Assignment
jang.yu
Bangladesh1.pptxBangladesh
IMF classifies Bangladesh as a “frontier economy” – mostly rural, quite poor but with a growing manufacturing sector and rapid growth in recent years.
Population 161m on land mass smaller than New England. One of the most densely populated countries in the world.
Manufacturing sector began growing in mid-2000s.
In last ten years, annual GDP growth avg. 6%. Per capita growth avg. 4%.
Background
When British partitioned Indian subcontinent in 1947, created nations of India and Pakistan.
Pakistan consisted of West Pakistan and East Pakistan (today Bangladesh) – 1,600km apart, non-contiguous
Majority of population in East and main language Bengal, but power resided in West. Urdu declared national language.
Over next 25 years, frequent uprisings, independence movements, civil unrest.
Culminated in declaration of independence in 1971
Bangladesh Liberation War
Violent war for independence in 1971 resulted in 1m – 3m deaths.
India supported Bangladesh
Government formed – called itself socialist and received aid from Soviets and East European countries.
Destruction of war extreme. Some 6m homes were lost. Roads, communications destroyed. Most farmers lost animals, homes, tools.
Most larger businesses closed and cash, equipment removed to Pakistan.
Famine and aftermath
Devastation of war followed by severe flooding and hoarding of rice >>> famine in 1974
Estimated that 6% of population starved.
US withheld food aid because of Bangladesh trade with Cuba.
Bangladesh Rural Advancement Committee (BRAC) and Grameen Bank both founded to rebuild country after war and famine.
1975 – First of several military coups.
ISI policies established under military rule, but corrupt, so little growth.
Country remained under military rule until mass uprisings by pro-democracy movements >>> elected government in 1991.
Opening economy
By 1991, no forex reserves, little trade, Soviet aid gone
IMF and World Bank loans conditioned on opening up economy to market forces
By 2000, small scale industry established and by mid-2000s increase in growth rates and emergence of export-oriented garment industry.
Currently 3/4 population rural and 1/2 workers employed in agriculture. 1/5 employed in manufacturing.
High population density allows many rural households to supplement income with mfg. jobs.
X = 20% GDP
Imports = 25% GDP
Remittances = 11% GDP, so has current account surplus (8th highest remittances in world – most from middle east, Malaysia, UK)
Garments
Garment manufacturing increased x12 since 2000.
Over 1/10 of GDP
94% of all garments are for export and garments comprise 4/5 of Bangladeshi exports (also has small pharmaceutical export industry).
Employs about 4.5m workers, 80% F (though almost all production workers female).
Little FDI (only 1% GDP). Mostly local firms who subcontract with large retailers and clothing brands (Target, Primark, GAP, Walmarts, H&M, etc.)
Working Conditions
One of the worst records of industrial accidents in world.
Series of fires in garment factories in 2012-2013 followed by collapse of Rana Plaza (1129 killed, 2000 injured) >>> mass demonstrations and scandalized western consumers.
Large EU/US retailers feared consumer boycotts
EU retailers signed accord on fire and building safety in 2013, which established standards on safety and also on forced overtime and physical abuse. Funded inspections. Fairly good enforcement mechanisms
US firms formed Alliance for Bangladesh Worker Safety. Disbanded after a few years and inspections carried out by Bangladesh-funded organization.
Working conditions
Vast improvements followed – fire doors, alarms, sprinkler systems.
Recent backsliding. Industry wants foreign inspectors out. Estimated that 45% garment factories lack adequate fire detection and alarm systems.
Also about 1/4 factories are producing for non-EU/US retailers, so not inspected or covered by accords.
Labor
Minimum wage – $94/month.
Average manufacturing wage around $125/month
Living wage estimated at $200/month.
Bangladesh has not ratified ILO Convention on Child Labor. Estimates that nearly 1m children working in garment factories (under 18)
Sexual harassment of female garment workers common. Recent survey by BBC found 80% workers had witnessed or experienced harassment.
Official workweek is 40 hours, but violations routine.
Garment industry politically powerful, so enforcement of labor laws poor.
Social indicators
Per capita GDP = $4,300 (PPP)
Poverty rates high but have fallen dramatically
| Source | Poverty Rate 1990 | Poverty Rate 2015 |
| World Bank | 70% | 45% |
| Government measure | 57% | 32% |
Gini index estimates unreliable – CIA estimate of 32.4 in 2010.
Estimates on social indicators for 2010
| Indicator | Bangladesh | South Asia Average | Change since 1990 |
| Life Expectancy | 70 years | 67 years | +14 |
| Infant Mortality | 33/1000 | 45/1000 | -67 |
| Child Mortality | 41/1000 | 57/1000 | -103 |
| Improved Sanitation | 57% | 39% | +24 |
| Improved Water | 97% | 80% | |
| Immunization 0-2 years | 82% | 44% | |
| Years of Education - Male | 8 years | 8.6 years | +4 |
| Female | 9.2 years | 8.3 years | +6 |
