Economy

Bangladesh is quite poor, with the average per capita income hovering around US$818. On the United Nations Human Development Index, a development scale based on a combination of gross national product, literacy and life expectancy, Bangladesh is ranked 146 of187 - ahead of 41 other countries and neck with Pakistan. Approximately US$ 11.41 billion per annum has been pumped into the country over the past decade or more, but aid levels are now falling significantly. Food aid is one-third of what it was 15 years ago because the country now produces most of what it consumes.

Still unable to shed its ‘basket case’ image, the country continues attract foreign aid from a large number of organizations from around the globe including aid agencies such as UNICEF, UNDO, UNESCO, WHO, ODA, USAID, GTZ and Danita. Much of it has gone into the family planning sector; the country’s rapidly declining birth rates are the result. For years foreign aid has provided over 50% of the government’s development budget, but the figure is now less than 30% and declining rapidly. The Bangladesh government maintains that as long as foreign donors increase to their markets (especially the garments market) to offset the decreased aid levels, it won’t complain. To some extent, this has been happening.

Bangladeshi garment workers

On the macroeconomic level, Bangladesh has a liberalized market-oriented economy and no major political party seems to question this overall policy, only its implementation. The structural adjustment program of the BNP government is an attempt to create a positive investment climate which involves conservative fiscal and monetary policies which have resulted in low inflation rates, low bank interest rates, a doubling in domestic saving rates, low fiscal deficit and minimal fluctuation in exchange rates. Exports have been growing annually at an impressive 20% and foreign reserves have grown to US$ 15 billion.

Despite these results, the annual growth in the economy remains arrested at around 6.5%, which is actually lower than in the early 1980s when economic reforms began. Due to strong pressure from trade unionists, the government has been moving at a snail’s pace in privatizing state enterprises, these losing enterprises continue draining huge sums from the state coffers. Also, while the country is now close to self-sufficiency in rice, agriculture production has been stagnant since 1991. Excluding garments, the manufacturing sector’s annual growth, too, is only fair at just 6.5%. The only growth sectors are fisheries and livestock which are of relatively minor importance.

The main reason, however, for the mediocre growth rate is that the country is failing to attract investment. Foreign investment shot up briefly in 1994 but then went dramatically down in 1995 as the country’s political situation heated up. So despite recent articles calling Bangladesh ‘The Emerging Tiger’ and ‘the best investment choice on the Indian sub-continent” and despite being allowed 100% ownership, foreign investor are staying away because of the volatile political situation.

The one really bright spot really bright spot is the ready-made garment industry with an annual growth of a phenomenal 22%. Incredibly low wages and a relatively disciplined workforce are Bangladesh’s drawing cards. Most of the 2200 garment factories are in and around Dhaka and Chittagong, and women, mostly from families, hold nearly 90% of the more than 3.5 jobs. Bangladesh is now the largest supplier of T-shirts, shirts, jeans pants to Europe to the US. Entrance into the Brand-name market seems to be the next step.