An Encyclopedic Guide to the Economy and Human Development of Bangladesh

Characteristics of the Economy and Livelihoods in Bangladesh

Bangladesh is fundamentally an agricultural nation, where the vast majority of the population resides in villages, making agriculture the primary source of livelihood. In rural areas, economic roles vary; while agriculture dominates, many individuals function as weavers, potters, blacksmiths, grocers, shopkeepers, and small traders. In urban environments, residents are predominantly service holders and businessmen. However, the urban landscape also includes a significant number of rickshaw pullers, small shopkeepers, hawkers, labourers, and workers. While many of these occupational roles are driven by personal initiative, the country also maintains state-owned sectors, including industries, railways, highways, and water transports, alongside welfare-oriented sectors like education and health. Currently, the private sector is expanding rapidly, with many industries and business organizations being established under private ownership. This sector plays a vital role in national development and employs a large portion of the population. The overall economy of Bangladesh is flourishing through the combined efforts of both government and non-government sectors.

Fundamental Economic Indicators: GDP, GNP, and Per Capita Income

Gross Domestic Product (GDP) represents the total monetary value of all goods and services produced within the geographical boundaries of a country during a specific year. This measurement includes contributions from both native citizens and non-native residents living within the country. GDP is primarily estimated to gauge the overall internal economic capability and output of a nation. It is important to note that if a citizen works abroad and sends money home, or if a domestic company operates and sends profits from abroad, these funds are not included in the GDP, as it focuses strictly on internal production.

Gross National Product (GNP) is defined as the total monetary value of all goods and services produced by the citizens of a country within a specific period, usually one year, regardless of where they are located in the world. This includes money earned by citizens working or running businesses abroad when that money is sent back to their home country. GNP allows for the realization of the total economic contribution of a country's citizens. For instance, if an individual or a Bangladeshi business firm operates legally abroad and sends money back to Bangladesh, it is factored into the Gross National Product.

Per Capita Income (PCI) is used to measure the overall standard of living and the relative prosperity of a nation's economy. It is calculated by dividing the Gross National Income of a year by the total population of that same year. The formula is expressed as follows:

$\text{Per Capita Income} = \frac{\text{Gross National Income of a Year}}{\text{Total Population of the Year}}$

As a practical example, if a country in the year $2011$ had a population of $10\,\text{crore}$ and a GDP of $5000\,\text{crore US dollars}$, the Per Capita Income would be calculated as:

$\frac{5000\,\text{crore US dollars}}{10\,\text{crore}} = 500\,\text{US dollars}$

Increasing production in agriculture, industry, and service sectors is aimed at raising the income of the population, leading to an improved standard of living and liberation from poverty. Since independence, Bangladesh has seen a steady increase in PCI. In the financial year $2010$, the per capita income was $928\,\text{US dollars}$, which increased significantly to $2784\,\text{US dollars}$ during the $2023-2024$ financial year. Other indicators of development include GNP and general living standards. Every year, the economic growth rate of Bangladesh increases, bolstered by domestic production and the contributions of overseas workers. According to Bangladesh Bank, the GDP was Tk. $3,70,707\,\text{crore}$ in $2004-2005$, and it rose to Tk. $50,48,027\,\text{crore}$ in the $2023-2024$ financial year, according to the Bangladesh Economic Survey-2024.

Sectoral Contributions to Gross Domestic Product

The Gross Domestic Product of Bangladesh is derived from various sectors, including agriculture and forest, fishery, industry, mineral, electricity, gas and water, construction-industry, wholesale and retail marketing, hotel, restaurant, transport and communication, bank and insurance, health and social welfare, and trade and commerce. Key sectoral data is as follows:

Agriculture Sector: This includes food grains, vegetables, fishery, and forest resources. In the financial year $2017-2018$, this sector contributed $13.14\%$ to the GDP with a growth rate of $3.54\%$. By the financial year $2023-2024$, its contribution was $11.02\%$ with a growth rate of $3.21\%$.

Fishery: In the financial year $2017-2018$, the contribution was $2.77\%$ with a growth rate of $4.93\%$. In $2023-2024$, the contribution was $2.38\%$ and the growth rate was $2.81\%$.

Industry Sector: In $2017-2018$, this sector contributed $33.85\%$ with a growth rate of $10.20\%$. If garments, electricity, gas, water supply, minerals, and construction are included, the contribution becomes even higher. In $2023-2024$, the contribution rose to $37.95\%$ with a growth rate of $6.66\%$.

Wholesale and Retail Marketing: In the financial year $2017-2018$, the contribution was $14.75\%$ with a growth rate of $8.74\%$. In $2023-2024$, the contribution was $15.32\%$ with a growth rate of $6.19\%$.

