in all legal matters. The rule of law must be established to
safeguard against arbitrary governance and to protect the nation from both dictatorship and anarchy.
Crime and corruption must be brought to an end. Reforms must be undertaken to increase transparency in government policy-making, raise public awareness, establish independence of the anti-corruption bureau, strengthen the independence of the judiciary, and build up the civil society. The party in power and the opposition must each set the tone for bipartisanship and respect for the civil society. Finally, appropriate steps must be taken so that the elections and transition of power occur smoothly every five years.
Policy Recommendation #2: Generate Employment
Each year approximately two million additional workers enter the labor force looking for jobs. Even if the population growth rate declines dramatically, large annual additions to the labor force will continue for some years given the dynamic effects of demographic transition. The new administration will be responsible for creating roughly 10 million new jobs during its five years in office. The minority communities, including women, must have the same opportunities in the government’s efforts to create jobs. The collapse in crude oil prices and the abrupt end to the real estate bubble in the oil-producing Middle-East may result in the return of many Bangladeshi workers. As the share of the farm sector in the economy continues to decline, the industrial and service sector must be able to create millions of new jobs to absorb the influx of farm labor. In this backdrop, we recommend that the new government take a number of steps to boost employment. The administration should create jobs for Bangladeshis by facilitating increased flow of remittances that work their way into creating jobs in the economy. Second, a sophisticated and sustained effort must be launched to substantially increase foreign direct investment in Bangladesh. There is no reason why Bangladesh cannot compete with its Asian neighbors like Vietnam, which have attracted a large pool of global investment, thereby creating millions of jobs. Bangladesh must be seen as an attractive destination for global investors. This can be done by developing the physical and information infrastructure, minimizing bureaucratic malfeasance, and eliminating hurdles such as political interventions and opposition party induced disruptions (hartals). In sum, global investors must be made to feel welcome.
The new government should build on the demonstrated record and potential of micro-finance and other non-traditional strategies popularized by the Grameen Bank, BRAC and other globally recognized NGOs to create small- and medium-scale entrepreneurs, who are self-employed and who can create new jobs in the local economy. A massive investment program strategically implemented to build the national infrastructure for the traditional and the new economy will create millions of new jobs directly, as well as through the multiplier effect. The absorption of the labor force must be planned in ways so that labor productivity levels evolve through learning and development of technology at a pace that is in keeping with indigenous resource endowments, not necessarily those of industrialized countries with labor “shortages.” While we can train labor and export them to work in other countries that will have shortages in the future, negotiation of appropriate labor contracts with international organizations such as the World Trade Organization (WTO) (Mode IV) and the International Labor Organization (ILO) deserve the government’s attention. This involves training at the government level so that such negotiation can be conducted effectively with countries seeking to use Bangladeshi labor.
Policy Recommendation #3: Achieve Long-term Food Security
As long as millions of Bangladeshi citizens live on the margin of starvation, any natural disaster or price spike in the international food markets can create a painful food crisis. The recent food crisis (2007–08) was partially caused by disruptive price bubbles in the world rice and grain markets. Self-sufficiency in food production is an important challenge, and a stated goal by the major political parties. We welcome this commitment, particularly in light of the high levels of inflation during 2007–08 that devastated the purchasing power of many ordinary citizens in Bangladesh. The recent reductions in fertilizer and diesel prices reflect the government’s concerns about food security. This will bring welcome relief for farmers producing the next boro crop. The recent collapse in the price of crude oil should help maintain the lower price of fertilizer and diesel, two very important ingredients for farmers. The extent of price reductions must, however, account for cross-border informal transactions (smuggling) that could run counter to the goal of benefiting the farmers from such measures. Food security also has more to do with real incomes (buying power) than the available stock of food. The battle for poverty alleviation is thus the struggle for increasing real incomes for all Bangladeshi citizens. Second, major investments in the agricultural and food market infrastructure — roads, waterways, railways, storage facilities, dredging the rivers and embankments for flood control, etc. — will help the farmers increase production and income, while creating jobs, and help the country reach food self-sufficiency. Bangladeshi farmers must also benefit from the ready availability of credit to invest in modern farm machineries, the availability of flood insurance and futures markets to reduce risks, and from having greater access to market information via the mobile phone and the Internet.
Policy Recommendation #4: Increase Investments in Infrastructure and Energy Infrastructure
We recommend that the new administration take up the challenge of laying the foundations of a 21st century infrastructure as a top priority. Bangladesh’s physical infrastructure is in serious disrepair and has lagged behind compared to its needs. Thus, patients die on their way to hospitals in the rural areas for lack of decent roads and transportation modes. Food supplies do not move readily from one area to another to match demand and supply, causing temporary price spikes. And the clogged streets in the cities that delay deliveries of key shipments (especially garments) increase the uncertainty and cost of doing business and encumber competitiveness. A bold and ambitious strategy of investment to build the country’s infrastructure will achieve multiple outcomes: generate immediate employment and income to reduce poverty, reverse the impact of the ongoing global economic slowdown, support ready-made garment (RMG) and other export industries, and ultimately create conditions for sustained economic progress. In the face of a severe global economic slowdown, the time is right to take up this project. Massive and strategically planned investments in physical and digital infrastructure can help Bangladesh leapfrog other nations, and at the same time work as a stimulus package to create jobs necessary to confront the vagaries of global recession. These mega projects should be undertaken with a firm commitment. Each project monorail, deep sea mega port, PadmaBridge, compact townships, communication systems, dredging of rivers to prevent flooding, others — must be justified on national interests alone. For every project, the question must be asked: How will this impact the poorest households? How will this affect land, water, forest, and other resources? A strong and proactive environment ministry that works in concert with other ministries will be able to ensure that the building of infrastructure is done in a manner that conserves resources while minimizing environmental degradation. Bangladesh’s main airport should also be developed into an international hub to compete with other international airports such as Dubai and Bangkok. The government must also take up the challenge of urban planning to reduce congestion and urban sprawl.
