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    Assignment

    On

    Globalization and Poverty in Bangladesh

    Submitted to:

    Mr. Manishankar SarkarLecturer,

    Faculty of Arts and Social scienceBangladesh University of Business & Technology (BUBT)

    Submitted by:

    Md. Kaysaruzzaman 102Sarmin Sultana 105

    A.K.M. Mahmud Hossain 134Zubayer Azgor Chowdhury 128A.G.M. Aminul Islam 130Program: BBAIntake: 18thSection: 3

    Submission Date: 29-04-2010

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    Abstract:

    Recent debates on the merits and shortcomings of globalization have focused on the

    implications stemming from increased capital and trade flows. The motivation for this paperis that international migration has received relatively little attention in the present debate onglobalization. This paper attempts toward filling that gap. It explores whether the movementof people across borders affect poverty scenario in developing countries through a case studyof Bangladesh. In particular, the paper focuses on the role played by migrants remittances totheir families in Bangladesh. The paper analyzes the case of Bangladesh, a country that hasnot only experienced a fast integration to the global economy through trade and capital flowscompared to its other poor neighbors, but through migration flows as well. Bangladeshreceived around US$ 27 billion remittances from its migrant population between 1976 and2003 and remittances to Bangladesh in 2003 were around US$ 3 billion. The direct links ofremittances to low-income migrant households make remittances a potentially important tool

    for alleviating poverty and raising living standards in Bangladesh. The data for this researchcomes from fieldwork conducted in Bangladesh for the period of six months in 2004.

    Introduction:

    Globalization is not new, though. For thousands of years, peopleand, later,corporationshave been buying from and selling to each other in lands at great distances,

    such as through the famed Silk Road across Central Asia that connected China and Europe

    during the Middle Ages. Likewise, for centuries, people and corporations have invested in

    enterprises in other countries. In fact, many of the features of the current wave of

    globalization are similar to those prevailing before the outbreak of the First World War in

    1914.

    Looking specifically at economic globalization demonstrates that it can be measured

    in different ways. Globalization has eaten away at its competitive edge in industry and

    agriculture, lowering the quality of life in locations that have not adapted to the change.

    The head of the International Food Policy Research Institute stated in 2008 that the

    gradual change in diet among newly prosperous populations is the most important factor

    underpinning the rise in global food prices.

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    One of the key points made by critics of recent economic globalization is that income

    inequality, both between and within nations, is increasing as a result of these processes.

    Globalization is a tool that should benefit all sections of mankind. One cannot ignore

    its negative effects. These must be addressed for the worlds peace and prosperity.

    The World Bank's World Development Indicators puts Bangladesh in 170th place (outof 207 countries) in the global ranking of gross national income per capita. Despite

    considerable international assistance, Bangladesh has been unable to eliminate extreme

    poverty and hunger. There is a huge disparity between standards of living in urban and rural

    areas of the country. In the West there are also poor people but you can barely notice them.

    Its not only that they are protected by social security, but there is hardly any difference of

    appearance between rich and poor.

    Hence poverty is the main problem in Bangladesh, but the government of Bangladesh

    has tried to fix this problem and already they were fighting with this since 1971 by the help of

    other developed countries.

    Objectives:

    1. Meaning of Globalization.2. Effects of globalization by world perspective.3. International social Forums.4. Benefits of Globalization.5. The Impact of globalization on poverty in Bangladesh.6. The Nexus between growth and poverty in Bangladesh.7. Employment elasticity.8. Poverty trends 1991-2000.9. Bangladesh Aims to cut poverty rate.

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    Conceptual Origin:

    The process has effects on the environment, on culture, on political systems, oneconomic development and prosperity, and on human physical well-being in societies aroundthe world is known as globalization. The historical origins of globalization are the subject ofon-going debate. Though some scholars situate the origins of globalization in the modern era,others regard it as a phenomenon with a long history.

    Globalization, since World War II, is largely the result of planning by politicians tobreak down borders hampering trade to increase prosperity and interdependence therebydecreasing the chance of future war. As of 20052007, the Port of Shanghai holds the title asthe World's busiest port. The interconnectedness of these markets, however, meant that aneconomic collapse in any one given country could not be contained. "Culture" is defined aspatterns of human activity and the symbols that give these activities significance. Culture iswhat people eat, how they dress, beliefs they hold, and activities they practice. In the

    Midwestern United States, globalization has eaten away at its competitive edge in industryand agriculture, lowering the quality of life in locations that have not adapted to the change.

    The World today is so interconnected that the collapse of the subprime mortgagemarket in the U.S. has led to a global financial crisis and recession on a scale not seen sincethe Great Depression. Government deregulation and failed regulation of Wall Street'sinvestment banks were important contributors to the subprime mortgage crisis.

    The first WSF in 2001 was an initiative of the administration of Porto Alegre inBrazil. The slogan of the World Social Forum was "Another World Is Possible". It was herethat the WSF's Charter of Principles was adopted to provide a framework for the forums. Itproved to be a vibrant player in macro level.

    Globalization is a tool that should benefit all sections of mankind. One cannot ignore itsnegative effects. These must be addressed for the worlds peace and prosperity."We have moved from a world where the big eat the small to a world where the fast eat theslow", as observed by Klaus Schwab of the Davos World Economic Forum. All economicanalysts must agree that the living standards of people have considerably improved throughthe market growth.

    Bangladesh belongs to the poorest group of countries in the world; during the last 3decades its GDP per capita income barely increased from US$203 in 1975 to US$348 percapita in 1998. In general, the urban population, in the areas around Dhaka, Chittagong, andother large cities, has long been involved in small- and medium-sized businesses or employed

    in various industries. They benefited from the recent growth and have higher incomes.Meanwhile, the rural population experience chronic shortages of land and regular floods andcyclones, which often a within matter of hours sweep away the results of months of hardwork.

    Inaugurating the 2nd ministerial meeting of the Center of Integrated RuralDevelopment for Asia and the Pacific (CIRDAP) in Dhaka, he said Bangladesh wantsCIRDAP to play a vital role for poverty alleviation and development of poorer nations.

    Living in a country like Bangladesh constantly forces me to redraw the lines around

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    my mental conception of poverty. A factory worker seems hard done by until you meet theconstruction worker. The construction worker earns your sympathy until you see the childcollecting trash. Except for the ber rich people (who have their limos and jets) people do notshow off their richness to others. They don't have maids at home, they are not more shiny inappearance than the less well-offs. Even you cannot distinguish between a day-labor and a

    rich lawyer in the streets as they are treated as equals.Bangladesh is preparing for the first visit by a US president since 1971, hoping it will

    attract more western investment to the country.

    During his nine-hour visit, President Bill Clinton will find out about the micro-credit systemof small loans aimed at helping poor people, for example to buy a cow so they can sell milk.

    It is a system supported by the president and much heralded across the world by countrieskeen to copy the Bangladesh model.

    What is globalization?

    Is it the integration of economic, political, and cultural systems across the globe? Or is itAmericanization and United States dominance of world affairs? Is globalization a force foreconomic growth, prosperity, and democratic freedom? Or is it a force for environmentaldevastation, exploitation of the developing world, and suppression of human rights?

    Globalization is a process of interaction and integration among the people, companies, andgovernments of different nations, a process driven by international trade and investment and

    aided by information technology. This process has effects on the environment, on culture, onpolitical systems, on economic development and prosperity, and on human physical well-being in societies around the world.

    Globalization is not new, though. For thousands of years, peopleand, later, corporationshave been buying from and selling to each other in lands at great distances, such as throughthe famed Silk Road across Central Asia that connected China and Europe during the MiddleAges. Likewise, for centuries, people and corporations have invested in enterprises in othercountries. In fact, many of the features of the current wave of globalization are similar tothose prevailing before the outbreak of the First World War in 1914.

    Effects of globalization

    Globalization has various aspects which affect the world in several different ways such as:Industrial - emergence of worldwide production markets and broader access to a range offoreign products for consumers and companies. Particularly movement of material and goods

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    between and within national boundaries. International trade in manufactured goods increasedmore than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. China's tradewith Africa rose sevenfold during 2000-07 alone.Financial - emergence of worldwide financial markets and better access to external financingfor borrowers.

    As of 20052007, the Port of Shanghai holds the title as the World's busiest port.Economic - realization of a global common market, based on the freedom of exchange ofgoods and capital. The interconnectedness of these markets, however, meant that an economiccollapse in any one given country could not be contained.

