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Paper no.

3735 Bangladesh Economy- Problems & Prospects- Part II


By Kazi Anwarul Masud TASKS BEFORE SHEIKH HASINA GOVERNMENT

27-Mar-2010

Early last year the center-left combine formed a government with overwhelming majority in Parliament with an ambitious agenda and promises to be fulfilled. But Prime Minister Sheikh Hasinas government so far has not been successful to bring down price of essentials, except for few essentials, within the purchasing capacity of the common men and to alleviate poverty. World Bank had estimated that the price hike, partly due to rise in international price of rice but mostly due to oligopolistic behavior of syndicates craving for abnormal profit, has added four million Bangladeshis to the poor class. Inability of the government to intervene forcefully in the market lest market forces are distorted has resulted in poor and middle class Bangladeshis to live a life that they should not have to live. It is encouraging that of late the present Bangladesh government appears determined to intervene in the market to destroy syndicates who have stolen from the people massive amounts of money by artificially raising price of commodities. It is generally recognized that "for a capitalist system to evolve in an effective developmental sense, it must have two hands and not one: an invisible hand that is implicit in the price mechanism and a visible hand that is explicitly managed by the government". Reduction and eventual eradication of poverty would be a greater challenge for the government given the fact that 40% of the people live below the poverty level. According to a World Bank official Bangladesh will, need 8% growth rate at a row for 20 years to reduce poverty to 15% from its present level. Additionally no country can become a middle income country with the level of increasing income disparity between the rich and the poor. Bangladesh could consider adopting Professor Joseph Schumpeters "creative destruction" meaning replacing old ways with new innovative measures that would increase wealth of nations. But since capitalism both influences and is influenced by political and sociological factors and since markets due to externalities or imperfections do not reach perfect equilibrium based on demand and supply state interventions in both regulatory and enforceable forms would be necessary for countries like ours. No longer can we leave the lives of millions of people to be guided by the profit making motive of some people. It is not suggested that we resurrect centrally planned socialism dismissed by Alan Greenspan, among others, as inefficient and unable to create wealth and raise living standard of the people but to have in place an amalgam of social equity and efficiency

of the market that some would call market socialism. ECONOMIC PHILOSOPHY Regardless of the economic system followed by the new government the pledges and the statements made by Ministers make it abundantly clear that this government unlike the previous one would not be servile to the wealthy and would try to bring about an egalitarian system in the distribution of national wealth. Prior to the Wage Board's announcement of its recommended minimum wage, the rate had remained unchanged at Tk950 for more than 12 years. Although the government may allow up to three years for the new wage to be implemented, and inevitably there will be compliance issues as manufacturers drag their feet, it seems politically untenable for wages to remain at their current levels given the unprecedented industrial unrest. In response to the Wage Board's initial draft recommendation of a minimum wage of TK 604 to be increased to Tk1, 800 after eight months, the BGMEA feared that over 50 per cent of factories would be ruined within a short time. While this claim is no doubt an exaggeration, the capacity of Bangladesh's textile industry to absorb a significant wage hike as margins become tighter is a key question which hangs over the future of the industry. Bangladesh's textile sector is concentrated in export processing zones in Dhaka and Chittagong. These zones, which are administered by the Bangladesh Export Processing Zone Authority, aim to offer "a congenial investment climate, free from cumbersome procedures". They offer a range of incentives to potential investors including 10 year tax holidays, duty free import of capital goods, raw materials and building materials, exemptions on income tax on salaries paid to foreign nationals for three years and dividend tax exemptions for the period of the tax holiday. All goods produced in the zones can be exported duty free, in addition to which Bangladesh benefits from the Generalized System of Preferences in European and Japanese markets and is also endowed with Most Favored Nation status from the United States. Furthermore, Bangladesh imposes no ceiling on investment in the EPZs and allows full repatriation of profits. The formation of labor unions within the EPZs is prohibited as are strikes. Bangladesh exports significant amounts of garments and knitwear to the EU market. Bangladesh also has significant jute, leather pharmaceutical, and ceramics industries. Bangladesh has been a lead in Western efforts to end the use of child labor in garment factories. In1995, the BGMEA, ILO, and UNICEF signed a memorandum of understanding on the elimination of child labor in the garment sector. Implementation of this agreement began in 1995, and by the end of 1999, child labor in the garment trade virtually had been eliminated. The labor-intensive process of ship breaking for scrap has developed to the point where it now meets most of Bangladesh's domestic steel needs. Other industries include sugar, tea, leather goods, newsprint, pharmaceutical, and fertilizer production. The Bangladesh government continues to court foreign investment, particularly in private power generation and gas

