Recent developments in the Bangladesh economy
Abstract
The economy of Bangladesh has experienced significant shifts in trade, fiscal, industrial, agricultural and financial policies over last two decades. Bangladesh is significantly dependent on external resources and at the behest of the World Bank and the International Monetary Fund, Bangladesh adopted a set of structural adjustment policies that impacted on all sectors of the economy and every aspect of the short- and medium-term economic management. The key sectors embodying the pace of reforms are agriculture industry, external trade, finance and banking and foreign exchange. The reform process has been discussed in detail in the literature (see for example, Jahan, 1998; Hossain and Alauddin, 2005; Sobhan, 1996). This paper does not repeat their arguments. Suffice it to say that reforms under the structural adjustment programme were activated through a set of comprehensive economic policies through which the government (a) acted directly to restructure taxation and the provision of social services, and (b) intervened in the market to change pricing behaviour to create a favourable environment for investment and growth. On the whole, therefore, the reform process represents significant changes in policy direction in almost all spheres of economic activity in Bangladesh. The policy base has shifted primarily from one of state interventionism to one of greater reliance on the operation of the market forces. This paper provides a broad overview of the recent developments in the Bangladesh economy paying particular attention to the trade liberalization phase. Section 2 examines the performance of the Bangladesh economy in terms of broad economic indicators including growth rates in GDP its composition and stability. Section 3 discusses the performance of the external sector and implications of the changes that it has experienced. It argues that despite significant changes, the Bangladesh economy lacks diversification and rests on a narrow base. Section 4 overviews the environmental implications of growth and change in the Bangladesh economy. Section 5 presents some further observations on the process of development. Section 6 concludes the paper.