    Almost all notable worldwide IT companies are now present in India. Four Indians wereamong the world's top 10 richest in 2008, worth a combined $160 billion. In 2007, China had415,000 millionaires and India 123,000.Health Policy - On the global scale, health becomes a commodity. In developing nationsunder the demands of Structural Adjustment Programs, health systems are fragmented and

    privatized. Global health policy makers have shifted during the 1990s from United Nationsplayers to financial institutions. The result of this power transition is an increase inprivatization in the health sector. This privatization fragments health policy by crowding itwith many players with many private interests. Britain is a country of rich diversity. As of2008, 40% of London's total population was from an ethnic minority group. The latest officialfigures show that in 2008, 590,000 people arrived to live in the UK whilst 427,000 left,meaning that net inward migration was 163,000, care for the wealthy.Britain is a country of rich diversity. As of 2008, 40% of London's total population was froman ethnic minority group. The latest official figures show that in 2008, 590,000 people arrivedto live in the UK whilst 427,000 left, meaning that net inward migration was 163,000.Political - some use "globalization" to mean the creation of a world government whichregulates the relationships among governments and guarantees the rights arising from socialand economic globalization. Politically, the United States has enjoyed a position of poweramong the world powers, in part because of its strong and wealthy economy. With theinfluence of globalization and with the help of The United States own economy, the People'sRepublic of China has experienced some tremendous growth within the past decade. If Chinacontinues to grow at the rate projected by the trends, then it is very likely that in the nexttwenty years, there will be a major reallocation of power among the world leaders. China willhave enough wealth, industry, and technology to rival the United States for the position ofleading world power.

    .

    Cultural effects:

    Globalization has had an impact on different cultures around the world.

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    Japanese McDonald's fast food as an evidence of corporate globalization and the integrationof the same into different cultures.

    "Culture" is defined as patterns of human activity and the symbols that give these activitiessignificance. Culture is what people eat, how they dress, beliefs they hold, and activities they

    practice. Globalization has joined different cultures and made it into something different. AsErla Zwingle, from the National Geographic article titled "Globalization" states, "Whencultures receive outside influences, they ignore some and adopt others, and then almostimmediately start to transform them."

    One classic culture aspect is food. Someone in America can be eating Japanese noodles forlunch while someone in Sydney, Australia is eating classic Italian meatballs. India is knownfor its curry and exotic spices. France is known for its cheeses. America is known for itsburgers and fries. McDonald's is an American company which is now a global enterprise with31,000 locations worldwide. This company is just one example of food causing culturalinfluence on the global scale.

    Another common practice brought about by globalization is the usage of Chinese kanji intattoos. These tattoos are popular with today's youth despite the lack of social acceptance oftattoos in China. Also, there is a lack of comprehension in the meaning of Chinese charactersthat people get, making this an example of cultural appropriation.

    Negative effects

    Globalization has been one of the most hotly debated topics in international economics over

    the past few years. Globalization has also generated significant international opposition overconcerns that it has increased inequality and environmental degradation. In the MidwesternUnited States, globalization has eaten away at its competitive edge in industry and agriculture,lowering the quality of life in locations that have not adapted to the change.

    Effect on disease

    Globalization, the flow of information, goods, capital and people across political andgeographic boundaries, has also helped to spread some of the deadliest infectious diseasesknown to humans. Starting in Asia, the Black Death killed at least one-third of Europe'spopulation in the 14th century. Modern modes of transportation allow more people and

    products to travel around the world at a faster pace, they also open the airways to thetranscontinental movement of infectious disease vectors. One example of this occurring isAIDS/HIV. Approximately 1.1 million persons are living with HIV/AIDS in the UnitedStates, and AIDS remains the leading cause of death among African American womenbetween ages 25 and 34. Due to immigration, approximately 500,000 people in the UnitedStates are believed to be infected with Chagas disease. In 2006, the tuberculosis (TB) rateamong foreign-born persons in the United States was 9.5 times that of U.S.-born persons.

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    Brain drain

    An opportunity in richer countries drives talent away from poorer countries, leading to braindrains. Brain drain has cost the African continent over $4.1 billion in the employment of

    150,000 expatriate professionals annually. Indian students going abroad for their higherstudies costs India a foreign exchange outflow of $10 billion annually.

    Economic liberalization

    The World today is so interconnected that the collapse of the subprime mortgage market inthe U.S. has led to a global financial crisis and recession on a scale not seen since the Great

    Depression. Government deregulation and failed regulation of Wall Street's investment bankswere important contributors to the subprime mortgage crisis.

    A flood of consumer goods such as televisions, radios, bicycles, and textiles into the UnitedStates, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies inrecent decades. However, Chinese textile and clothing exports have recently encounteredcriticism from Europe, the United States and some African countries. In South Africa, some300,000 textile workers have lost their jobs due to the influx of Chinese goods. A total of 3.2millionone in six U.S. factory jobshave disappeared since the start of 2000.

    Effect on Income disparity

    A study by the World Institute for Development Economics Research at United NationsUniversity reports that the richest 1% of adults alone owned 40% of global assets in the year2000. The three richest people possess more financial assets than the poorest 10% of theworld's population, combined. The combined wealth of the 10 million millionaires grew tonearly $41 trillion in 2008. In 2001, 46.4% of people in sub-Saharan Africa were living inextreme poverty. Nearly half of all Indian children are undernourished.

    Effect on environmental degradation

    Burning forest in Brazil. The removal of forest to make way for cattle ranching was theleading cause of deforestation in the Brazilian Amazon from the mid 1960s. Recently,

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    soybeans have become one of the most important contributors to deforestation in the BrazilianAmazon.

    The World watch Institute said the booming economies of China and India are planetarypowers that are shaping the global biosphere. In 2007, China overtook the United States as the

    world's biggest producer of CO2. At present rates, tropical rainforests in Indonesia would belogged out in 10 years, Papua New Guinea in 13 to 16 years. A major source of deforestationis the logging industry, driven spectacularly by China and Japan. Thriving economies such asChina and India are quickly becoming large oil consumers. China has seen oil consumptiongrow by 8% yearly since 2002, doubling from 19962006. Crude oil prices in the last severalyears have steadily risen from about $25 a barrel in August 2003 to over $140 a barrel in July2008. State of the World 2006 report said the two countries' high economic growth hid areality of severe pollution. The report states:The world's ecological capacity is simply insufficient to satisfy the ambitions of China, India,Japan, Europe and the United States as well as the aspirations of the rest of the world in asustainable way.

    Food security

    The head of the International Food Policy Research Institute stated in 2008 that the gradualchange in diet among newly prosperous populations is the most important factor underpinningthe rise in global food prices. From 1950 to 1984, as the Green Revolution transformedagriculture around the world, grain production increased by over 250%. The world populationhas grown by about 4 billion since the beginning of the Green Revolution and most believethat, without the Revolution, there would be greater famine and malnutrition than the UNpresently documents (approximately 850 million people suffering from chronic malnutrition

    in 2005).

    Drug and illicit goods trade

    The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drugtrade generates more than $320 billion a year in revenues. Worldwide, the UN estimates thereare more than 50 million regular users of heroin, cocaine and synthetic drugs. Theinternational trade of endangered species is second only to drug trafficking. TraditionalChinese medicine often incorporates ingredients from all parts of plants, the leaf, stem,flower, root, and also ingredients from animals and minerals. The use of parts of endangered

    species (such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws)has created controversy and resulted in a black market of poachers who hunt restrictedanimals. In 2003, 29% of open sea fisheries were in a state of collapse.

    Sweatshops

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    A maquila in Mexico

    It can be said that globalization is the door that opens up an otherwise resource-poor countryto the international market. Where a country has little material or physical product harvestedor mined from its own soil, large corporations see an opportunity to take advantage of the

    "export poverty" of such a nation. Where the majority of the earliest occurrences of economicglobalization are recorded as being the expansion of businesses and corporate growth, inmany poorer nations globalization is actually the result of the foreign businesses investing inthe country to take advantage of the lower wage rate: even though investing, by increasing theCapital Stock of the country, increases their wage rate.

    One example used by anti-globalization protestors is the use of sweatshops by manufacturers.According to Global Exchange these "Sweat Shops" are widely used by sports shoemanufacturers and mentions one company in particularNike. There are factories set up inthe poor countries where employees agree to work for low wages. Then if labor laws alter inthose countries and stricter rules govern the manufacturing process the factories are closed

    down and relocated to other nations with more conservative, laissez-faire economic policies.