exploration and production, as well as in other sectors such as cellular telephony, textiles, and pharmaceuticals. In 1989 it established a Board of Investment to simplify approval and start-up procedures for foreign investors, although in practice the board has done little to increase investment. The government created the BEPZA to manage the various export processing zones. The government has given the private sector permission to build and operate competing EPZs-initial construction on a Korean EPZ started in 1999. In June 1999, the AFL-CIO petitioned the U.S. Government to deny Bangladesh access to U.S. markets under the GSP, citing the country's failure to meet promises made in 1992 to allow freedom of association in EPZs. Although the economy has improved in the 1990s, Bangladesh still suffers in the area of foreign trade in South Asia region. Despite major impediments to growth like the inefficiency of state owned enterprises, a rapidly growing labor force that cannot be absorbed by agriculture, inadequate power supplies, and slow implementation of economic reforms, Bangladesh has made some headway improving the climate for foreign investor and liberalizing the capital market; for example, it has negotiated with foreign firms for oil and gas exploration, better countrywide distribution of cooking gas, and the construction of natural gas pipeline and power stations. Progress on other economic reforms has been halting because of opposition from the bureaucracy, public sector unions, and other vested interest groups. The severe floods of 1998 increased the country's reliance on large-scale foreign aid. So far the East Asian Financial Crisis has not had major impact on the economy. Foreign aid has seen a decline but economists see this as a good sign for self-reliance. GLOBAL MELTDOWN AND EMPLOYMENT SECTOR The global financial crisis has triggered a serious slowdown in world economic growth. Enterprises have stopped hiring and many are lying off workers in considerable numbers. According to ILO Global Employment Trends of January 2009(44) an estimated 6.0 per cent of the worlds workers were not working but looking for a job, up from 5.7 per cent in 2007. Experience shows that the longer people stay out of work the more their "employability" deteriorates, making it progressively harder to get back into work. This is especially worrying for young workers who may get trapped into a lifetime of weak attachment to the labor market alternating between low paid insecure work and outright unemployment. In many developing countries well over half of the workforce is employed in conditions that fall short of decent work, and breaking out of such situations is at the core of the global development challenge set out in the Millennium Declaration and its poverty-reducing goals. By the end of 2008 working poverty, vulnerable employment and unemployment were beginning to rise as the effects of the slowdown spread. In 2008, global financial markets experienced their worst crisis since the 1930s. The crisis was triggered by the collapse of the housing bubble in the United States, although the actual causes go deeper. In the United States and other developed countries there were credit excesses in residential mortgages, commercial mortgages, credit cards, auto loans and student loans. And there were excesses in the securitized products that converted these debts into

toxic financial derivatives; in financing for leveraged buyouts and in the dangerous credit default swap market. The World Bank in its Global Economic Prospects report had forecast the global economy would expand a mere 0.9 per cent in 2009 and world trade volume would fall for the first time in 26 years by 2.1 per cent. Overall, the outlook for economic activity weakened through 2008 and became evident through declines in GDP for many advanced economies and official recession announcements. As consumer confidence dwindled, the purchasing of goods and services declined with households cutting spending in further deteriorating conditions. Business investment and industrial production also worsened as revenues fell and credit markets seized. Inter-bank lending continued to be stalled and whilst some national interest rates have declined to near record lows, these lower rates have not been transmitted to producers and consumers who found it difficult to spend as they feared further job reductions. To compound the situation, banks have been hesitant to offer loans to consumers, seeing an additional risk with unemployment on the rise. In response to the crisis, a mobilization of trillions of dollars occurred with governments and Central banks intervening in some cases and others relying on support from the International Monetary Fund (IMF). Global leaders met at an extraordinary G-20 summit in Washington on 15 November 2008 to discuss the economic crisis. The leaders agreed on common principles to guide financial market reform through: strengthening transparency and accountability; enhancing sound regulation; promoting integrity in financial markets; reinforcing international cooperation; and reforming international financial institutions. In October 2007, the IMF projected global economic growth for 2008 at 4.8 per cent, but by October 2008 this rate had been adjusted downward to 3.9 per cent, which was further adjusted downward to 3.8 per cent in November 2008. The overall downward adjustment affected all regions in the world except Latin America and the Caribbean and the Middle East. The global number of unemployed youth increased to 76 million, and the youth unemployment rate has increased by 0.4 percentage points in 2008. Given the current economic downturn, the youth labor market situation is all the more worrisome in view of the lack of progress in addressing youth labor market issues during more prosperous years. Until 2007, developing economies saw a continuation of the downward trends in working poverty and vulnerable employment witnessed in recent years. Estimates of the proportion of the employed that are working but also fall below an accepted poverty line (the working poor) show a major break with estimates in previous years following the revision of poverty estimates by the World Bank. On the basis of new research and information from household surveys, the threshold for extreme poverty has been revised to USD 1.25 a day, while the threshold for poverty has remained at USD 2 a day. On the basis of the new poverty estimates, the share of working poor (USD 1.25 a day) in total employment is estimated at 20.6 per cent in 2007, a decrease of 12.1 percentage points over 1997. In 2008, the World Bank released new poverty estimate. Covering 116 countries and spanning the period 1981 to 2005. The new threshold for extreme poverty is now set at USD 1.25 a day in 2005 prices, which is the average threshold for the poorest 15 countries. The new estimates show that 1.4 billion people in developing countries are living in extreme poverty (950 million on previous estimates). However, the World Bank shows that

