Economic Indicators and the Nature of the Economy of Bangladesh

Economic Indicators

  • Gross National Product (GNP): The total monetary value of all material and immaterial goods and services produced by a country's labor and capital within a specific time frame, usually one year.

    • Measured from three aspects:
      1. Produced Goods and Services: Calculate the total value by multiplying the quantity of goods/services produced by their market prices, including only final products to avoid overcounting.
      2. Earned Income from Factors of Production: Sum of incomes earned by land (rent), labor (wages), capital (interest), and organization (profit).
      3. Total Expenditure of Society: Total financial expenditures in a specific period, classifying spenders as government, NGOs, and individuals.
    • GNP is often equated with Gross National Income (GNI).

  • Gross Domestic Product (GDP): Total monetary value of all final goods and services produced within a country's borders by all contributors, regardless of nationality. Formula:
    GNP = GDP + (Income of residents abroad - Income of foreigners in the country).

  • Per Capita Income: Average income per person, calculated by dividing GNI by total population. Indicator of standard of living; high per capita income often correlates with high living standards, but needs to be balanced against price level changes.

Sectors of Economy

  • Types of Economy: Classified into three main sectors:

    1. Agriculture: Includes crops, livestock, fishery, which has historically dominated the economy of Bangladesh, providing essential food supplies and raw materials for industries.
    2. Industry: Divided into large, medium, and small industries. Significant for GDP contribution, though underdeveloped heavy industries can be a barrier to rapid growth.
    3. Services: Includes finance, education, health, trade, which is becoming increasingly important in the economy.

  • Sector Contributions to GDP (2016-17): Analytical statistics show contributions from various sectors with industry leading at 21.74%, followed by trade at 14.01%, and transportation at 11.26%. Categorized as:

    • 1) Agriculture and forest: 11.12%
    • 2) Fishery: 3.61%
    • 3) Industry: 21.74%
    • 4) Wholesale and Retail Trade: 14.01%
    • 5) Transportation: 11.26%, and others.

Comparison of GNP, GDP, and Per Capita Income

  • Countries categorized by income: High-income, Middle-income (further divided into lower and upper middle), and Low-income countries. Indicators are:
    • High-income Countries: Developed with advanced social services, high living standards, and comprehensive infrastructure.
    • Developing Countries: Show progress via industrialization and attempts to diversify economies.
    • Underdeveloped Countries: Characterized by low per capita incomes, dependency on agriculture, and weak industrial sectors.

Characteristics of the Economy of Bangladesh

  1. Agriculture-Based: Agriculture contributes significantly (around 15% of GDP) and employs 40% of the workforce. Despite modernization attempts, agricultural methods remain traditional, emphasizing yields.
  2. Industrial Growth: The industrial contribution to GDP is on the rise but lacks heavy industry that could spur faster economic growth.
  3. Population Pressures: With a high population density and accompanying unemployment, the educational skills market is underdeveloped. Approximately 72.8% literacy rate, with unskilled labor prevalent.
  4. Socio-economic Challenges: Widespread poverty, low income per capita, insufficient healthcare, and infrastructural weaknesses adversely affect economic conditions.
  5. Over-reliance on Foreign Aid: Historically dependent on foreign assistance, with gradually increasing internal loan resources.

Obstacles to Economic Advancement

  • Historical exploitation leading to underdevelopment, infrastructural weaknesses in agriculture/industry, natural disasters, lack of educated workforce, and political instability.

Steps for Development

  1. Policy Foundations: Establishing national policies targeted at development sectors, with focused planning.
  2. Agriculture Initiatives: Policies for systemic agricultural advancements, technology, and financial support for farmers.
  3. Industrial Development: Strategies for establishing basic and heavy industries coupled with financial accessibility for entrepreneurs.
  4. Social Infrastructure Development: Improving educational systems, healthcare, women's empowerment, and vocational training.
  5. Emergency Preparedness: Institutional disaster management systems to mitigate the impacts of natural calamities.

Economic Relationships

  • Bangladesh's economic ties with developed countries focus on trade (especially textiles) and receiving foreign loans for developmental projects. Heavy import dependence on machinery and raw materials from strategic partners.
  • Active participation in regional trade agreements to enhance exports to neighboring countries (particularly within SAARC).