    Pro-globalization (globalism)

    Supporters of free trade claim that it increases economic prosperity as well as opportunity,especially among developing nations, enhances civil liberties and leads to a more efficientallocation of resources. Economic theories of comparative advantage suggest that free tradeleads to a more efficient allocation of resources, with all countries involved in the tradebenefiting. In general, this leads to lower prices, more employment, higher output and ahigher standard of living for those in developing countries.

    Dr. Francesco Stipo, Director of the USA Club of Rome suggests that "the world governmentshould reflect the political and economic balances of world nations. A world confederationwould not supersede the authority of the State governments but rather complement it, as boththe States and the world authority would have power within their sphere of competence".

    Proponents of laissez-faire capitalism, and some libertarians, say that higher degrees ofpolitical and economic freedom in the form of democracy and capitalism in the developedworld are ends in themselves and also produce higher levels of material wealth. They seeglobalization as the beneficial spread of liberty and capitalism.

    Examples of globalization

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    Some examples of globalization are things like: blending of cultures, companies outsourcing,and technology. These things happen because of countries competing and/or working togetherto get more money (thats what most people want). Most people think its a good thing, but

    some think its bad. I think it is good but only to an extent.

    Poorer or underdeveloped countries get left behind in many ways because they can't affordthings like new technologies that North American's can afford. China opening to the freemarket had a big impact on everyone. Some good, some bad.

    Just look at it this way, anything thats good for you, isn't going to be good for everyone else.Someone is going to be left behind or left out along the way.

    International Social Forums

    The first WSF in 2001 was an initiative of the administration of Porto Alegre in Brazil. Theslogan of the World Social Forum was "Another World Is Possible". It was here that theWSF's Charter of Principles was adopted to provide a framework for the forums.It proved tobe a vibrant player in macro level.

    The WSF became a periodic meeting: in 2002 and 2003 it was held again in Porto Alegre andbecame a rallying point for worldwide protest against the American invasion of Iraq. In 2004it was moved to Mumbai (formerly known as Bombay, in India), to make it more accessibleto the populations of Asia and Africa. This last appointment saw the participation of 75,000delegates.

    In the meantime, regional forums took place following the example of the WSF, adopting itsCharter of Principles. The first European Social Forum (ESF) was held in November 2002 inFlorence. The slogan was "Against the war, against racism and against neo-liberalism". It sawthe participation of 60,000 delegates and ended with a huge demonstration against the war(1,000,000 people according to the organizers). The other two ESFs took place in Paris andLondon, in 2003 and 2004 respectively.

    Recently there has been some discussion behind the movement about the role of the socialforums. Some see them as a "popular university", an occasion to make many people aware ofthe problems of globalization. Others would prefer that delegates concentrate their efforts onthe coordination and organization of the movement and on the planning of new campaigns.

    However it has often been argued that in the dominated countries (most of the world) theWSF is little more than an 'NGO fair' driven by Northern NGOs and donors most of which arehostile to popular movements of the poor.

    Crisis Jolts Globalization Process

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    Economic and financial globalization and the expansion of world trade have broughtsubstantial benefits to countries around the world. But the current financial crisis has putglobalization on hold, with capital flows reversing and global trade shrinking.

    Some analysts see the drivers of the recent globalization wave getting undermined, with

    protectionism on the rise.

    Even supporters of globalization agree that the benefits of globalization are not withoutriskssuch as those arising from volatile capital movements. The IMF works to helpeconomies manage or reduce these risks, through economic analysis and policy advice andthrough technical assistance in areas such as macroeconomic policy, financial sectorsustainability, and the exchange-rate system.

    This page pulls together the IMFs work on globalization and includes links to key articles,documents, and background information.

    The negative effects of globalization

    Opponents of globalization point out to its negative effects. Some of them are listed below.Developed nations have outsourced manufacturing and white collar jobs. That means less jobsfor their people. This has happened because manufacturing work is outsourced to developingnations like China where the cost of manufacturing goods and wages are lower. Programmers,editors, scientists and accountants have lost their jobs due to outsourcing to cheaper locationslike India. Globalization has led to exploitation of labor. Prisoners and child workers are usedto work in inhumane conditions. Safety standards are ignored to produce cheap goods.Jobinsecurity. Earlier people had stable, permanent jobs. Now people live in constant dread oflosing their jobs to competition. Increased job competition has led to reduction in wages andconsequently lower standards of living. Terrorists have access to sophisticated weaponsenhancing their ability to inflict damage. Terrorists use the Internet for communicating amongthemselves. Companies have set up industries causing pollution in countries with poorregulation of pollution. Fast food chains like McDonalds and KFC are spreading in thedeveloping world. People are consuming more junk food from these joints which has anadverse impact on their health. The benefit of globalization is not universal. The rich aregetting richer and the poor are becoming poorer. Bad apects of foreign cultures are affectingthe local cultures through TV and the Internet. Enemy nations can spread propaganda throughthe Internet. Deadly diseases like HIV/AIDS are being spread by travelers to the remotestcorners of the globe. Local industries are being taken over by foreign multinationals. Theincrease in prices has reduced the governments ability to sustain social welfare schemes in

    developed countries. There is increase in human trafficking. Multinational Companies andcorporations which were previously restricted to commercial activities are increasinglyinfluencing political decisions.

    The positive aspect of globalization

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    Globalization has a positive side as well. Supporters of globalization argue that it is good andbeneficial. Some of their arguments are listed below. Globalization has created the concept ofoutsourcing. Work such as software development, customer support, marketing, accountingand insurance is outsourced to developing countries like India. So the company that

    outsourced the work enjoys the benefit of lower costs because the wages in developingcountries is far lower than that of developed countries. The workers in the developingcountries get employment. Developing countries get access to the latest technology. Increasedcompetition forces companies to lower prices. This benefits the end consumers. Increasedmedia coverage draws the attention of the world to human right violations. This leads toimprovement in human rights.

    The Future

    Globalization is a tool that should benefit all sections of mankind. One cannot ignore its

    negative effects. These must be addressed for the worlds peace and prosperity.

    Benefits of globalization

    "We have moved from a world where the big eat the small to a world where the fast eat theslow", as observed by Klaus Schwab of the Davos World Economic Forum. All economicanalysts must agree that the living standards of people have considerably improved throughthe market growth. With the development in technology and their introduction in the globalmarkets, there is not only a steady increase in the demand for commodities but has also led to

    greater utilization. Investment sector is witnessing high infusions by more and more peopleconnected to the world's trade happenings with the help of computers. As per statistics,everyday more than $1.5 trillion is now swapped in the world's currency markets and aroundone-fifth of products and services are generated per year are bought and sold.

    Buyers of products and services in all nations comprise one huge group who gain from worldtrade for reasons encompassing opportunity charge, comparative benefit, economical topurchase than to produce, trade's guidelines, stable business and alterations in consumptionand production. Compared to others, consumers are likely to profit less from globalization.

    Another factor which is often considered as a positive outcome of globalization is the lower

    inflation. This is because the market rivalry stops the businesses from increasing prices unlessguaranteed by steady productivity. Technological advancement and productivity expansionare the other benefits of globalization because since 1970s growing international rivalry hastriggered the industries to improvise increasingly.

    Critics argue that:

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    Poorer countries suffering disadvantages: While it is true that globalization encourages freetrade among countries, there are also negative consequences because some countries try tosave their national markets. The main export of poorer countries is usually agricultural goods.Larger countries often subsidies their farmers (like the EU Common Agricultural Policy),which lowers the market price for the poor farmer's crops compared to what it would be under

    free trade.Exploitation of foreign impoverished workers: The deterioration of protections for weakernations by stronger industrialized powers has resulted in the exploitation of the people inthose nations to become cheap labor. Due to the lack of protections, companies from powerfulindustrialized nations are able to offer workers enough salary to entice them to endureextremely long hours and unsafe working conditions, though economists question ifconsenting workers in a competitive employers' market can be decried as "exploited". It istrue that the workers are free to leave their jobs, but in many poorer countries, this wouldmean starvation for the worker, and possible even his/her family if their previous jobs wereunavailable.The shift to outsourcing: The low cost of offshore workers have enticed corporations to buy

    goods and services from foreign countries. The laid off manufacturing sector workers areforced into the service sector where wages and benefits are low, but turnover is high . This hascontributed to the deterioration of the middle class which is a major factor in the increasingeconomic inequality in the United States . Families that were once part of the middle class areforced into lower positions by massive layoffs and outsourcing to another country. This alsomeans that people in the lower class have a much harder time climbing out of poverty becauseof the absence of the middle class as a stepping stone.