the rate of decrease in the poverty rate between1981 and 2005 remains about the same, at 1 percentage point per year for the developing world as a whole. POVERTY IN BANGLADESH Taking a broader measure of poverty, 2.6 billion people consume less than USD 2 a day in 2005 prices. This number of people has remained relatively unchanged since 1981 although it is now a lower proportion of the population. The new estimates do not yet reflect the increase in food prices since 2005. The share of vulnerable employment in total employment is highest in South Asia, Sub-Saharan Africa, South-East Asia and the Pacific, and East Asia. In all these regions the majority of workers do not enjoy the possible security that wage and salary jobs could provide. Taking into account that a wage and salary job in poor regions may still not ensure all the components of a decent job, it becomes understandable that only a minority of working people have a job that is well paid, respects their fundamental rights and ensures some security in case of job loss. Similar to other Asian regions, economic growth in recent years has resulted in impressive reductions in working poverty in South Asia. However, poverty levels in South Asia remain much higher than in South-East Asia and East Asia. Extreme working poverty decreased from 57.2 per cent in 1997 to 47.1 per cent in 2007. Most of the change occurred during 20022007. The share of vulnerable employment, also on a downward trend, remains very high (77.5 per cent in 2007). Employment-topopulation rates have traditionally been very low in South Asia because of the low labor force participation of women. Women continue to be an untapped potential in the region, as in 2008 only one out of three women of working age were recorded as working. During1998-2008, this share even slightly decreased, as did the male employment-to-population ratio. Both decreases are caused by a considerable downward trend in youth employment. In response to the financial crisis and dwindling access to funding, many companies in an increasing number of countries has taken action to reduce operating costs including postponement of investment and reductions of the size of the workforce. In turn, consumers who have become uncertain about their livelihoods or who have joined the ranks of the unemployed or the working poor have been left with little choice but to curtail spending, thus adding to the downward spiral of economic activity. The economic weight and market size of the Developed Economies and European Union, and the global linkages of the financial sector, means that the crisis has had a major impact on other parts of the world. The labor market outlook for 2009 dependent on the effectiveness of coordinated government measure had to wait for the time it would take for the global economy to find a path toward sustainable and socially equitable growth Based on current labor market trends it was assessed that the global unemployment rate might rise to 6.1 per cent in 2009, and 198 million people will be unemployed. This is an increase of 18 million over the estimated number of unemployed in 2007. The IMF had forecast announced in December 2008

that it is likely to revise its global forecast that global economic growth in 2009 was likely to fall below the 2.2 per cent. Finally, if unemployment rate is projected in each country as the rate in 2008 plus the largest change in unemployment since 1991 in the Developed Economies and the European Union and half of the largest increase in economies in other regions then the worst impact on the unemployment rate would repeat itself simultaneously in all developed economies. The rationale for taking half of the worst impact in economies in other regions is that in developing economies the main impact of the current crisis is not necessarily reflected in the unemployment rate. The impact as captured in the vulnerable employment rate and changes in working poverty may be equally important. According to the third scenario, the global unemployment rate would rise to 7.1 per cent, an increase by 1.4 percentage points over 2007, but in some of the developing economies the unemployment rate would reach unprecedented levels in the third scenario. In view of the large decent work deficits among the employed in developing economies, assessment of the potential impact of the economic crisis necessitates scenarios using additional indicators beyond the unemployment rate, in particular indicators for working poverty and vulnerable employment. The reason is that many of the poor cannot survive without working. Unemployment is "unaffordable" for them given that they often have no savings and cannot fall back on social security. A large proportion of workers in developing economies can only react in one way when economic situation deteriorates and the cost of living rises: they have to work even more and/or they have to pick up any work available, independent of the conditions of this work. So while part of the crisis may be reflected in the unemployment rate, we are also likely to see more people taking up any type of employment, and a rise in the number of people joining the ranks of the working poor and vulnerable employment in developing economies. It is difficult to accurately estimate the quantitative impact on the vulnerable workers and the working poor at this point in time, as data at the country level are hardly available. However, given our understanding of labor markets, a negative impact on vulnerable employment and working poverty seems realistic for at least two reasons: 1) people who lose their wage and salaried employment will join the ranks of the vulnerably employed, having to work as own-account workers and unpaid contributing family workers; 2) new entrants into labor markets will have fewer chances to find decent and productive work in wage and salaried jobs and will also join the ranks of the vulnerably employed. Given the detailed employment scenario in the ILO report it is difficult to visualize clearly the prospect of overseas employment of Bangladeshis. Remittance of Bangladeshis from abroad is the mainstay of our external economy as more than a quarter comes from expatriates living in the developed countries and the rest from the Arab countries who now have not escaped the adverse effects of global meltdown coupled with less than $100 per barrel from more than $150 they used to get earlier. This loss of petro dollar earning will have serious effect on the construction industry in the Arab world where many Bangladeshis were employed. Lost jobs for Bangladeshis has many facets-they will be unable to repay the loans taken to get visa for these jobs, expected sustenance by their families from overseas earning will not be there any more, and they will add