Transport and Communication: In the financial year $2017-2018$, the contribution was $7.88\%$ with a growth rate of $6.74\%$. In $2023-2024$, the contribution was $7.25\%$ and the growth rate was $5.24\%$.

Health and Welfare Sector: In the financial year $2017-2018$, the contribution was $2.89\%$ with a growth rate of $9.20\%$. In $2023-2024$, the contribution rose to $3.57\%$ with a growth rate of $10.07\%$.

Human Resource Development and the Vicious Circle of Poverty

Human beings become a state asset only when they can contribute through physical labour or innovation. Manpower that employs merit and labour to increase production in agriculture, industry, and service sectors is termed human resource. The goal of human resource development is to transform every unskilled person into a skilled asset through proper education, training, housing, medicare, and food. Skilled individuals are essential for economic development, necessitating the provision of knowledge through education and the development of skills via training to ensure productive labor.

According to the Economic Survey of Bangladesh 2024, the population reached $171,466,990$ by the year $2023$. The $2022$ census reported a population of $16\,\text{crore } 51\,\text{lakh } 58\,\text{thousand } 616$. The Labor Force Survey ($2023-2024$) indicates an economically active labour force over the age of $15$ consisting of $7.35\,\text{crore}$ people. Of this group, $45\%$ are in agriculture, $17\%$ in industry, and $38\%$ in various services. The literacy rate has significantly improved from $54.8\%$ in $2009$ to $77.9\%$ in $2024$.

However, progress is hampered by the 'vicious circle of poverty.' This cyclic order functions as follows: poor individuals lack sufficient food, leading to ill-health and an inability to work. This results in lower income and minimal savings. Small savings lead to small capital, which in turn leads to small investment. Low investment fails to create new employment, forcing individuals to remain poor. Breaking this cycle requires investment in food security, health, nutrition, and both general and vocational education.

Human Development Index (HDI) and Global Standing

Standard economic measurements like GDP and GNP often exclude labor that cannot be sold in the market, such as household chores performed by women, which leads to an incomplete picture of the economy. To address this, the Human Development Index (HDI) uses various indicators to assess economic benevolence and social well-being. These indicators include average life expectancy, social inequality, maternal death rates, unemployment rates, poverty percentages, child labour rates, allowances for the helpless, rates of early marriage and motherhood, income discrimination, and educational rates. Indicators such as student admission rates, medicare access, and food security are also processed to determine the national standard of living.

Bangladesh's HDI position has improved from $142$ in $2014$ to $129$ in $2022$. The government has implemented specific rules, such as appointing $60\%$ women teachers in primary schools, which shifted the percentage of women teachers from $21\%$ in $1991$ to $64.9\%$ currently. Health initiatives have led to decreased birth and death rates, increased life expectancy, and lower malnutrition. Poverty rates stood at $18.7\%$ in $2022$, with extreme poverty at $5.6\%$, down from $24.3\%$ and $12.9\%$ respectively in $2016$. Social security networks include cash allowances and food for the destitute, and projects like 'a House a Farm', 'Ashrayan', and 'Grihayan'. Bangladesh achieved middle-income status in $2015$ and became a developing country in $2018$, though income disparity between the rich and the extremely poor remains a challenge.

Comparative Analysis and the Impact of Remittances

Development is compared across nations using indicators like per capita GNI and unemployment. In $2024$, GNI per capita in US dollars was $2820$ for Bangladesh, $2650$ for India, $1430$ for Pakistan, $11,670$ for Malaysia, and $4910$ for Indonesia. Life expectancy in Bangladesh is $74.7\,\text{years}$, compared to $72\,\text{years}$ in India and $67.6\,\text{years}$ in Pakistan. The government is currently working toward attaining Sustainable Development Goals (SDG).

Remittance—money sent home by expatriate workers—is a cornerstone of the Bangladeshi economy. Millions work in the Middle East (Saudi Arabia, Kuwait, Qatar, Egypt, Libya, Morocco), East Asia (Malaysia, Singapore, Brunei, South Korea), and Western nations (Europe, America, Australia). In the fiscal year $2022-2023$, $11.38\,\text{lakh}$ Bangladeshis went abroad, sending back $21,610\,\text{million US dollars}$, a massive increase from the $9,689\,\text{million US dollars}$ sent in $2008-2009$. In $2009$, Bangladesh ranked $8th$ globally and $2nd$ among SAARC countries for remittance receipts. This influx of capital allowed Bangladesh to avoid the worst effects of the $2008-2009$ global economic depression.