    One of the key points made by critics of recent economic globalization is that incomeinequality, both between and within nations, is increasing as a result of these processes. Onearticle from 2001 found that significantly, in 7 out of 8 metrics, income inequality hasincreased in the twenty years ending 2001. Also, "incomes in the lower deciles of worldincome distribution have probably fallen absolutely since the 1980s". Furthermore, the WorldBank's figures on absolute poverty were challenged. The article was skeptical of the WorldBank's claim that the number of people living on less than $1 a day has held steady at 1.2billion from 1987 to 1998, because of biased methodology.

    A chart that gave the inequality a very visible and comprehensible form, the so-called'champagne glass' effect, was contained in the 1992 United Nations Development ProgramReport, which showed the distribution of global income to be very uneven, with the richest20% of the world's population controlling 82.7% of the world's income.Distribution of world GDP, 1989Quintile of Population IncomeRichest 20% 82.7%Second 20% 11.7%Third 20% 2.3%Fourth 20% 2.4%Poorest 20% 0.2%

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    Economic arguments by fair trade theorists claim that unrestricted free trade benefits thosewith more financial leverage (i.e. the rich) at the expense of the poor.

    Some other benefits of globalization as per statistics:

    Commerce as a percentage of gross world product has increased in 1986 from 15% to nearly27% in recent years. The stock of foreign direct investment resources has increased rapidly asa percentage of gross world product in the past twenty years.For the purpose of commerce and pleasure, more and more people are crossing nationalborders. Globally, on average nations in 1950 witnessed just one overseas visitor for every100 citizens. By the mid-1980s it increased to six and ever since the number has doubled to12. Worldwide telephone traffic has tripled since 1991. The number of mobile subscribers haselevated from almost zero to 1.8 billion indicating around 30% of the world population.

    Internet users will quickly touch 1 billion.

    Benefits and costs of globalization?

    The benefits and problems of globalization with example:

    Benefits

    Globalisation enables greater trade and competition between different economies, leading tolower prices, greater efficiency and higher economic growth - and it has also enabledincreased levels of investment. It has made it easier for people to attract short term and longterm investment (investment by multinational companies can play a big role in improving theeconomies of developing countries). These countries also gain from globalization as it offersaccess to foreign capital, global export markets, and advanced technology; while breaking themonopoly of inefficient and protected domestic producers.

    While globalization may confront government officials with more challenging decisions, the

    result for their citizens is greater individual freedom.

    There is arguably less cultural diversity

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    Problems

    However developing Countries often struggle to compete with developed Countries.

    One problem of globalisation is that it has increased the use of non-renewable resources,whilst also contributing to the increase in pollution and global warming. There is also lesscontrol on output as firms can outsource production to where environmental standards are lessstrict.

    Globalisation enables workers to move more freely. Therefore, some countries find it difficultto hold onto their best skilled workers, who are attracted by higher wages elsewhere.

    Benefits From Globalization

    Facts

    The things that come to many minds when globalization is mentioned are loss of UnitedStates' jobs, NAFTA, CAFTA, APEC, outsourcing, and low-wages. The perception to mostpeople is that if outsourcing is bad, then globalization must be bad. The fact is thatglobalization is good for the United States of America and the market economy. It promotesprosperity for participating countries. What needs to be done is to educate people on thediversity and multiculturalism in the work place, and the sensitivity in the culture of theparticipating countries. Listed below are the benefits of Globalization and international trade:

    (1) Opportunity cost

    (2) Comparative advantage

    (3) Cheaper to buy than to produce

    (4) The terms of trade

    (5) Balance trade

    (6) Changes in production and consumption

    THE IMPACT OF GLOBALISATION ON POVERTY IN BANGLADESH

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    I. Introduction

    The contemporary global debate on globalization and its multi-pronged impact has had a

    strong echo in the academic and political discussions in Bangladesh as well. After a hesitantstart in the mid-1980s, Bangladesh moved decisively to embrace the wave of globalization inthe 1990s. Ever since, the impact of globalization on the economy of Bangladesh and, morepointedly, on the lives of its people, has become a hotly debated issue.1 This paper attempts totake a fresh look at the impact of globalization on the evolving poverty situation inBangladesh, and to draw some policy conclusions. For the purposes of present analysis,globalization is viewed purely in its economic dimensionsdefined as increasing integrationof a national economy with the world economy through exchange of goods and services,capital flows, technology, information, and labour migration. Not all of these exchanges,however, figure equally prominently in the case of Bangladesh. The least advance has beenmade in respect of capital flow. By the year 2000, foreign direct investment amounted to just

    0.4 per cent of GDP, which was low even by the standards of low-income countries (average0.9 per cent). But significant advances have been made in some of the other spheresespecially, exchange of commodities and labor. Aided by trade liberalization and exportincentives of various kinds, the economy has become much more open in the last decade orso. During the 1980s, the shares of both imports and exports in GDP had remained virtuallystagnant. By contrast, between 1989/90 and 1999/00, the share of imports in GDP went upfrom 13.5 per cent to 20.0 per cent, and the share of exports went up from 5.7 per cent tonearly 13.4 per cent. The flow of labor migration and the concomitant inflow of migrants

    remittances have also gathered pace. The foreign exchange earnings from remittances nowamount to nearly three-fourths of net export earnings. This paper will focus specifically on theconsequences of these two dimensions of globalizationviz. trade openness and workers

    remittances. The paper is structured as follows. Section II provides an overview of growth andpoverty in Bangladesh in the last two decades and presents an analysis of the growth povertynexus i.e. the mechanisms through which growth impacted on poverty. Section III thendescribes the mechanisms through which the forces of globalization affected poverty throughthe growth-poverty nexus described in the preceding section.In this context, special attention is given to the impact of globalization on theemployment opportunities for the poor. Section IV examines the question of whetherglobalization is undermining the ability of the government of Bangladesh to conductpro-poor public policy by constraining its revenue-raising powers. Finally, Section Voffers some brief concluding observations.

    02. Bangladesh - Poverty and wealth

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    Bangladesh belongs to the poorest group of countries in the

    world; during the last 3 decades its GDP per capita income barely increased from US$203 in

    1975 to US$348 per capita in 1998. The World Bank's World Development Indicators puts

    Bangladesh in 170th place (out of 207 countries) in the global ranking of gross nationalincome per capita. Despite considerable international assistance, Bangladesh has been unable

    to eliminate extreme poverty and hunger. There is a huge disparity between standards of

    living in urban and rural areas of the country. The urban areas, especially the capital Dhaka,

    and major industrial cities such as Chittagong, Khulna, and Rajshahi, enjoy a better quality of

    living, with electricity, gas, and clean water supplies. Still, even in the major cities a

    significant proportion of Bangladeshis live in squalor in dwellings that fall apart during the

    monsoon season and have no regular electricity. These Bang-ladeshis have limited access to

    health care and to clean drinking water. The rural population, meanwhile, often lives in

    traditional houses in villages with no facilities associated with even the most modest standards

    of living.

    Disparities encompass 3 dimensions that define considerable differences: geographic,

    educational, and gender. There is still considerable inequality in the distribution of income

    between rural and urban populations. In general, the urban population, in the areas around

    Dhaka, Chittagong, and other large cities, has long been involved in small- and medium-sized

    businesses or employed in various industries. They benefited from the recent growth and have

    higher incomes. Meanwhile, the rural population experience chronic shortages of land and

    regular floods and cyclones, which often a within matter of hours sweep away the results of

    months of hard work. The 1998 flood, for example, affected two-thirds of the country, wiping

    out the entire winter crop and displacing millions of people.

    Education is another problem, as the adult literacy rate reached just 60 percent in 2000,

    despite the fact that primary education is universal, compulsory and free. The illiterate section

    of the population is generally much

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    GDP per Capita (US$)

    Country 1975 1980 1985 1990 1998

    Bangladesh 203 220 253 274 348

    United States 19,364 21,529 23,200 25,363 29,683

    India 222 231 270 331 444

    Burma N/A N/A N/A N/A N/A

    SOURCE: United Nations.Human Development Report

    2000; Trends in human development and per capita

    income.