to the burden of the society till such time they can get a job, a difficult proposition, or can become gainfully self-employed. In the background of this difficult global employment situation, consequent upon the global meltdown that was described by Joseph Stiglitz as "the fall of the Wall Street is for market fundamentalism what the fall of Berlin Wall was for Communism", Bangladesh government has correctly taken an integrated policy of poverty reduction, solution of unemployment problem, and to provide a meaning to the life of the people of Bangladesh. Awami League manifesto describes the need for employment generation in the agriculture sector, provision for training and loans for self-employment, sub-contracting system between small and big/medium scale industries successfully achieved in Japan and South Korea. And special training for the labor to be sent abroad. Considering the fact those 28 million remains unemployed the Manifesto aims at decreasing the number to 24 million by 2013 and 15 million by 2021. These are achievable goals considering the facts that global meltdown will not remain a long term feature but may be a cyclical phenomenon furthered by greed and lack of oversight by the regulators in the euphoria of unbridled capitalism. This argument is not being made to reinstall socialism that failed to provide answers to development aspirations of the poor who were the primary victims of capitalism unbound but to provide an egalitarian system advocated by Joseph Stiglitz and Paul Krugman who felt that, even in the case of the US, the majority of the people did not get the reward of development in consonance with the advancement of the economy. Security of states from non-state actors with transnational links and/or aggrieved people can lead to restlessness among the working population and enthuse pseudo-religious leaders to recruit disaffected and marginalized section of the society in their evil quest for opposing modernization and harking them to take the world to six century Saudi Arabia adorned not even with the "facilities" of the medieval age. If the three legs of modernity rested on the discovery of the "new world", the Renaissance and the Reformation it was basically a victory of superiority of modern values over pre-modern, primitive and traditional mores that used to regulate the lives of the people RATIONALE OF FOREIGN AID Development economists generally concur that the inflow of foreign direct investment (FDI) can play a vital role in the growth dynamics of developing economies. It is generally accepted that the inflow of FDI in developing countries can help fill at least three "development gaps" first, the "investment gap" by providing capital for domestic investment; secondly, the "foreign exchange gap" by providing foreign currency through initial investments and subsequent export earnings made possible by the initial investments; and finally, the "tax revenue gap" by generating tax revenues through additional economic activities (Smith, 1997). The FDI inflow can also create many other benefits for recipient economies. For example, FDI can help generate domestic investment in matching funds, increase local market competition, create modern job opportunities, increase global market access for locally produced export commodities, facilitate transfer of managerial skills and

technological knowledge from developed countries, etc. -- all of which should ultimately contribute to economic growth in host countries. Recognizing the manifold benefits of FDI, developing countries have generally eased restrictions on the inflow of foreign capital since the early 1980s. Furthermore, the end of the Cold War in the early 1990s brought about a new political era that not only witnessed the end of the foreign aid programs sponsored by the erstwhile Soviet Union in socialist LDCs (less developing countries), but also diminished strategic alliances between the US and the pro-US developing nations resulting in a sizable reduction in the USsponsored foreign aid programs. The new political reality forced many LDCs to vigorously seek out alternative sources of foreign private capital. As a result, the annual FDI inflow to developing countries has increased manifold from $23 billion (0.7% of their combined GDP) in 1990 to about $211 billion (2.6% of combined GDP) in 2004 (World Bank, 2006).The vital role played by FDI in the growth dynamics of developing countries has created considerable research interest among development economists. Consequently, a sizeable empirical literature has evolved on the determinants of FDI. These studies have identified a number of variables, such as market size, economic openness, financial liberalization, rate of return, quality of infrastructure, human capital, political instability, etc. as key determinants of FDI. However, due to non-availability of reliable and consistent set of quantitative data on investment climate, the literature has generally excluded the domestic investment climate in recipient countries as a determinant of FDI. BANGLADESH AND FOREIGN ASSISTANCE External assistance has played a vital role in the economic development of Bangladesh, assisting in bridging the internal gap (savings-investment gap) and external gap (export-import gap). The costs, risks and maturity structure related to external debt management analysis are important. The cost of external debt is low as the most of the foreign loans received are through the concessional window of IDA, ADBand Japan. The structure of maturity of the external debt of Bangladesh is composed of medium and long-term debt with an average grace period of 10 years and a repayment period of 20 years. With the shrinkage of share of grant aid in the external aid package in recent years, the volume of external borrowings is increasing which has resulted in a progressive increase of per capita debt obligation which stood at US$ 139.9 in 2006. From 1972 to 30 June 2006, a total of about US$ 53.93 billion of foreign assistance was committed of which about US $ 44.83billion of aid was disbursed. 44.74 percent of the disbursed aid was grants and 55.26 percent was loans. In 2007, Bangladesh received $1631 million as foreign economic assistance of which $1040 was loan while the amount of grant was $590, almost half of the amount received as loan. Aid is received from both multilateral and bilateral sources. The multilateral sources include World Bank (WB), Asian Development Bank (ADB), United Nations Development Programs (UNDP) and other UN organizations. The bilateral donors include individual countries.