Energy is a prime mover of the national economy. With vibrant sectors such as ready-made garments, pharmaceuticals, shipbuilding, agro-industries, ceramics, raw hides and leather goods, jute, tea, and related products, as well as the service industries, that earn huge foreign exchange and are reliant on consistent supplies of energy, the government must have a viable energy policy that will address short and long term energy needs for the country’s operation and development. It is important for the government to articulate how the nations’ power needs will be met: How much of it is to be met from internal and external sources? What exact role will be played by the different resources (gas, hydroelectricity, coal, and renewables)? This must
be determined from a policy perspective that establishes the allocation of energy to various constituencies (households, industries, and the service sectors) for immediate and long term needs. As capacity is gradually increased, how that capacity will be allocated also needs to be projected for a stable and sustainable growth model of the economy. It may also be noted that roughly 30% of the population presently has access to power supplies. With the present output of roughly 5,000 MW of electricity, effective power generation by the PDB is about 3900 MW while private power suppliers produce about 1200 MW. With a burgeoning population and the need to extend power to a larger segment of the population, power generation capacity must be increased substantially. We project that a 100% increase in power generation would be immediately absorbed. Reliance on natural gas to generate power must be weighed against alternate sources. For example, coal is abundantly available in the northern districts. While its usage has environmental implications, Bangladesh may need to exploit this resource in the short run, while developing alternative renewable sources for the long term as the technology evolves. Given the resource constraints that the government is likely to face, it should negotiate private investments in the power sector to ramp up quickly. An alternative is to consider public-private partnerships. Also given the adverse environmental impact of coal-generated power, with its huge carbon imprint, the government can bring this to the attention of the developed countries and obtain alternate energy technologies or lower prices for more efficient technologies in return for ensuring a better and more sustainable environment for them. Reliance on imported oil is not a solution for Bangladesh and hard earned remittances and export dollars should not be spent on unplanned energy expenditure as oil prices rise. Relying on domestic energy will also lower the rate of inflation, the current account deficit, and the continued devaluation of the taka. Energy efficient transportation systems, alternative energy development and use for power and industrialization needs will allow the country to continue its low carbon imprint.
Policy Recommendation #5: Invest in education and develop human resources
The education system of Bangladesh must be designed afresh. Foremost is the need for a comprehensive and fresh education policy that envisages the specific needs of Bangladesh for the present, as well as for the future. The government must envision a ground-up new education system that integrates the various, unrelated and incoherent streams of education that exist today. What is needed is a unified system that generates synergy and facilitates easy movement from one stream to another so that it can continue to create the needed human resources to power Bangladesh’s growth path without the waste that the current system
generates (dropouts, unneeded skills, mismatch with national needs, etc.). The government must be able to clearly state what entities are to be produced by the education system and to what purpose. We reiterate that it is imperative for such system to consider the needs of Bangladesh now and for the next few decades. The new administration must find resources to invest in education at all levels, aligning this part with the needs of building, supporting and sustaining the nation’s infrastructure, industries, and service sectors. The 21st century global economy will increasingly demand knowledge workers. To this end, the government must offer more technical and vocational training opportunities to build people with technical skills —
basic machining, operating, repair, computer operations, etc. — with a basic 10th grade education. The government needs to promote and establish programs to train people for retail, transportation, education, and other service sector jobs, since these are the primary areas of employment. By expanding literacy to 100% of the population and ensuring that an increasing number of young people have opportunities for higher education, the nation can succeed in alleviating poverty and achieve other ambitious goals. The education sector has had chronic problems for long in the following areas: capacity, quality, relevance of curriculum, quality of teachers, accountability, effective assessment tools, research institutions, educational governance, and linkages and partnerships between academia and the market. How the multiple streams of education, beginning from the primary levels, can be unified and coordinated, so that students have clear options as they move from one stage of education to the next, also deserves special attention. Particular attention must be devoted to the assessment system, especially at the SSC and HSC levels where the grading system is too coarse, leading to the same high GPA for very many students. Admission to the next higher
level is thus being decided by ad hoc mechanisms such as “first come first served” basis or even by age. The need is a fine-grained norm-referenced grading system.