    03. The Nexus between Growth and Poverty in Bangladesh

    03.1 Trends in Growth, Distribution and Poverty: 1980-2000

    Compared to the 1980s, the decade of the 1990s witnessed accelerated growth andfaster reduction of poverty, but also a widening of income inequality. GDP grew atthe annual average rate of 4.8 per cent in the 1990s compared to 3.7 per cent in the1980s. At the same time, an unexpectedly early demographic transition brought

    population growth down from 2.4 per cent to 1.8 per cent. As a result, the growth inper capita income saw an even faster acceleration compared to overall GDPfrom1.6 per cent per annum in the 1980s, it went up to 3.0 per cent in the 1990s (Table 1).For an average Bangladeshi, income had grown by about one-third over the decade asa whole. This was not nearly as spectacular a growth of income as observed in manyother parts of Asia, but at least it represented a significant advance over the previousdecade when per capita income grew by only one-sixth.Faster growth of income was accompanied by some widening of income inequality, inboth urban and rural areas. Inequality had also widened in the earlier decade, but it didso much more sharply in the 1990s. Thus, the Gini coefficient of consumptionexpenditure for urban areas had gone up from 0.30 in 1983/84 to just 0.32 in 1991/92,

    but then rose sharply to 0.38 by 2000. Rural areas also experienced a similar trend.After remaining roughly constant around 0.25 during the 1980s, the rural Gini rosesteeply to 0.30 by 2000.Despite the worsening of income distribution, however, poverty declined in the 1990s,and whats more, it declined faster than in the preceding decade. In the 1980s, theextent of poverty was virtually staticfrom 52 per cent in 1983/84, the proportion ofpeople in poverty fell to just 50 per cent by 1991/92. But the rate of poverty reductionaccelerated in the 1990s, and by 2000 the proportion had fallen to 40 per cent. As in

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    the case of growth, the acceleration in the pace of poverty reduction was nowhere asspectacular as in much of East and Southeast Asia, but it did mark a significantimprovement over the 1980s. Not just the proportion of poor people.

    03.2 The Sources of Growth Acceleration

    The simultaneous acceleration that was observed in the 1990s in growth and povertyreduction was not a matter of mere coincidence. In-depth probes into the sources ofgrowth on the one hand and the sources of poverty reduction on the other reveal adistinct causal connection between the two. Poverty declined at a faster pace preciselybecause the nature of growth acceleration was conducive for that to happen.Analysis of the proximate sources growth shows that industry and servicescontributed almost equally to the incremental growth in the 1990s, each with a shareof about 41 per cent, with agriculture making a relatively small contribution of 17 percent. Within the broad group of industry, the manufacturing sub-sector contributed 28

    per cent, out of which some 20 per cent came from large and medium industries, andthe rest from small-scale industries. In agriculture, fisheries made an overwhelminglylarge contribution, accounting for 15 out of the 17 per cent contribution that camefrom all of agriculture. It is important to note that at least two-thirds to three-quartersof the incremental growth in the 1990s originated from the non-tradable sectorsmainly, services, construction and small-scale industry.What are the underlying causes of the increasing dominance of non-tradable sectors?In theory it is possible that they enjoyed a kind of endogenous growth arising fromautonomous productivity improvement within the sector, but there is no empiricalbasis for supporting this view. A more likely possibility is that the sector has benefitedfrom a strong demand stimulusarising from outside the sector. The existence ofwidespread underemployment in the informal sectorestimated at around 43 per centin 1991makes the non-tradable (which reside mostly in the informal sector)especially responsive to demand stimulus. It is, therefore, reasonable to advance thehypothesis that growth acceleration of the 1990s originated from an enhanced dose ofdemand stimulus enjoyed by the non-tradable sectors in the 1990s.

    Evidence suggests that the enhanced demand stimulus came from three major sourcesa quantum jump in crop production that occurred in the late 1980s, rapidgrowth in the flow of income generated by the readymade garments industry, andaccelerated flow of workers remittance from abroad

    The readymade garments (RMG) industry has registered phenomenal growth in recentyears. Starting from a low base in the mid-1980s, it has by now become both theleading industry and the leading export item of Bangladesh. By the mid-1990s, it wascontributing somewhere between 20 and 25 per cent of total value-added andemploying between 40 and 50 per cent of the workforce engaged in large and mediumscale manufacturing.3 Its share in total export has risen from barely 4 per cent in1983/84 to over 75 per cent by the year 2000. The growth of RMG was especiallyrapid in the 1990s. The number of manufacturing units in this sector increased fromfewer than 1000 in 1990/91 to nearly 3000 by the end of the decade, and the aggregate

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    04.1 The Impact of Globalization on the Growth Process

    The preceding section has argued that the modest growth acceleration that occurred inthe 1990s was led by small and medium enterprises in the non-farm non-tradablesectors. Furthermore, as these enterprises created new opportunities for wageemployment, the rural poor benefited more than before since wage employment ismore rewarding for them than the petty self-employment in which they havetraditionally been engaged when looking for alternative employment opportunitiesoutside agriculture. As a result, growth acceleration translated into a faster rate ofpoverty reduction as well.At the first sight, globalization would seem to have little to do with this process, sinceglobalization has to do with a countrys relationship with the external world, whereas production of non-tradable is by definition geared towards the domestic market. But

    this view is too simplistic. Non-tradable may be produced for the domestic market,but they are not insulated from the countrys interactions with the outside world.What is much clearer, however, is the incentive provided by trade liberalizationthrough the input market. In fact, it is arguable that the major credit for bringing aboutthe quantum jump in crop production in the late 1980s goes mainly to liberalization ofmarkets for agricultural inputs, especially elimination of non-tariff barriers to theimportation of cheap irrigation equipment. Because of import liberalization, whichtook effect in 1988, the price of shallow tube-well in particular came down drastically.Until about 1986, shallow tube-wells used to be distributed by the government at asubsidized price in order to promote more extensive use of irrigation. Liberalizationprovided an alternative, and from the point of view of government budget a much lessexpensive, method of achieving the same goal. In fact, the price of shallow tube-wellscame down so much that the market price turned out to be almost 40 per below eventhe subsidized price of pre-liberalization era. This fall in price, combined withrelaxation in sitting restrictions, resulted in an enormous expansion in the extent ofirrigated area. Between 1986 and 1996 irrigated area expanded twice as fast as in theperiod between 1978 and 1986. From an average of 2.3 million acres in the three-yearperiod 1984/85-1986/87, total irrigated area jumped to an average of 3.5 million in thenext three yearsan increase of nearly 50 per cent.Who were typically large and middle farmers, but also reached the small andmarginal farmers who had to buy water from others. This is so, because the operationof market forces ensured lower prices of water following expansion of its supply.According to one estimate, the average water charge in nominal terms declined by 4per cent during 1987-1994 while the price of rice increased by 30 per cent, indicatinga substantial fall in the real price of water . The result was a broad basedexpansion of irrigation coverage.million metric ton during 1984/85-1986/87 the use of fertilizer went up to an averageof 1.7 million metric ton in the next three yearsrepresenting once again nearly 50per cent increase as in the case of irrigated area.13 This expansion in the use offertilizer occurred in a context where there was no significant decline in its price but

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    its availability had much improved by the privatization of its distribution and internalmarket liberalization of fertilizer trade that had occurred a few years earlier. Whileinternal market liberalization must have created an enabling condition for theexpansion of fertilizer use, the stimulus to expansion must have come from theexpansion of irrigated areaitself boosted by liberalized import of irrigation

    equipment. The combined effect of much greater use of irrigation and fertilizer wasreflected in the discrete jump in rice production that occurred in the late 1980s.Careful econometric investigation has confirmed the predominant role played by tradeliberalization of irrigation equipment in boosting rice production in the late 1980s(Ahmed 2001).14 As expected, the major determinant of fertilizer use was found to beirrigated rice area, and by far the most important influence on irrigated area was adummy variable representing import liberalization around 1988/89. While theexpansion of fertilizer use and irrigated area boosted rice production, this was partlyoffset by the loss of non-irrigated rice area. The net effect, however, was still stronglypositive. Ahmed (2001) has estimated that the net effect of liberalization amounted tosome 38 per cent of the incremental rice production between 1988/89 and 1996/97.