Since independence, Bangladesh has received highest amount of bilateral aid from Japan in terms of cumulative disbursement followed by USA. International Development Association (IDA) is the largest amongst the multilateral development institutions followed by the Asian Development Bank. IDA contributed 26.68% of the total aid disbursed between 2001-2007, followed by ADB Common agendas of International Financial Institutions (IFIs) are: Dismantling public institutions and public enterprises that deprives people but give immense authority to big business Removing all supports and protection for local industries and agriculture by liberalizing imports Supporting export oriented activities to meet the needs of western market by supplying cheap product at the expense of economy and environment Withdrawing states responsibility of providing basic services such as health care and education for the people Raising prices of fuel, gas, electricity, raising fees of education and healthcare to create good business opportunities of the global companies. It should be noted that the agenda looks more akin to market fundamentalism and Washington Consensus, severely criticized by Nobel Laureate Joseph Stiglitz, and condemned by most developing countries as unsuitable to meet their needs in the light of global meltdown. There has been a significant change in the composition of aid to Bangladesh over the years. The key features demonstrate the fact that the share of grants has been decreasing steadily over the past few decades. The share of grants which was 89 percent in 1971/73 has reduced to only 31.9 percent in 2006. The declining volume of grants resulted in a larger share of loans in the total aid package. Bilateral aid has shown a declining trend whereas multilateral aid has increased positively over the years. Bilateral aid that was 75.4 percent of total aid in 1973/78 has declined to about 43.8 percent in 2005. Multilateral aid, on the other hand, has grown from 24.6 percent to about 56.2 percent in 2005. The flow of food aid and commodity aid has shown a declining trend while project aid has increased sharply from 1.3 percent of total aid in 1971-72 to 93.8 percent in 2006. OFFICIAL DEVELOPMENT ASSISTANCE (ODA)

To achieve a significant growth, adequate savings for investment and sufficient foreign exchange to buy capital goods is essential. Development assistance or foreign aid can serve as a supplement when either domestic savings or necessary foreign exchange for the development is lacking. It has become quite essential for the least developed countries. Statistics shows that in recent years, ODA from countries belonging to the Development Assistance Committee (DAC) has been decreasing, both in real value and as share of the GNI of donor countries. It dropped from US$1.24 billion (0.28% of GNI) in 1996 to US$1.02 billion (0.22% of GNI) in 2001. ODA to the least developed countries also fell from 0.06% of donors GNI in 1996 to 0.05% in 2001. This is far from the target of 0.7 and 0.15%, respectively; set as the MDG requirements for these indicators. The effect of declining trend of ODA was also reflected in foreign aid disbursement in Bangladesh. In2003-04, Bangladesh received US$954 million of foreign aid, which was US$1,577 million in the fiscal 2002-03, registering negative growth of 39.5%. However, due to the lower capacity of utilizing aid in the context of lowering trend of aid commitment, Bangladesh has the experience of about US$5.4 billion aid in the pipeline from 1971-72 to 1 July, 2002. In addition, our foreign aid structure has experienced a remarkable change after independence. In 1972-73, project aid was only about 15% out of total foreign aid, which rose to 86.8% in 2001-02. But this aid proved ineffective in our development. During 2003-04, only 82% of the total project aid was utilized in the ADP. Though market expansion, GDP growth have been argued as a positive result of foreign aid, no survey or analysis has been conducted figuring out the net result or effect of this aid so far. A research identifying the beneficiaries of the foreign aid shows that about 80% of the total foreign aid goes back to the foreign countries in the form of import payment and payments to foreign consultants, 15% goes to the local importers, indenters and bureaucrats (Sobhan,1992). However, foreign aid has played an insignificant role to stimulate growth in the context of scarcity of savings and investment in Bangladesh. It has been observed that when the domestic savings of the country declined or stagnated, the flow of foreign aid also declined and remained a marginal proportion of GDP. Since foreign aid does not add significantly to total national savings and rather shows a diminishing trend, it is not likely to promote growth in Bangladesh (CPD, 2005). CONCLUSION While in this age of globalization it is neither possible nor desirable for developing countries to act alone discarding Professor Ziauddin Sardars caustic remark of globalization as another form of colonialism and accepting the advantages propagated by Thomas Friedman in his Flat Earth theory that immense possibilities have been opened up for all countries through easy connectivity facilitated by technological advancement. It would be inadvisable for Bangladesh to remain a captive of Indo-Pak political discord for that captivity can only arrest our national growth and regional economic progress. One has to recognize that India of 1947 and India of today are vastly different, courted by the West, incorporation as a member of G-20, exception

