Industrialization in Bangladesh

Industrialization in Industrialization in BangladeshBangladesh

Industrial Development in Industrial Development in Bangladesh:Bangladesh:

There are four stages to discuss the There are four stages to discuss the industries and industrial development industries and industrial development of Bangladesh during the 100 years:of Bangladesh during the 100 years:

Stage 1Stage 1: Up to the eve of World War I : Up to the eve of World War I (1900-1914); (1900-1914);

Stage 2Stage 2: At the time of Partition, 1947;: At the time of Partition, 1947; Stage 3Stage 3: At the time Independence, : At the time Independence,

1971 1971 (1947-1970);(1947-1970); Stage 4Stage 4: The Contemporary phase.: The Contemporary phase.

Stage 1: Up to the eve of World War I Stage 1: Up to the eve of World War I (1900-1914): (1900-1914):

The early part of the 20th Century was of The early part of the 20th Century was of great significance in industrial great significance in industrial development in Bangladesh and several development in Bangladesh and several parts of India. But in Bangladesh (East parts of India. But in Bangladesh (East Bengal) a start was not made with any Bengal) a start was not made with any kind of machine-driven industry until a kind of machine-driven industry until a later period. There were few industrial later period. There were few industrial developments happened namely: developments happened namely: handloom weaving, silk, metal; industry, handloom weaving, silk, metal; industry, leather, jute, sugar, rice milling, tobacco, leather, jute, sugar, rice milling, tobacco, oil-mills, fruits, tea, and other industries. oil-mills, fruits, tea, and other industries.

Stage 2: At the time of Partition, Stage 2: At the time of Partition, 1947-1948:1947-1948:

At Partition in August 1947, the area At Partition in August 1947, the area

inherited a legacy of industrial inherited a legacy of industrial

backwardness, dating from the dawn backwardness, dating from the dawn

of the modern industrial era in British of the modern industrial era in British

Bengal. The variety of agricultural Bengal. The variety of agricultural

resources and vast multitudes, the resources and vast multitudes, the

Bangladesh (East Bengal) area made Bangladesh (East Bengal) area made

little progress with modern industry. little progress with modern industry.

Stage 3: At the time Independence, 1971 Stage 3: At the time Independence, 1971 (1947-1970):(1947-1970):

During Pakistan period situation did not changeDuring Pakistan period situation did not changetouch in favour of local entrepreneurship to grow.touch in favour of local entrepreneurship to grow.In 1947 there was only a handful large-scaleIn 1947 there was only a handful large-scaleindustrial unit- a few cotton textile mills and fewindustrial unit- a few cotton textile mills and fewsugar mills developed in this area. In 1949/50sugar mills developed in this area. In 1949/50manufacturing sector to the GDP was verymanufacturing sector to the GDP was veryinsignificant. In 1950s and 1960s manufacturinginsignificant. In 1950s and 1960s manufacturingunits established in the then East Pakistan wereunits established in the then East Pakistan weremainly Jute and Cotton industries and these weremainly Jute and Cotton industries and these weremostly established which the organization namedmostly established which the organization namedwas East Pakistan Industrial Developmentwas East Pakistan Industrial DevelopmentCorporation (EPIDC). Corporation (EPIDC).

Stage 4: The Contemporary Stage 4: The Contemporary Phase:Phase:

At the time of independence Bangladesh At the time of independence Bangladesh was a predominantly agricultural country was a predominantly agricultural country that inherited a tiny manufacturing sector. that inherited a tiny manufacturing sector. 80 percent of which owned either by 80 percent of which owned either by Pakistani business houses or state Pakistani business houses or state agencies only 18 percent of those owned agencies only 18 percent of those owned Bangalee were mostly small industries. Bangalee were mostly small industries. Table 1 is given below depicts more vividly Table 1 is given below depicts more vividly the structure of ownership of industrial the structure of ownership of industrial enterprises prior to independence in 1971.enterprises prior to independence in 1971.

•Importance of Industrialization:Importance of Industrialization: Industry is contributing about 17% in the GDP of Bangladesh. Not only that the Industry is contributing about 17% in the GDP of Bangladesh. Not only that the

second step towards development is industrialization. Following table depicts the second step towards development is industrialization. Following table depicts the importance of industrial sector in the economic development of Bangladesh. importance of industrial sector in the economic development of Bangladesh.

To increase the national income of the economy: To increase the national income of the economy:

Industry plays a very crucial role in the national income Industry plays a very crucial role in the national income

of a country. It can contribute from different point of of a country. It can contribute from different point of

view. For example, the output produced in the sector view. For example, the output produced in the sector

will add value in national income and the employment will add value in national income and the employment

creation will add value in the labor force. Moreover, creation will add value in the labor force. Moreover,

industrial wage is higher than that of agricultural wage. industrial wage is higher than that of agricultural wage.

