Bangladesh Country Report

Size Structure of Manufacturing Industry and Implications for Growth and Poverty

Bangladesh Country Paper

Nazneen Ahmed Zaid Bakht Md. Yunus

April 2011

Bangladesh Institute of Development Studies E-17 Agargaon, Sher-e-Bangla Nagar, Dhaka-1207, Bangladesh

Size Structure of Manufacturing Industry in Bangladesh and Implications for Growth and Poverty

I. Introduction The developmental odds faced by Bangladesh at the time of independence in 1971 were formidable. The challenges of high population growth, constant food shortages, recurring natural disaster, high aid-dependence, limited production of tradable, widespread poverty and low levels of human development were compounded by the dislocations caused by the war of liberation. Against that backdrop, the prospect of Bangladesh economy appeared rather bleak. However, Bangladesh’s achievements over the past four decades negated considerably that pessimistic outlook. Against the benchmark trend GDP growth rate of 3.2 percent during 19501970, Bangladesh achieved a reasonably steady annual rate of growth of over 4 percent during the first two decades of her independence and was successful in moving into the higher growth trajectory of nearly 5 percent during 1990s. The economy achieved a trend growth rate of 5.9 percent during 2000-2010. The boom in export and remittance earnings, with yearly compound growth of more than 12 percent in each during 1980-2010, coupled with the decline in population growth rate from the post-independence peak of 2.7 percent to 1.2 percent in recent years helped raise average yearly per capita GNI growth to more than 5 percent during the past three decades. This was more than twice the global median for per capita growth during the same period. The acceleration in the pace of growth started since the early 1990s when Bangladesh returned to a democratic form of government after almost a decade of autocratic rule. This also coincided with the intensified phase of wide ranging policy...