made by the US through conclusion of nuclear agreement though India refuses to be a signatory of the NPT, Western keenness to enter the vast Indian market with an ever increasing property owning middle class capable of buying durable goods, a population more numerous that speaks English than those whose mother tongue is English, a potential economic and military power house that subscribes to democracy and liberalism more akin to the Western culture. Prime Minister Sheikh Hasinas visit to India, first as PM, is not only to signal our determination for integrated regional development under the existing constraints but also to dissolve the fog of mistrust that enveloped our relations since 1975. At the same time Bangladesh is not oblivious of the presently more economically successful China, authoritarian and intolerant of dissent and that, some think, could be a potential adversary to the US in future. Our nirvana however lies not in choosing sides but having good relations with all to promote our national interests. Bangladesh Prime Ministers most recent visit to China is a reflection of that policy. Bangladeshs economic advancement demands of us that efforts be directed towards regional integration and close cooperation with the rest of the world. ConcludedThe author is a former Secretary and Ambassador of Bangladesh.

Unemployment Problem In Bangladesh


Unemployment Problem In Bangladesh Unemployment is the situation in which one does not have any opportunity to work and earn. An unemployed person can not earn his living. He has to depend on others . He is thought as a burden to the family or the society. So, it is regarded as a problem. Unemployment is common every where in the world. No country in the world is completely is free form it. So, Bangladesh is not exception from it. Rather, this problem is very serious in our country. Many people are badly suffering from the curse of unemployment.

There are many direct or indirect causes of unemployment. They are as follows: Our country is over populated. The rate of population growth is very high. So the present job facilities can not keep pace with the growing population. Besides, our country is not developed in industries. They can absorb only a limited number of people. Again, our education system is very defective. It is traditional and depends on memorization. It does not make

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them self-reliant. There is less opportunity for vocational training. So, only the memorized bookish knowledge does not help them in the work field. Moreover, our students have a false sense of prestige to become officers. They hanker after only for official jobs. So they remain unemployed. Then, there is serious lack of skilled manpower. This limits the scope of jobs. We have a lot of natural resources but we can not use these properly. This also causes the problem. Lastly, many illiterate people believe in a false notion such as What is lotted can not be blotted. This negative outlook creates unemployed people. Unemployed people fail to maintain themselves and their families. They lose their mental peace and social status. We know that an idle brain is devils workshop. So they commit many crimes. This is increasing social crimes and hampering social peace. To solve this problem we should bring our population growth under control. New mills and factories should be...

Bangladesh-Education System

Bangladesh Index

Nakshi kantha-style embroidered quilt from Chapai, Nawabganj Courtesy Joyce Rahim

In the 1981 census only 19.7 percent of the total population was counted as literate. The literacy rate was 17 percent in rural areas and 35 percent in urban areas. T urban-rural gap shrank slightly between 1961 and 1981, primarily because of the influx of rural Bangladeshis to urban areas. The adult literacy rate in 1988 remaine about equal to the 1981 level, officially given as 29 percent but possibly lower. The education system also had had a discriminatory effect on the education of wome a basically patriarchal society. The female literacy rate in 1981 (13.2 percent) was about half the literacy rate among men (26 percent) nationally. The gap was even greater in rural areas, where 11.2 percent women and 23 percent of men were literate. (In 1988 the literacy rate was 18 percent for women and 39 percent for men. national school attendance rate in 1982 was 58.9 percent for ages 5 to 9; 20.9 percent for ages 10 to 14; and 1.9 percent for ages 15 to 24. The estimated 1988 stu teacher ratio was fifty-four to one in primary schools, twenty-seven to one in secondary schools, and thirteen to one in universities. Approximately 10 million student all ages attended school in 1981.

The base of the school system was five years of primary education. The government reported a total of nearly 44,000 primary schools enrolling nearly 44 million students in 1986. Recognizing the importance of increasing enrollments and improving quality, the government made universal primary education a major objective educational development plans, which focused on increasing access to school, improving teacher training, and revising the primary school curricula. As a result, the share of primary education by the mid-1980s increased to about 50 percent of the public education expenditure. Although enrollment in the entry class rose over tim the ability of the primary education sector to retain students in school and increase the literacy rate did not match government goals. Throughout the system a high annual dropout rate of 20 percent existed in 1988. Studies suggested that no more than 10 to 15 percent of those attending primary schools retained a permanent a to read and write. The Third Five-Year Plan (1985-90) envisaged reducing the rural-urban gap in education, establishing facilities for the enrollment of 70 percent of children of primary-school age, and placing emphasis on keeping children in school longer.

