Economy

 

Despite sustained domestic and international efforts to improve economic and demographic prospects, Bangladesh, the 32nd biggest economy in the world, remains an underdeveloped and overpopulated nation. The per capita income in 2004 was a low US$440 (GDP - per capita purchasing power parity $2100), and many other economic indicators were less than impressive. Yet, as the World Bank notes in its July 2005 Country Brief, the country has made impressive progress in human development by focusing on increasing literacy, achieving gender parity in schooling, and reducing population growth. Jute was once the economic engine of the country. Its share of the world export market peaked in the late 1940s at 80% and even in the early 1970s accounted for 70% of its export earnings. However, polypropylene products began to substitute jute products worldwide and the jute industry started to slow down. 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. 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's July 2005 Country Brief: "Among Bangladesh's most significant obstacles to growth are poor governance and weak public institutions." Despite the hurdles, since 1990, the country has achieved an average annual growth rate of 5% according to the World Bank. The middle class and the consumer industry have seen some growth. 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 and several other countries. Bangladesh has seen a sharp increase in foreign direct investment. A number of multinational corporations, including Unocal and Tata, have made significant investments, with the natural gas sector 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 through the Grameen Bank. By the late 1990s, Grameen Bank had 2.3 million members, with a further 2.5 million members of other similar organizations.