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Bangladesh

 

Bangladesh is a Next Eleven developing nation with a US$175 billion economy and a per capita income of US$1,190. The Taka is the currency of Bangladesh. The central bank is the Bangladesh Bank. The service sector accounts for 51% of GDP, the industrial sector 30% and agriculture 18%. Bangladesh is a major agricultural producer, particularly in the global production of rice (4th), fisheries (5th), jute (2nd), tea (10th) and tropical fruits (5th). Major industries include textiles, pharmaceuticals, shipbuilding, steel, electronics, telecommunications, energy, fertilizer, cement, leather, food processing and ceramics. The country is the seventh-largest natural gas producer in Asia. Its exports amounted to US$30 billion in the fiscal year 2013–14,70% of export earnings came from the textile industry, which is the world's fourth largest textile exporter (after China, India, Germany and Italy). Remittances from the Bangladeshi diaspora and overseas workers provide vital foreign exchange earnings, accounting for US$14 billion in FY2013-14.

Bangladesh has a large, often inefficient, public sector, including state owned utilities, banks and industries. The government provides heavy subsidies for fuel prices and irrigation. Since the British Raj, jute and tea were the backbones of the economy. East Bengal once accounted for 80% of the world jute trade, which peaked during the Second World War. The country's tea industry includes many of the world's largest tea plantations.

After independence, the international community poured substantial foreign aid into Bangladesh to help develop its infrastructure, education, healthcare and demographic prospects. Today, the country has decreased its dependency on foreign aid from 85% (in 1988) to 2% (in 2010), for the annual development budget. Since 2004, the economy has grown at an average rate of 6%.

Bangladesh has seen rising foreign direct investment, particularly in energy, telecoms and export processing zones. Bangladesh has one of the largest financial industries in South Asia. Its twin stock markets are the Dhaka Stock Exchange and the Chittagong Stock Exchange.

The telecoms industry in Bangladesh is one of the fastest growing markets in the world, with 114 million cell phone subscribers in December 2013. The pharmaceutical industry meets 97% of domestic demand and exports to 52 countries. The shipbuilding industry has seen rapid growth in recent years. The steel industry in Bangladesh is concentrated in the port city of Chittagong. It is buoyed by the boom in shipbuilding, construction and real estate. Bangladesh is increasing its export of ceramics, particularly bone china and porcelain. It is a major exporter of fish, seafood, frozen and processed food. It has a fast growing solar power industry and ranks as the country with the fifth-largest number of green jobs.

A significant contributor to the economy is the microfinance sector. Pioneered by Muhammad Yunus and the Grameen Bank in the late 1970s, it has grown to include more than thirty million borrowers and has lent billions of dollars in microcredit loans. The industry stimulates a dynamic rural economy, supporting entrepreneurship in agriculture, cottage industries and small businesses. Microcredit organizations such as BRAC and Grameen Bank have diversified into education, housing and renewable energy.

Transport is a major sector in the Bangladesh economy. The country has a 2,706 km rail network operated by the Bangladesh Railway. It has one of the largest inland waterway networks in the world, with 8,046 km of navigable waterways. The Port of Chittagong is its busiest seaport, handling over US$60 billion in annual trade. More than 80% of the country's export-import trade passes through Chittagong. The second largest seaport is the Port of Mongla.

The insufficient power supply is a significant obstacle to growth. According to the World Bank, poor governance, corruption and weak public institutions are major challenges for Bangladesh's development. In April 2010, Standard & Poor's awarded Bangladesh a BB- long term credit rating, which is below India and above Pakistan and Sri Lanka.

 

Bangladesh has maintained an impressive track record on growth and development. In the past decade, the economy has grown at nearly 6 percent per year, and human development went hand-in-hand with economic growth. Poverty dropped by nearly a third, coupled with increased life expectancy, literacy, and per capita food intake. More than 15 million Bangladeshis have moved out of poverty since 1992.

 

While poverty reduction in both urban and rural areas has been remarkable, the absolute number of people living below the poverty line remains significant. Despite the strong track record, around 47 million people are still below the poverty line, and improving access to quality services for this vulnerable group is a priority. There are also many people who could fall back into poverty if they lose their jobs or are affected by natural disasters.

 

With nearly 150 million inhabitants on a landmass of 147,570 square kilometers, Bangladesh is among the most densely populated countries in the world. Sustained growth in recent years has generated higher demand for electricity, transport, and telecommunication services, and contributed to widening infrastructure deficits. While the population growth rate has declined, the labor force is growing rapidly. This can be turned into a significant demographic dividend in the coming years, if more and better jobs can be created for the growing number of job-seekers. Moreover, improving labor force participation and productivity will help to release the potential of the economy.

Exploiting the potential of regional cooperation and making trade policy more conducive to a deepening and diversification of exports will also play a vital role in the growth process.

 

Bangladesh aspires to be a middle-income country by 2021.This will require increasing GDP growth to 7.5 to 8 percent per year based on accelerated export and remittance growth. Both public and private investment will need to increase as well. Growth will also need to be more inclusive through creation of productive employment opportunities in the domestic economy. To sustain accelerated and inclusive growth, Bangladesh will need to manage the urbanization process more effectively, as well as prepare for adaptation to climate change impacts.

 

Becoming a middle-income country will require substantial efforts on many fronts. These include maintaining macroeconomic stability; strengthening revenue mobilization; tackling energy and infrastructure deficits; deepening financial-sector and external trade reforms; improving labor skills, economic governance, and urban management; and adapting to climate change. Bangladesh can become an export powerhouse, with its labor-intensive manufactured and service exports growing at double digits on a sustained basis, if it speeds up government decision-making. Without timely action, other countries (such as Vietnam and Myanmar) will take the markets being vacated by China.