    Another way of looking at it is that without trade liberalization annual growth rate ofrice production during this period would have been 1.4 per cent instead of the 2.5 percent rate that was actually achieved.The forces of globalization are thus seen to have played a critical role behind all threesources of demand stimulus that led to accelerated growth in the 1990s and in theprocess led to faster reduction of poverty. Small industries seem to have benefited from theliberalization of import of capital machinery and raw materials . They were especially helpedin this regard by a structure of tariffs that favored raw materials and intermediate inputs morethan final products. Thus, in 2001/02, average applied tariffs on raw materials andintermediate inputs were in the range of 11-12 per cent as against 26 per cent on finalproducts. While most categories of industries benefited from lower tariff on inputs and highertariff on final products, there are reasons to believe that small industries gained more thanothers. In a regime of import control, small firms find it difficult to compete with largerenterprises in claiming a fair share of foreign exchange to obtain the necessary inputs. Theyare then forced to obtain their inputs from domestic sources, where the price is higher, qualitylower and supply limited. Therefore, when the import of inputs is liberalised, small firms tendto gain proportionately more. At the same time, they are spared, relatively speaking, therigours of liberalisation-induced competition in the product market as their products happen tobe only remote substitutes of imported items.

    04.3 The Trend of Manufacturing Employment

    In addition to considering the overall employment situation, the debate on globalization inBangladesh has also focussed on manufacturing employment in particular. This has beeninspired partly by high-profile news stories about job losses in a number of large-scaleimport-substituting industries, especially in the public sector. Mainly, however, the debate hasbeen fuelled by the findings of the Labour Force Surveys, which show that manufacturingemployment has declined in both relative and absolute terms in the 1990s. Thus, under the

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    usual definition of labour force of age 10 years and above, the number of workers engaged

    in manufacturing seems to have declined dramatically from 7.0 million in 1989 to just 4.1million in 1995/96. This has raised concerns that globalisation may be leading todeindustrialization in Bangladesh, with all the deleterious consequences for poverty thisimplies.

    However, careful analysis of data casts serious doubt on this pessimistic view. Thefirst point to note is that the deindustrialisation thesis rests on data that takes either1989 or 1990/91 as the base, but the data for both these years are highly suspect.Successive labour force surveys (LFS) provide the following figures onmanufacturing employment.

    1983/84 - 2.48 million1984/85 - 2.69 million1985/86 - 3.02 million1989/90 - 7.00 million1990/91 - 5.90 million

    1995/96 - 4.10 million1990/00 - 4.30 million

    The figures for the two years 1989/90 and 1990/91 are clearly anomalous. Theyrepresent an absurdly high rate of employment growth in the latter half of the 80s, whenmanufacturing output was actually stagnating. By the same token, they represent anabnormally large decline in employment in the first half of the 1990s,when manufacturing output was expanding fast.After a careful re-examination of the LFS data, Salmon (2002) concludes that the apparentdecline in manufacturing employment in the 1990s was probably a statistical artifact createdby reclassification of a certain category of female workers namely, those involved partly infood processing and partly in agriculture. Its probable that most of these female workers were

    classified as unpaid family worker in manufacturing in the LFS of 1989 and 1990/91, butmainly classified as agricultural workers in the subsequent surveys.19 This would explain atleast in part the unusual inflation of manufacturing employment in the LFS of those twoyears. There are also a couple of independent sets of evidence that strengthen the presumptionthat the LFS figures for 1989 and 1990/91 were unduly inflated. First, contrary to LFS data,the CMI data show increasing volume of employment in large and medium-scalemanufacturing in the 1990s. Thus from 1.16 million in 1991/92, the figure went up to 1.71million in 1995/96 and further to 2.1 million in 1997/98. There is no evidence here of anydramatic decline in the first half of the 1990s, as the LFS indicates, at least as far as the largeand medium scale industries are concerned.Furthermore, since the output of the more labour-intensive small-scale sector grew faster thanits larger counterpart during this period, there is no reason to suspect any decline inemployment in this sector either, barring a dramatic reversal of factor intensity, for which it ishard to think of any plausible reason.Second, alternative estimates of overall manufacturing employment exist for the late1980s, which are clearly incompatible with the LFS figures for 1989/90 and 1990/91. Thusthe Economic Census of 1986/87, which covered all size categories of manufacturingenterprises, gave a figure of 3.09 million, which is perfectly consistent with the LFS figures

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    for the preceding years but not with the two later years. There is another set of estimates, for1989, which combines data from the Census of Manufacturing Industries (CMI), whichcovers mostly large and medium sized industries, with data from Handloom Census, whichcovers the handloom part of the cottage industry sector, and data from the Integrated AnnualSurvey of Non-Farm. Economic Activities, which covers other small and cottage industries.

    The combined employment figure comes to 2.89 million, which is way below the LFS figuresfor 1989/90 and 1990/91, but not too far out of line with the estimates for the rest of the yearsin the late 1980s.

    Employment elasticity

    There is another strand of argument that focuses not so much on the absolute size ofmanufacturing employment as on the ability of the manufacturing sector to createemploymentas measured by the elasticity of employment with respect to eitheroutput or value-added.

    A typical conclusion drawn from such evidence is that the employment generating capacity ofthe manufacturing sector has declined. If true, this would be a serious indictment of the movetowards globalization that gathered pace in the 1990s. In truth, however, the evidence onemployment elasticity needs to be interpreted with extreme caution, for depending on thecauses underlying the decline in elasticity it may or may not indicate a reduction in thecapacity to generate employment. There are a number of reasons for this.First, when an industry is expanding, it may adopt new processes or innovate new productsthat enhance the productivity of labour. In that case, elasticity would decline, but this declinewould be a necessary precondition for the industry to expand and hence to generate moreemployment.Second, if an expanding industry comes up against the bottleneck of a tightening labour

    market, it will have to pay higher wages in order to expand its scale of operation. Higherwages will, however, reduce the elasticity of employment (with a given productiontechnology), but once again this decline would be a necessary precondition for the industry toexpand and to generate more employment. In both these cases, declining elasticity would infact indicate enhanced rather than reduced capacity of the industry to generate employment in the sense that, given the conditions stated, the only way the industry could generate moreemployment was by allowing the elasticity to fall. By the same token, unchanged elasticitywould have indicated failure to expand and to create more employment. There is someevidence to suggest that something like this has probably happened in Bangladesh in the1990s.

    If this conclusion seems counter-intuitive, the reason lies in the fact that there is a problemwith the way elasticity of employment is usually measured. Strictly speaking, elasticity is aceteris paribus concept; it is supposed to show how employment responds to output, otherthings remaining the samethese other things include factor prices and the available menu oftechnology choice. If the ceteris paribus elasticity declines, then it makes sense to say that thecapacity to create employment has declined, holding other things constant. But in order toderive such an elasticity, one will have to estimate a structural parameter, through someprocedure that holds other things constant. However, the way elasticity is typically measured

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    by taking the ratio between observed change in employment with observed change in output(or, value-added)gives one a reduced form estimate, where the effects of all sorts of thingsget confounded. There is no theoretical reason why such an estimate of elasticity shouldindicate what a structural parameter is meant to do. In the absence of a proper structuralestimate of elasticity, an alternative approach is to look at the manner in which the structure of

    production has changed, in two respects whether the proportion of more labour-intensiveactivities has changed relative to less labour-intensive ones, and whether labour-intensity ofthe technique of production has changed within each type of activity. These would indicatethe direction in which the capacity to create employment has changed.However, in order to assess how globalisation has affected this capacity, one will have to goone step further to see how much of the observed structural change can be attributed toglobalisation and how much to other factors. All this requires detailed empirical investigationof a kind that is beyond the scope of this paper.

    However, some tentative observations can be made. First, the growth of labor-intensiveactivities such as readymade garments and leather products suggests that the structure of

    production has probably moved towards more labour-intensive activities. Furthermore, sincethese activities also happen to be export-oriented, globalization can be given some credit forthis phenomenon. Second, careful econometric investigation has shown that the activities thathave a higher proportion of either export orientation or import penetration seem to employmore labour-intensive techniques of production, holding other things (such as factor prices)constant. In other words, the activities that have been exposed to globalisation more havebecome more labour-intensive than the rest. These observations would seem to strengthen thepresumption that manufacturings capacity to generate employment has actually increased inthe period of rapid globalisation. In summary, while the data on manufacturing employment isnot entirely unambiguous, the balance of evidence sifted from a close examination ofalternative sources of data would suggest the following conclusions.First, manufacturing employment increased in the 1990s, not declined as has sometimes beensuggested.Second, the rate of increase of manufacturing employment was considerably faster in the1990s compared to the 1980s, which is in keeping with the observed acceleration in thegrowth of manufacturing output. Third, manufacturings capacity to generate employment has

    probably increased in the era of globalization. None of these conclusively proves thatglobalization had a positive impact on manufacturing employment because the effects of otherpossible influences have not been controlled for in the preceding analysis. But at least theycast serious doubt on the hypothesis of a negative impact that is frequently drawn on basis ofthe observed trend in manufacturing employment in Bangladesh.First, since the whole idea of trade liberalization is to reallocate resources from inefficientimport-substituting industries towards more efficient export-oriented ones, the loss of outputand employment in some activities is inevitable in fact it is an inseparable part of theprocess of improving efficiency through freer trade.Second, the loss of employment in textile and other inefficient industries has probably beenmore severe than would have been the case in the normal course of reallocation of resourcesfollowing trade liberalization. This is because the public sector firms had long been burdenedwith excess labourmore on political than on economic grounds. The resulting inefficiencywould have forced these firms either to close down or shed labour in any case, sooner or later.