Bangladesh had 8,790 secondary schools with 2.7 million students in 1986. Secondary education was divided into two levels. The five years of lower secondary (gr six through ten) concluded with a secondary school certificate examination. Students who passed this examination proceeded to two years of higher secondary or intermediate training, which culminated in a higher secondary school examination after grade twelve. Higher secondary school was viewed as preparation for colleg rather than as the conclusion of high school. Development efforts in the late 1980s included programs to provide low-cost vocational education to the rural populace Efforts also focused on the establishment of science teaching facilities in rural schools, as compulsory science courses were introduced at the secondary level. The government also had provided training for science teachers and supplies of scientific equipment. In spite of many difficulties over the years, the number of both secondary schools and students, particularly females, increased steadily. For example, whereas there were 7,786 secondary schools for boys and 1,159 for girls in 1977, the number of boys' schools had decreased to 7,511 while girls' schools had increased to 1,282 by 1986. The number of students increased as well. In 1977 were 1.3 million boys and 450,000 girls in secondary schools; by 1986 there were 1.9 million boys and 804,000 girls. Enrollment in technical and vocational schools increased in a similar manner. Secondary education for the most part was private but was heavily subsidized by the state budget. Nationalization of private schools a standing government policy.

Development of the education system depended largely on the supply of trained teachers. In 1986 about 20 percent of the estimated 190,000 primary-school teach

were adequately trained; at the secondary-school level, only 30 percent of the teachers were trained. Contributing to the shortage of trained teachers was the low socioeconomic standing of educators. The social image of teachers had been gradually eroded, making it difficult to recruit young graduates to the profession. The proportion of poorly trained teachers led to lower standards of instruction. Despite these problems, the number of secondary-school teachers increased from 83,955 1977 to 99,016 in 1986, according to government figures.

In 1986 there were forty-nine primary-school teacher training institutes and ten secondary-school teacher training colleges. In addition to regular degree, diploma, a certificate programs, various crash programs and correspondence courses also were available. The Bangladesh Institute of Distance Education also had started an experimental program of teacher training under the auspices of Rajshahi University.

At the postsecondary level in 1986, there were 7 universities, 758 general colleges, and 50 professional (medical, dental, engineering, and law) colleges. More than percent of the colleges were government managed; the rest were private but received substantial government grants. The private colleges were gradually being nationalized. In the 1980s, emphasis was being placed on the development of science teaching facilities in nongovernment colleges. Twelve government colleges w selected to offer graduate courses during the Third Five-Year Plan.

In addition to four general-curriculum universities--the University of Dhaka, Rajshahi University, Chittagong University, and Jahangir Nagar University--there were th University of Engineering and Technology in Dhaka, the Agricultural University in Mymensingh, and the Islamic University in Tongi (near Dhaka). The total enrollme the 7 universities in 1986 was estimated at 27,487, of which 80 percent were male. Universities were selfgoverning entities with 95 percent of their total expenditure paid through government block grants. The University Grants Commission, created in 1973, coordinated the funding and activities of the universities. A large numbe scholarships and stipends were offered to students in education institutions at all levels.

The number of college students increased from 238,580 in 1980 to 603,915 in 1986, according to government statistics. During that period, female enrollment incre from 29,000 to 115,000. Qualitative improvement, enrollment stabilization, interuniversity rationalization of departments, and controlled expansion were some of the government objectives for college education in the mid- and late 1980s.

Curricula in nongovernment institutions of higher education focused mostly on the humanities and social sciences. Many government colleges and universities, how offered advanced courses in natural, physical, and biological sciences. Sophisticated courses in language and literature, philosophy and philology, fine arts, and folk culture also were offered at the universities. Advanced research degrees, including doctorates, were offered in several disciplines of science, the arts, the humanitie and the social sciences. Faculty members at the government colleges and universities were usually well qualified, but research facilities were limited.

To remove the heavy bias toward liberal arts education, greater attention was being focused in the late 1980s on technical education, which received the third highe allocation, after primary and secondary education, in the Third Five-Year Plan. In addition to four engineering colleges, Bangladesh had eighteen polytechnic institu four law colleges, two agricultural colleges, a graphic arts institute, an institute of glass and ceramics, a textile college, a college of leather technology, sixteen commercial institutes, and fifty-four vocational institutes in 1986. The nation also had ten medical colleges and one dental college, offering both graduate and postgraduate training. In addition, there were twenty-one nursing institutes, a music college, and a college of physical education.

Because secondary and higher education benefited the small middle and upper classes and because the government defrayed a portion of the costs of private high institutions through grants, the poor in effect subsidized the education of the affluent. This situation was most evident at the university level, where about 15 percent the education budget was devoted to less than 0.5 percent of the student population. The technical education sector, which experienced some growth in the late 19 nevertheless failed to provide the numbers and kinds of personnel required for economic development. Most university training also failed to equip its recipients with

marketable professional skills. Data as of September 1988

Bangladesh-Education Planning and Policy Bangladesh Index

Public expenditures for education were very low in Bangladesh. As a percentage of the gross domestic product (GDP--see Glossary), the level of expenditure for education in 1983 was approximately 1.3 percent, a figure that did not rise substantially through 1988. On the average, the sectoral s of education in the total development expenditure of the government between 1973 and 1983 was only 4.1 percent; in 1985 it was only 3.1 percent.

