Comprehensive Notes on the Economy of Bangladesh

Economy of Bangladesh

Bangladesh is primarily an agricultural country with most people living in villages and depending on agriculture. However, the significance of industry and commerce is increasing with urbanization. All sectors, including agriculture, industry, and commerce, are crucial for the country's development in the modern competitive world.

Chapter Objectives

By the end of this chapter, the student will be able to:

1. Describe informal economic activities.
2. Explain the expansion of informal economic activities in rural areas.
3. Illustrate informal economic activities in urban areas.
4. Explain the role of informal economic activities in the national economy.
5. Describe types of industries in Bangladesh.
6. Evaluate the contribution of different industries.
7. Understand the future of industries in the economy of Bangladesh.
8. Describe major products of import and export of Bangladesh.
9. Realize the roles of import and export.
10. Explain processing industries.
11. Describe the agro-product processing of Bangladesh.
12. Explain the problems of agro-product processing and their solutions.

Lesson 1: Informal Economic Activities

Any work, service, or transaction with economic value is an economic activity. These activities are divided into formal and informal types.

Informal Economic Activities

Informal economic activities lack fixed wages, are difficult to tax, and are not regulated by the government. Examples include:

• Work in one's own land.
• Work in shops and businesses.
• Household work.
• Work of hawkers and day laborers.

In underdeveloped or developing countries like Bangladesh, most economic activities are informal, representing the traditional sector of the economy.

Informal Economic Activities in Rural Areas

Rural economies heavily rely on informal activities. Farmers working in their fields without wages contribute significantly to food production, benefiting society and the state. Other informal activities include:

• Works of blacksmiths and potters.
• Cottage industries.
• Shops and small businesses.

These activities keep the economy dynamic. Despite the increasing use of modern technology, the traditional or informal sector remains crucial.

Informal Economic Activities in Urban Areas

The urban population includes people from all income levels. Lower-income individuals often engage in informal activities such as:

• Running small shops.
• Hawking goods.
• Selling goods in localities.
• Pulling rickshaws or pushcarts.
• Working as porters, technicians, helpers, and house workers.

Contribution to the Economy

Bangladesh's economy is largely dependent on informal economic activities. Villagers are involved in:

• Harvesting crops.
• Catching fish.
• Rearing livestock.
• Maintaining cottage industries.
• Selling products in the market.

Similarly, people in urban areas engage in various informal activities. Despite the rise of formal economic activities, the traditional sector maintains its importance.

Lesson 2: Industry of Bangladesh

While Bangladesh is an agricultural country, industries have been developing since the British reign.

Historical Context

Jute, cotton, and textile industries were the major industries. During the Pakistan period, East Pakistan faced discriminatory policies. After independence in 1971, new industries began to emerge.

Current Industrial Landscape

Jute was once the largest industrial sector, but now other industries like tea, sugar, cement, fertilizer, leather, rail, engineering, ready-made garments, and pharmaceuticals are also present.

Industries are categorized based on capital, size, production, and number of workers.

Large Industries

Large industries, such as jute, textile, cement, fertilizer, rail, engineering, and electricity, require significant capital, skilled labor, engineers, experts, and experienced managers. They have a high production capacity.

Their produce meets local demand, and a portion is exported. These industries serve as the backbone of the national economy.

Medium Industries

Industries with capital exceeding $1.5$ crore are considered medium industries. Examples include light engineering, silk, ceramics, and cold storage. They meet local demand and employ many people.

Small Industries

Industries with a working capital less than $1.5$ crore taka are small industries. Examples include rice mills, small-scale shoe factories, plastic industries, and food processing industries.

Cottage Industries

In cottage industries, owners or their family members typically handle production and sales. Examples include handloom industries, earthenwares, bamboo, cane, and wood works, sari or sweet packets, and incense sticks. These industries promote self-reliance and employ a good number of people, which is highly important considering the large population and industrial backwardness of Bangladesh.

Contribution of Industry to the Economy and its Future

Increasing urbanization and living standards have elevated the importance of industries. Bangladesh offers a cheap supply of skilled and unskilled laborers, attracting foreign investment. The government has established export processing zones and is improving infrastructure to attract more foreign investors.

Expatriate Bangladeshis are also showing interest in investing in the industrial sector, enhancing the possibility of Bangladesh becoming an industrially rich, middle-income country. This growth can reduce poverty and unemployment and improve the financial status of the people.

It's essential to ensure a safe working environment and labor rights and to control environmental pollution caused by industries. Supervision by the government is essential to achieve these goals.

Lesson 3: Exports and Imports of Bangladesh

Countries engage in international trade because they cannot produce all required goods themselves. They export surplus products and import necessary commodities.

International Trade

International trade involves exporting products produced in abundance and importing goods that are needed. Foreign exchange from exports is used to pay for imports and cover developmental expenses.

