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Economy
Economy of Bangladesh
Fishermen near the town of Cox's Bazaar in southern Bangladesh. Many industries
in Bangladesh are still primitive by modern standards.Despite sustained domestic
and international efforts to improve economic and demographic prospects,
Bangladesh remains a developing nation, in part due to its large population. Its
per capita income in 2006 was US$2300 compared to the world average of $10,200.
Yet, as the World Bank notes in its July 2005 Country Brief, the country has
made significant progress in human development in the areas of literacy, gender
parity in schooling, and reduction of population growth.
Jute was once the economic engine of the country. Its share of the world export
market peaked in World War II and the late 1940s at 80% and even in the early
1970s accounted for 70% of its export earnings. However, polypropylene products
began to substitute for jute products worldwide and the jute industry started to
decline. Bangladesh grows significant quantities of rice, tea and mustard.
Although two-thirds of Bangladeshis are farmers, more than three quarters of
Bangladesh’s export earnings come from the garment industry, which began
attracting foreign investors in the 1980s due to cheap labour and low conversion
cost. In 2002, the industry exported US$5 billion worth of products. The
industry now employs more than 3 million workers, 90% of whom are women. A large
part of foreign currency earnings also comes from the remittances sent by
expatriates living in other countries.
Worker in a paddy field - a common scene throughout Bangladesh. The economy of
Bangladesh is often cited to be agro-based because of its dependency on
agriculture.Obstacles to growth include frequent cyclones and floods,
inefficient state-owned enterprises, mismanaged port facilities, a growth in the
labour force that has outpaced jobs, inefficient use of energy resources (such
as natural gas), insufficient power supplies, slow implementation of economic
reforms, political infighting and corruption. According to the World Bank,
"among Bangladesh’s most significant obstacles to growth are poor governance and
weak public institutions."
Despite these hurdles, the country has achieved an average annual growth rate of
5% since 1990, according to the World Bank. Bangladesh has seen expansion of its
middle class, and its consumer industry has also grown. In December 2005, four
years after its report on the emerging "BRIC" economies (Brazil, Russia, India,
and China), Goldman Sachs named Bangladesh one of the "Next Eleven," along with
Egypt, Indonesia, Pakistan and seven other countries. Bangladesh has seen a
dramatic increase in foreign direct investment. A number of multinational
corporations, including Unocal Corporation and Tata, have made major
investments, with the natural gas sector being a priority. In December 2005, the
Central Bank of Bangladesh projected GDP growth around 6.5%.
One significant contributor to the development of the economy has been the
widespread propagation of microcredit by Muhammad Yunus (awarded the Nobel peace
prize in 2006) through the Grameen Bank. By the late 1990s, Grameen Bank had 2.3
million members, along with 2.5 million members of other similar organizations.
In order to enhance economic growth, the government set up several export
processing zones to attract foreign investment. These are managed by the
Bangladesh Export Processing Zone Authority.
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