The Third Five-Year Plan included efforts to improve quality by restructuring higher secondary and college education, making it more cost effective, a introducing management controls and performance evaluations. Community-based nonformal education approaches seemed to hold promise as an alternative means of providing basic arithmetic and reading skills. For instance, the Bangladesh Rural Development Board has been able to achieve dropout rates, especially for females, in nonformal primary schooling, keeping operating costs fairly low and capital expenditures at a minimum.

The Ministry of Education and Culture was responsible for planning, financing, and managing education at all levels. The ad hoc Bangladesh Educat Commission was appointed in 1972 to investigate and report on all major aspects of education. In 1987 another high-level body--the National Educat Commission--was instituted. Its August 1988 recommendations were for compulsory free education; reforms in madrasa, medical, and law education removal of student politics from the campus. It was expected that the commission's recommendations would be addressed in the fourth and fifth fiveplans covering the period up to the year 2000. Data as of September 1988

Higher Education in Bangladesh: Problems and Policies


By: Dr. Muhammad Masum To add a paper, Login .

The paper examines selected issues of access, equity and efficiency, both internal and external, of higher education as imparted in degree colleges and universities of Bangladesh, and makes certain policy recommendations. Degree colleges that account for the lions share of enrolment at the level of higher education in Bangladesh suffer from inadequate infra-structural facilities (libraries and laboratories), and lack of qualified teachers. The poor pass percentage and high incidence of unemployment amongst the graduates indicate to low levels of internal and external efficiency respectively. Because of limited number of seats in public universities, and high tuition fees charged by the private universities, access to university education is rather limited in Bangladesh. Private universities with inadequate full time faculty members depend heavily on part- time teachers drawn primarily from public universities, which adversely affect quality of education in those universities. With a few notable exceptions, most private universities impart education of uncertain quality, and high tuition fees charged by such institutions make them accessible only to the affluent sections in the society. Public universities, primarily dependent on limited government funding shrinking in real terms, unable to generate additional resources by raising tuition fees due to political constraints, are hardly in a position to improve their quality of education through greater investment in libraries and laboratories. Many democratic provisions of the University Acts not only encroach upon the limited teaching time of the faculty members by engaging them in active politics, but also fail to ensure accountability of the teachers, that contribute to lengthening of session jams, quite often accentuated by unscheduled closures of universities due to violent inter and intra-party clashes of student fronts of major political parties. Moreover, as it happens quite often, 'voters', not 'teachers' are recruited that adversely affect the quality of university education. As there hardly exists any linkage between public universities on the one hand, and employers and the job market on the other, many university graduates, produced at considerable cost to the society, have to remain unemployed for a considerable period of time before they find employment often in areas outside their fields of study. Private universities on the other hand remain confined only to a few disciplines that have high market demand. The paper concludes with a few policy recommendations for improving equitable access to, and efficiency, both internal and external, of higher education in Bangladesh.

Keywords: Higher Education, Bangladesh Stream: Research and Development Presentation Type: 30 minute Paper Presentation in English Paper: Higher Education in Bangladesh,

Dr. Muhammad Masum Adjunct Professor, Department of Economics, Towson University Towson, Maryland, USA
Professor Muhammad Masum has been teaching in the Department of Economics, Jahangirnagar University, Savar, Dhaka, Bangladesh, since 1979. On leave from his university, he served Towson University as a Visiting Professor in the Department of Economics in 2006-07, and is currently serving as an adjunct professor in the Departments of Economics of Towson University and Morgan State University, USA. He obtained his Ph. D. in Economics from Delhi School of Economics in 1977, and served as a Commonwealth Academic Staff Fellow at Queen Elizabeth House, University of Oxford in 1983-84. He started his professional career as an Assistant Director of Bangladesh Education Commission in June, 1973; joined Dhaka University as a Lecturer in Economics in Sept. 1973, became an Assistant Professor in February, 1978, and moved to Jahangirnagar University as an Associate Professor in Jan. 1979, where he became a Professor in April, 1988. Professor Masum served as a Visiting Fellow in Heidelberg University (1990), as a Consultant on Education , Manpower and Employment to Banglash Planning Commission (1989); as a Thomas Jefferson Fellow in the University of California, Riverside (1993-94); as an ILO adviser in Ghana (199495), as the Executive Director of UCEP-Bangladesh, a large NGO implementing an integrated program of general, technical and vocational education and job placement services for underprivileged urban children of Bangladesh(1998-99). He is a development economist by traing with considerable research and consultancy experience at home and abroad. His research interests include education, poverty and employment. He also served as the Member Secretary to the National Task Force on Education formed by CPD to prepare policy brief on education. Professor Masum published two books, co-authored one, published a number of journal articles and research reports.

Ref: U08P0257

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