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    Globalization has hastened that process, but only a part of the loss of employment can beattributed to globalization, the other part being attributable to the history of overstaffing.Third, well-publicized cases of loss of employment in large public sector enterprises shouldbe seen in the context of the evidence presented above, which showed that overallmanufacturing employment most probably increased in the 1990s, suggesting a net positive

    effect of globalization. The number of job losses occurring in the large import-substitutingfirms in both public and private sector is actually a very small fraction of overallmanufacturing employment.Fourth, while the positive net effect implies that globalization has helped reduce povertyoverall through the route of manufacturing employment, the increased poverty and sufferingof those who have actually lost their jobs cannot be ignored. Public policy must address theirsuffering as an integral part of the policy towards globalization.

    IV. Globalization, Fiscal Powers of the State, and Sustainability of PovertyReduction

    The preceding discussion has shown that on the whole globalization has strengthenedthe potential for poverty reduction in Bangladesh by creating more remunerativeemployment opportunitiesboth directly in the tradable sectors and indirectly, andperhaps more importantly, in the non-tradable sector as well. Whether this potentialcan be fully utilised depends, however, on public policy that goes beyondglobalisation. After all, while globalisation may help, it cannot be the whole of propoorpublic policy. This raises the question of what effect globalisation might have onthe governments ability to conduct pro-poor public policy. One strand of argument inthe contemporary debate on globalisation suggests that it might actually compromisegovernments ability to conduct pro-poor policy by reducing its fiscal powers. Theforce of this argument needs to be examined in the context of Bangladesh. The argument thatpublic policy needs to go beyond globalisation is certainly valid. One reason emanates fromthe consequences of globalisation itselfnamely, that. globalisation brings about wide-ranging structural changes within an economy, opening up new opportunities for enhancingemployment and income but also closing down, or at least diminishing, many existing meansof livelihood. In general, opportunities open up in those activities in which a country hascomparative advantage, and diminish in those in which it has comparative disadvantage. Joblosses in many importing-substituting industries in Bangladeshprincipally, in the traditionaltextile and paper industrieseven as employment has expanded rapidly in garments, leatherproducts and frozen food sectors, bear testimony to this fact. Economic theory suggests thatgenerally speaking the gains will outweigh the losses, so that a nation should gain an overallincrease in welfare. The problem, however, is that gains and losses may not be distributedevenly across the population. Much depends on who happens to be engaged in the expandingactivities and who in the contracting ones, and who has the skills and resources to access thenew opportunities that are being opened up. This is not a problem that is unique toglobalisation. Even without globalisation, structural changes do occur in any economy exceptin the most moribund ones. Owing to changes in technology, tastes, demographic structure,and so on, new opportunities open up in the sphere of production and old ones close downall the time. The effects of these home grown structural changes are not qualitativelydissimilar to those induced by globalisation. They too create new uncertainties and

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    vulnerabilities along with new opportunities, and in this case too the cost of negativeeffects tends to fall disproportionately more on the weaker segments of the population, and formuch the same reasons. If this is not seen as a reason for avoiding structural changes ingeneral, it should not be seen as a reason for shutting the door to globalisation either.There is, however, a very good reason for being especially concerned with the

    possible negative effects of globalisation and for trying do something about it. Theproblem with globalisation is that, unlike home grown structural changes, whichtypically unfold incrementally over a long haul allowing a breathing space fornecessary adjustments, globalisation tends to bring about sweeping structural changeswithin a short period of time. The sheer pace of change can entail serious problems ofadjustment. What is worse, these adjustment problems can be compounded by whatcan be described as the problem of shifting comparative advantage. It refers to thephenomenon that the structural changes caused by globalisation may not be an oncefor-all affair, because the nature of comparative advantage may itself undergo rapidchange during the process of globalisation. Comparative advantage, it must beremembered, is inherently comparative in nature, i.e. it depends not just on the

    characteristics of a particular country but also on those of other countries thatparticipate in a trading network. As a result, any country that has already embracedglobalisation may find that its comparative advantage keeps changing as the wave ofglobalisation brings in new countries within the trading network. Thus, Hong Kongand Taiwan found out that the comparative advantage they had once enjoyed inlabour-intensive garment industries for a number of years was eroded as countriessuch as Bangladesh and Vietnam entered the export market with cheaper labour.Bangladesh itself faces similar prospects today as the impending expiry of the Multi-Fibre Agreement threatens the viability of its garments industry in the face ofcompetition from new entrants, chiefly in Africa. In each case, a country that losescomparative advantage in one sphere will eventually find it elsewhere. But theproblem is that shifting comparative advantage of this kind can keep the structure ofan economy in a constant state of flux for a prolonged period of time. The disruptiveeffects of globalisation may, therefore, be quite serious.Public policy must addressthis problemby setting up an adequate safety network, by retraining displacedworkers, and so onif the potential poverty-reducing effect of globalisation is tobecome a reality for the majority of the poor.In addition to addressing the short run adjustment costs, there is also a longer-termconcern that public policy must address. It is important to emphasise that the mostglobalisation can do to help reduce poverty is to strengthen the potential for reducingpoverty - by expanding employment opportunities for the poor. Whether thispotential will translate itself into reality depends on whether a sufficiently largenumber of poor people will actually be able to take advantage of these opportunities.It cannot be taken for granted, however, that the poor will be able to do, since theytypically face many well-known impediments in integrating themselves intomainstream economic activities.The problem essentially is that there may be amismatch between the structure of opportunities opened up by globalisation and thestructure of capabilities possessed by the poor. Public policy will have to play a majorrole here to improve and remould the structure of capabilities of the poorforexample, by providing them with education, healthcare, access to infrastructure and

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    other assets, and so on. Otherwise, the poverty reducing potential of globalisation willremain largely unrealised.In short, for globalisation to be able to reduce poverty, it must be complemented bypublic policy that goes beyond measures designed merely to deepen the forces ofglobalisation. In particular, public policy must address issues of social safety net to

    deal with the poverty-enhancing disruptions that are inherent in the process ofglobalisation and of enhancing the capabilities of the poor so that they can take fulladvantage of the opportunities opened up by globalisation. But public policy of thiskind costs resources, which means that the size and role of public expenditure mayhave to rise. Yet, many have argued that globalisation actually reduces governmentsability to undertake necessary public expenditure. This is because governmentsability to collect taxes is supposed to be reduced in various waysfor example, by thetax exemptions that are offered in order to lure foreign capital and by the tariffreductions that are made for promoting trade liberalisation. If true, this wouldseriously undermine globalisations ability to reduce poverty.Bangladesh does offer very lucrative tax exemptions for foreign capital. But the

    inflow of foreign capital still remains so minuscule that the overall revenueimplication of this policy is yet to emerge as a major concern. A more importantconcern lies in the potential loss of revenue from trade liberalisation, especially sinceBangladesh has undertaken one of the deepest and fastest move towards tradeliberalisation compared to many other developing countries. The experience ofBangladesh in his regard is quite instructive.First, a great deal of tariff reforms did not lead to any effective reduction in duties,because of widespread prevalence of tariff redundancy (water in tariff). Second, anyeffect of reduced rates of duty was compensated partly by the ratification of quotasand partly by an upsurge in the volume of imports following trade liberalization, bothof which served to expand the base of revenue collection. As a result, revenue fromimport duties as a proportion of GDP did not decline, and even slightly increased inyears of high import growth.