So a better living standard can be expected by So a better living standard can be expected by

industrial development in the country. Industry also industrial development in the country. Industry also

helps the economy to reduce BOP deficit. helps the economy to reduce BOP deficit.

Table 1: Contribution of Manufacturing Sector in Table 1: Contribution of Manufacturing Sector in GDP (in Crore Taka) and its growth (1995-96 as GDP (in Crore Taka) and its growth (1995-96 as

base year periods)base year periods)IndustryIndustry 1988-19891988-1989 2003-2004 2003-2004 2005-2006 2005-2006

Small & Small & Cottage Cottage 

8184.9 8184.9 11496.5 11496.5 13529.7 13529.7

(0.75) (0.75) (7.45) (7.45) (9.04) (9.04)

Medium & Medium & LargeLarge

20803.320803.3 27572.3 27572.3 33156.3 33156.3

(4.2) (4.2) (6.95) (6.95) (11.04) (11.04) TotalTotal 28988.2 28988.2 39068.8 39068.8 46686 46686

(3.2) (3.2) (7.1) (7.1) (10.45) (10.45) Source: GOB (2007).

For Agricultural Development:For Agricultural Development:

Our country still is highly dependent on Our country still is highly dependent on

agriculture. Unfortunately agricultural agriculture. Unfortunately agricultural

growth has become stagnant in last growth has become stagnant in last

few years. The main reason of less few years. The main reason of less

growth in agriculture was identified as growth in agriculture was identified as

lack of modernization. Farmers are not lack of modernization. Farmers are not

using modern technology in the using modern technology in the

agriculture due to its unavailability and agriculture due to its unavailability and

high cost of import.high cost of import.

Table 2: Employment in different Table 2: Employment in different sectors (in million)sectors (in million)

Economic SectorsEconomic Sectors LFS, 1989LFS, 1989 LFS, 1990-91LLFS, 1990-91L L.FS. 1995-96L.FS. 1995-96

Agri, fores. Agri, fores. Fishery Fishery

32.6 32.6 33.3 33.3 34.5 34.5

Mining Mining 0.1 0.1 0.00.0 0.00.0

Manufacturing Manufacturing 7 7 6.9 6.9 4.14.1

Construction Construction 0.60.6 0.50.5 1.51.5

Trade, Hotel, Trade, Hotel, Restu Restu

4.1 4.1 4.34.3 0.10.1

Transport. Transport. Storage Storage

1.31.3 1.61.6 2.32.3

TotalTotal 50.1 50.1 50.2 50.2 54.6 54.6

Contribution in the Employment of the Contribution in the Employment of the Economy:Economy:

In 1986, BBS conducted the first ever census of In 1986, BBS conducted the first ever census of non-farm activities. It has provided three broad non-farm activities. It has provided three broad types of economic units: (a) types of economic units: (a) permanent permanent establishmentestablishment (b) (b) temporary establishmentstemporary establishments and and (c(c) household premise based establishments) household premise based establishments. .

To increase the standard of living:To increase the standard of living: Main determinants of living standard are higher Main determinants of living standard are higher

national income, high level of employment and national income, high level of employment and better per capita income. By creating better per capita income. By creating employment and by increasing income level we employment and by increasing income level we can increase our living standard.can increase our living standard.

Economic Stability:Economic Stability:

Inflation remained a major problem Inflation remained a major problem

in Bangladesh economy. The reasons in Bangladesh economy. The reasons

may be the low supply of the may be the low supply of the

demanded products and high price of demanded products and high price of

the imported inputs. For price the imported inputs. For price

stability and enough supply of goods stability and enough supply of goods

industrial sector has no alternative. industrial sector has no alternative.

Avoiding External Avoiding External Dependency: Dependency:

To avoid external dependency, all the To avoid external dependency, all the

developing countries should establish developing countries should establish

their own industrial sector where they their own industrial sector where they

can produce machineries required for can produce machineries required for

both agricultural and industrial both agricultural and industrial

development. This is a kind of import development. This is a kind of import

substitution strategy to reduce the substitution strategy to reduce the

import bill of the country. import bill of the country.

Urbanization:Urbanization:

Urbanization is recognized as another Urbanization is recognized as another

determinant in the development of the determinant in the development of the

economy as whole. If the industrial areas are economy as whole. If the industrial areas are

established, people will shift to urban areas established, people will shift to urban areas

from rural areas with an aim to get job in from rural areas with an aim to get job in

industries at a higher wage. This total industries at a higher wage. This total

process will create urbanization in the world. process will create urbanization in the world.

Urbanization is encouraged as it is capable to Urbanization is encouraged as it is capable to

provide better living standard to people by provide better living standard to people by

fulfilling the basic needs in a better way. fulfilling the basic needs in a better way.