Poverty in Bangladesh

Nature
Dimension
Poverty Alleviation interventions
Role of GOB and NGOs

Introduction
Bangladesh agreed to meet certain poverty targets by
2005:
Economic
Social aspects
Social goals are on their way to being met
BUT chances of reaching the INCOME poverty targets
are slim
What to do?
The long run growth rate must be raised
Entrepreneurship and Infrastructure
Simple but far-reaching Institutional changes
Example: computerizing land records
POVERTY REDUCTION REQUIRES A RETURN TO

Partnership Agreement on
Poverty Reduction

PA

The GOB and the ADB set 7 goals to be

achieved by 2005. These were listed in the
Partnership Agreement as below
1. Reduce by 25% the number of people below the
poverty line
2. A 50% reduction of the number of non-school going
children aged 6-10
3. Eliminate gender disparity in access to basic education
4. 20% reduction in the proportion of malnourished
children under 5
5. Reduce maternal mortality by 35%
6. Reduce infant and child mortality by 30%
7. 50% reduction in the proportion of women of
appropriate age not having access to reproductive
health services

Requirements
10% growth in GDP is necessary to achieve
the goals
The poverty reduction rate required is 4.7%
annually (it was 1.7% between 1996-1999)
Population needs to be controlled
The Total Fertility Rates (TFR) has to come
down

Scope for increase in the

Growth Rate
Agriculture unlikely to provide thrust
Agri-processing requires more
favourable exchange rates
Industry has not shown dynamism yet
Foreign Direct Investment (FDI) has not
been enough forthcoming
Services has mostly been a residual
catchall due to low levels of skill and
literacy

Growth for Poverty Reduction

Finding ways to increase the growth rate of per capita
GDP : to REDUCE POVERTY
2 facts: impact on income growth on poverty: poverty
elasticity
All poverty reduction elasticities : per capita growth rate
and hence all of them depend upon population growth
Slow rate of population growth : More poverty
reduction ??
We can also use higher poverty elasticities as an
alternative to higher growth rates, or better yet, in
conjunction with them
GRWTH POVERTY REDUCTION differs from
ORDINARY ECONOMIC GROWTH
EXAMPLE : GAS EXPORT : much more discussed
policy

GAS EXPORT
To provide
1.The foreign exchange to pay for the contractual
obligations to the International Oil Companies
2.Resources for the development of downstream
industries in the sector
3.Cushion() for the balance of payments
While these are all desirable in themselves, they
do not bear directly on the reduction of poverty.
Indeed, given the capital-intensity and high skills
needed in this industry, the direct impact on
poverty will be small in relation to the
expenditure

Entrepreneurship
1. Domestic entrepreneurship needs a
secure base from which to operate
2. Domestic economic performance has
to be sustained at a high level
3. Requires a sustained thrust towards
pro poor economic growth in the
domestic economy
4. Entrepreneurs need the rule of law and
finances

FDI and Entrepreneurship

Industry has not shown any dynamism and FDI has
not shown any prospects
Secure base for domestic entrepreneurship :
Domestic economic performance has to be sustained
at a high level while
Bases for international competitiveness develop.
This requires a sustained thrust towards pro poor
economic growth in the domestic economy
Thus, GAS EXPORTS will not do the job because of
the highly capitalized production technology and the
absence of linkages.

Poor Governance and Business

Businesses have to spend time as well as money to complete
any simple transaction.

Table 1.1: The hidden Cost of Service

Service

Standard Waiting
Time

Informal Payment
for Faster Service

High Tension
Electricity Connection

6 months 1 year

Taka 100,000-150,000

Low Tension
Electricity Connection

Taka 10,000-15,000

Gas

3 months

Taka 40,000

Water

3-4 months

Taka 14,000-20,000

Phone

10-12 years

Taka 50,000-70,000

Trade License for A

Garments Factory

1 year

Taka 5,000-8,000

Source: Government That Works, Reforming the Public Sector, The

Small and Medium Enterprises

(SME)

Critical role in bringing economic development

and reducing poverty

The role of Small and Medium Enterprise in

generating pro poor economic growth will be
clear from the fact that such enterprises are
usually labor intensive, easy to enter and
exit and have low capital requirements
SME FOUNDATION : non-profit making organization
7 booster sectors: agri, plastic and synthetic,
electrical and electronic, fashion and design light
engineering (LEI and LES)

Infrastructures
Pull the social framework
Provide the new generations with
facilities to continue growth

Export-led Growth?
1. Ready Made Garments(RMG)
o
o

Largest manufacturing and export business in the country

Employment for nearly 2 million people, 90% of which are
women

Drawbacks and Potential Hazards

o
o
o
o

Financial Sector- Weak banking sector with little transparency or

central bank control.
Crony ()capitalism and moral hazard
Overvaluation of the taka compared to the currency of its
competitors
Limited entry of Bangladeshi entrepreneurs into the higher end
of the value chain

Education
Educational Facilities have expanded rapidly since
the mid-1980s
Between 1997 and 1999, the enrolment rate has
increased by 4%
GOB has let NGOs to set up many mainstream
schools since 1980s