Importance

International trade is crucial for a country's economy. The modern world order has facilitated international trade. Countries now focus on the easy availability and profitability of production or import under a set of principles and mutual contracts.

Organizations

International and regional organizations like the World Trade Organization (WTO) and South Asian Free Trade Area (SAFTA) monitor, control, and fix tariffs.

Developed Countries

A developed country typically exports more than it imports.

Import Products of Bangladesh

Bangladesh imports:

• Rice
• Wheat
• Pulses
• Oil seeds
• Cotton
• Crude petroleum and petroleum products
• Edible oil
• Fertilizer
• Agro and industrial machinery
• Yarn

These are imported from countries including China, India, Japan, Singapore, South Korea, Malaysia, the USA, the UK, France, and Germany. Imports are conducted in both public and private sectors.

Import Values

The import values for different fiscal years are:

• 2012-13: $34,084$ million US dollars
• 2013-14: $40,732$ million US dollars
• 2014-15: $40,704$ million US dollars
• 2015-16: $42,921$ million US dollars
• 2016-17: $47,005$ million US dollars
• 2018-19: $56,060$ million US dollars
• 2022-2023: $75062$ million US dollars

Maximum products were imported from China.

Export Products of Bangladesh

Jute and jute products were once major export goods. The invention of the 'genome sequence' or life history of jute by Bangladeshi scientists and global environmental awareness have contributed to a resurgence in demand for jute products.

Other exports include:

• Readymade garments
• Frozen shrimp
• Medicines
• Tea
• Leather goods
• Chemicals

These are exported to the USA, Germany, the UK, France, Belgium, Italy, Canada, the Netherlands, and Japan.

Export Values

The export values for different fiscal years are:

• 2012-13: $27,027$ million US dollars
• 2015-16: $34,257$ million US dollars
• 2016-17: $34,656$ million US dollars
• 2018-19: $40,540$ million US dollars
• 2022-2023: $55559$ million US dollars

Readymade garments are the top export, and the USA is the largest buyer of Bangladeshi products.

Importance of Export and Import

Bangladesh imports essential products to meet public demand. Failure to import these goods can lead to price hikes and social unrest. Exports earn foreign currency, which helps the economy, expands industries, and creates employment opportunities.

Reducing imports and increasing exports can lead to self-reliance. Engaging the population in productive sectors increases economic self-sufficiency.

International trade, especially export activities, is important to become a middle-income country.

Lesson 4: Agro Product Processing Industries

Processing Industries

Processing transforms and preserves a product into another using knowledge and technology. Agro-product processing industries are being established in Bangladesh to meet annual demands through multi-dimensional use of agro-products.

Examples include baby food, milk products, and processed fish, meat, sugarcane, and vegetables. Ensuring safe food also increases our opportunities.

Agro Product Processing Industries in Bangladesh

Traditionally, Bangladesh processed foods like parched rice, stuffed rice, and dried fish. Modern technology has improved food production and processing.

Problems of Traditional System of Processing

• Products cannot be processed as per demand.
• Problems of storage.
• No way to ensure that the food is healthy.

Advantages of Modern System

Increased production and healthier processing methods.

Importance of Agro-Processed Products

Agro-product processing industries allow Bangladesh to maximize the use of its produce. Multi-dimensional use of jute has facilitated people with jutex, jute bags, and jute crafts. This generates more profit for the farmers and entrepreneurs and more employment for workers.

Partex processing from jute sticks is also creating a new industry. Similarly, industries processing rice, wheat, corn, tomato, potato, milk, fish, meat, sugarcane, hide, and cotton are being established.

Cold storages are preserving tomatoes year-round. Fish is canned or tinned for preservation. Seasonal fruits are preserved to make various juicy foods. Milk processing yields sweetmeats, curd, butter, cheese, and baby food.

Processing crops, animals, fruits, flowers, and seeds can greatly benefit Bangladesh. There is a worldwide attempt to process agro-products into medicines. However, we must prevent harming the environment by using excessive fertilizer, pesticides, and electricity. Development should always be sustainable.

Problems in Processing Industries

Limitations

• Problem of capital.
• Problem of sufficient knowledge and research.
• Problem of skilled entrepreneurs and laborers.
• Problematic transportation and communication systems.
• Lack of skilled managers.
• Lack of storage facility for agro-produces.

Ways to Overcome the Problems

• Enacting a specific plan and a set of principles for processing of agro-produces.
• Patronizing higher education and research for multi-dimensional inventions.
• Creating opportunities for skilled entrepreneurs and laborers.
• Utilizing the experience and expertise of the developed world.
• Facilitating marketing of the products and venturing export.
• Creating mass-awareness about multi-dimensional use of agro-products and their benefits on the human body.