Another alarming problem is the current capacity of the education system in Bangladesh to accommodate the growing number of willing and capable students. In 2005, out of approximately 73 million students of different age-groups, only 25 million had any education (90% at primary, 44% at secondary, 10% at intermediate college and 1.6% at university levels). During this year, the number of educational institutions was approx: 80,397 (primary), 18,500 (secondary and higher secondary), 3,150 (intermediate, colleges) and 74 (universities). By 2025, the population will grow to a staggering 192.9 million, of which nearly 83 million people, an increase of nearly 10 million additional students, will be of school age. At the current rate of attendance, the nation will have to increase capacity by 15%, i.e., will have to build almost 15,318 additional educational institutions. And, if the demand for education goes up (which is expected to happen), even by adding 100% to capacity, the system will be under tremendous pressure for space, especially at the higher education levels.
Policy Recommendation #6: Manage the Nation’s Health and Population Health
Health and human productivity are intertwined. There is a bi-directional relationship between health and economic development. The positive externalities of keeping a nation’s human resources healthy also cannot be emphasized enough. From a policy perspective, the government must be able to envision the desired state of health of the nation reflected in nutrition, water quality, air quality, economic status, mental health, physical health, reduced state of disabilities, etc. What is vitally important is to articulate a pro-poor health strategy where accountability, quality, cost effectiveness, access, and sustainability must be ensured, all
focusing on the need for more effective and efficient health programs. The focus on preventive rather than curative health care must be strengthened. Thus attention must be devoted to various factors connected to health: drinking water, sanitation, and air quality in particular. The crisis facing drinking water is its connection to sanitation, industrial wastes, and natural occurrences like arsenic. Without addressing these sources of health maladies, prevention strategies may be thwarted. Health communication must also play a vital role in strengthening prevention of health problems. The out-of-pocket (OOP) costs of health care to all, especially the poorer segment of the population, have become outrageously high, while quality is poor, especially for tertiary care. The National Health Accounts study (NHA-2, 2003) estimates household expenditures at Tk. 48.35 billion on health related expenses of which pharmaceutical purchases constitute around 70%, while expenditures on qualified medical providers
is only 4.1%. This represents a problem in that the ability to purchase drugs freely can be downright harmful. Legislation must address this problem so that drugs are not available without qualified prescriptions. We also advocate periodic certification of healthcare providers (doctors and nurses in particular) to ensure that the people receive a basic standard of services. In addition, we feel many trained doctors end up in administrative work far removed from the direct provision of health services. We advocate the establishment of health administration training so that a different cadre of health administrators is created for those who want to be administrators. As a result medical doctors, trained with valuable national resources, would not be wasted in administrative positions. Absenteeism of government doctors in the rural centers is a major
problem that must be quickly rooted out. Finally, to establish accountability and justice, it must be ensured that medical malpractice, as well as avoidable mistakes can be pursued in the courts of law.
Bangladesh is the 7th largest nation in the world. Estimates are that there are now about 150 million people that is expected to grow to 250 million before it stabilizes. This can be seen as strength if managed properly. Thus, population management (not control) should be given major attention to harness this strength effectively, both for the local economy as well for earning from abroad. On the latter, demographic patterns suggest that many western countries are aging and declining in population size. According to one source, Europe’s population could decline by 88 million by 2015. It is easy to surmise the tremendous opportunities that await a skilled workforce to fill the population bust, thereby sending remittances back to Bangladesh
that could be multiples of the present $6.4 billion. The under-15 population is also roughly 40% of the total population, resulting in the “population momentum” phenomenon driven by the young age-structure of the population. When it comes of age, its needs must be met, not only in education and health, but in employment and various service needs. Scenario analyses with demographic projections must be conducted periodically to ensure future needs and to avoid social instability. We believe close attention to health, education, and employment strategies (discussed earlier) will ameliorate some of the concerns that population momentum portends. For effective management of this population, it is important to legislate age at marriage and ensure proper education about contraception and economic consequences of unsustainably large family sizes. Service delivery to maintain maternal and child health (MCH), sustain contraceptive prevalence rates (CPR) and decrease total fertility rates (TFR) to replacement levels requires another resolution: the current crisis of whether health and family planning
ought to delivered as one integrated organization or two. This “integration” issue has stalled the efficacy of the program and needs to be resolved quickly, the downside being that population “management” will fail otherwise and population momentum will be adversely impacted. This is an organizational culture problem that cannot be solved by decree but by consensus.
At the end of the report we want to say that there have great opportunities for our country to develop its economic sector and other sectors for achieve its goal for 2050. Though there have some threats but have some opportunities also. If we can overcome these threats and use our opportunities our country will be the TOP 30 richest country in the world.
Although one of the world’s poorest and most densely populated countries, Bangladesh has made major strides to meet the food needs of its increasing population, through increased domestic production augmented by imports. The land is devoted mainly to rice and jute cultivation, although wheat production has increased in recent years; the country is largely self-sufficient in rice production. Nonetheless, an estimated 10% to 15% of the population faces serious nutritional risk.
The present government has set “Vision 2021” to move Bangladesh to middle Income Country (MIC) by 2021. We are confident that “Vision 2050” with the help of vision 2021 objectives of strong economic fundamentals will set the foundation for Bangladesh to become one of the 30th largest economies in the world.