    It is important to emphasize, however, that mere evidence of a reduction in revenues fromcustoms duties is not sufficient to conclude that trade liberalization has adversely affected therevenue effort of the government. In theory, trade liberalization does not necessarily entailloss of revenue from imports (even leaving aside the possibility of an expanding tax basefollowing ratification of quotas and increase in import volume). What liberalisation requires isthe elimination of protective duties i.e., duties that discriminate against imports. This isperfectly consistent with the imposition of a tax that is neutral between imported and domesticgoods. Such a tax would continue to raise revenue from importsas well as from domesticgoodswhile liberalization is undertaken. Therefore, if a government is concerned about therevenue effect of trade liberalisation, it has the option of imposing such a neutral tax.Bangladesh did precisely that by introducing the value-added tax (VAT) in 1992 to beapplied uniformly on domestic and imported goods. On the domestic front, it replaced the old-style excise duties, and on the import front it (partly) replaced customs dutiesand sales tax onimports. Another potential tax instrument for sustaining revenue effort while reducingprotective tariffs is provided by the so-called Supplementary Duty. Like the VAT, it is meant

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    to be imposed equally on import and domestic production; and it can also be selectivelyimposed on relatively inessential items ofconsumption.As a result of these tax reforms, the overall collection of indirect taxes did not actually sufferin Bangladesh following trade liberalisation. As a proportion of GDP, total revenue from

    indirect taxes in fact increased from 4.6 per cent in the late 1980s to 5.6 per cent in the firsthalf of the 1990s and further to 6.3 per cent in the second half of the decade.Increased revenue from indirect taxes has been supplemented by a move towards bettercollection of direct taxes that proved quite successful up to the mid-1990s (but tapered offsince then). As a result, total revenue as a percentage of GDP went up from 6.3 per cent in thesecond half of the 1980s to 9.2 per cent in the second half of the 1990s. Correspondingly,public expenditure as a percentage of GDP also went up, albeit slightly, during the sameperiodfrom 12.9 per cent to 13.6 per cent, despite a secular decline in the inflow of foreignaid. Moreover, the share of public expenditure going to sectors that benefit the poorproportionately moresuch as health, education, and basic infrastructurehas also increased.The combined share of health and education in total budgetary expenditure has gone up from

    14 per cent in the first half of the 1980s to 23 per cent in the second half of the 1990s.

    Rural poverty in Bangladesh

    Bangladesh is one of the worlds poorest countries, ranking third after India and China in the

    extent of poverty. The population is predominantly rural, with about 85 per cent of its

    135 million people living in rural areas. For their livelihoods rural people depend mainly on

    the land, which is both fertile and extremely vulnerable. Most of the country is made up of

    flood plain, and while the alluvial soil provides good arable land, large areas are at risk

    because of frequent floods and cyclones, which take lives and destroy crops, livestock and

    property.

    Since the 1990s the country has made good progress towards reducing the incidence of

    poverty, achieving a 1 per cent drop in the proportion of people living below the poverty line

    every year. Estimates of rural poverty rates now stand between 53 per cent and 43.6 per cent.

    In general the depth and severity of poverty has been reduced more successfully in rural zones

    than in urban areas, although rural zones still lag far behind urban areas in terms of

    development.

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    Population below poverty line: 36.3% (2008 est.)

    Year Population below poverty line Rank Percent Change Date of Information

    2009 45 36 2004 est.

    2010 36.3 48 -19.33 % 2008 est.

    Definition: National estimates of the percentage of the population falling below the poverty

    line are based on surveys of sub-groups, with the results weighted by the number of people ineach group. Definitions of poverty vary considerably among nations. For example, richnations generally employ more generous standards of poverty than poor nations.

    Source:CIA World Factbook- Unless otherwise noted, information in this page is accurateas of February 19, 2010

    Poverty trends 1991-2000

    World Bank/BBS estimates are based on the Cost of Basic Needs (CBN) method. The base year for the CBN poverty line was 1991-92, which was then updated for

    1995-96 and 2000 for changes in the cost of living using a price index. Difference with Sen/Mujeri estimates is the use of unit record data vs grouped data

    and different non-food poverty line as base year.

    Bangladesh: PovertyHeadcount Rate

    Upper PovertyLine

    Lower PovertyLine

    https://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.htmlhttps://www.cia.gov/library/publications/the-world-factbook/fields/2046.html
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    1991-92 1995-96

    2000 1991-92 1995-96

    2000

    National 58.8 51.0 49.8 42.7 34.4 33.7

    Urban 44.9 29.4 36.6 23.3 13.7 19.1

    Rural 61.2 55.2 53.0 46.0 38.5 37.4

    Bangladesh aims to cut poverty rate to 15% by 2021

    The Bangladeshi government is working to cut poverty to 15 percent of its population by2021, the country's local government minister Syed Ashraful Islam said Sunday.

    Inaugurating the 2nd ministerial meeting of the Center of Integrated Rural Development forAsia and the Pacific (CIRDAP) in Dhaka, he said Bangladesh wants CIRDAP to play a vitalrole for poverty alleviation and development of poorer nations.

    Islam called upon the delegates of 14 countries, participating in the five-day meeting of theCIRDAP in Dhaka, to extend all possible support in promotion of agriculture sector and ruraldevelopment in particular.

    "We are struggling very hard to develop agricultural sector and eradicate poverty," he said.

    An estimated 45-50 percent of Bangladesh's 150 million people reportedly live below theinternational poverty line of 1.25 U.S. dollars a day.

    Fighting poverty in Bangladesh

    By BBC News Online's Kate Milner

    Bangladesh is preparing for the first visit by a US president since 1971, hoping it will attractmore western investment to the country.

    During his nine-hour visit, President Bill Clinton will find out about the micro-credit systemof small loans aimed at helping poor people, for example to buy a cow so they can sell milk.

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    It is a system supported by the president and much heralded across the world by countrieskeen to copy the Bangladesh model.

    But in his short visit, the president will not see the whole picture. The scheme has proved verypopular but there are criticisms that it fails to help

    Conclusion and Recommendations:

    As a conclusion of the project, we would like to propose criteria for designing andimplementation policy measurements and development actions which will contribute topoverty alleviation through secondary crop based agricultural diversification.

    Technology development for secondary crops should be strengthened. Theallocation of R & D resources should be examined based on the effect of the developedtechnologies to the welfare of rural poor farmers. Development of cost saving technologiesshould be prioritized.

    Contract farming is an effective measurement to provide mutual benefit both toproducers and consumers. The clear and fair standard of contract and monitoring systemshould be provided by the initiative of government.

    Construction of small scale irrigation, storage facilities and provision of marketinformation should be prioritized in infrastructure development.

    Credit schemes should focus on resources poor farmers. Practical measurement suchas grouping of credit recipient is necessary to assure repayment.

    Small scale processing is an effective measurement to mitigate rural poverty andshould be supported by credit and appropriate technologies. Modern processing has potentialto expend secondary crops demand which should be monitored carefully to use opportunitiesfor poverty alleviation.

    Current price support and import trade policy for major cereals should be carefullyexamined if these policies deteriorate poorpeoples welfare.

    The input use for secondary crop production is still low. Therefore, the output which

    will be expected by increase of input use is relatively higher than major cereals. It is useful toevaluate the benefit of input use to convince the relevancy of input subsidy schemes.

    There is enough possibility to formulate regional collaboration schemes which can

    produce mutual benefit based on the differences in socio-economic conditions. Formulation of farmers group should be supported to solve problems which small

    scale farmers cannot handle individually, especially to promote contract farming andtechnology dissemination.

    Legal protection of land should be secured to strengthening farmers motivation to

    invest their own land.

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    REFERENCES

    1. Rahman, P.M.M. 1994: Poverty Issueses in Rural Bangladesh, PP. 3-702. Ravallion, M. and B. Sen 1996: When Method Matters: Monitoring

    Poverty in Bangladesh,

    3. weekend (the daily Independent magazine)4. Web sides:

    1. Www.google.com.bd2. www.wakipidia.com3. www.amazon.com

    http://www.google.com.bd/http://www.google.com.bd/http://www.wakipidia.com/http://www.wakipidia.com/http://www.amazon.com/http://www.amazon.com/http://www.amazon.com/http://www.amazon.com/http://www.amazon.com/http://www.amazon.com/http://www.wakipidia.com/http://www.wakipidia.com/http://www.wakipidia.com/http://www.wakipidia.com/http://www.wakipidia.com/http://www.google.com.bd/http://www.google.com.bd/http://www.google.com.bd/http://www.google.com.bd/http://www.google.com.bd/http://www.google.com.bd/http://www.google.com.bd/