Economic Development


Location

Bangladesh is located in South Asia and shares borders with India to the west, the north and the east. To the southeast lies Burma. The southern shores are washed by the Bay of Bengal. Bangladesh occupies a fertile delta created by two of Asia\'s largest river systems, the Ganges and the Brahmiputra.

Politics
Bangladesh is one of the youngest nations in Asia. Until two and a half decades ago, it formed the eastern half of Pakistan; the western half lay over 2,000 km away, on the other side of India. In 1971, Pakistan\'s army attempted to subdue an East Pakistani movement for regional autonomy which led to a bloody civil war. India joined the war in early December of that year and, later that month, Bangladesh became an independent nation. A parliamentary democracy was established and Sheikh Mujibur Rahman came to power.

Mujib was assassinated in August 1975 during a military coup. Afterwards Bangladesh went through a turbulent period characterized by a series of military coups. The last military ruler Gen. Hussain Mohammad Ershad, ruled for nine years, eventually toppled by a civilian movement in December 1990. Elections were held in 1991 under a neutral government and Khaleda Zia of the Bangladesh Nationalist Party (BNP) became the country\'s first elected Prime Minister in 16 years.

In the parliamentary election held in June 1996, the Awami League, led by Sheikh Mujibur Rahman\'s daughter Sheikh Hasina, came to power. The Awami League won 51 percent of seats in parliament; trailing behind the Awami League were the BNP with nearly 36 per cent of the seats and Hussain Mohammad Ershand\'s Jatiyo Party with 10 per cent. The rest of the seats were won by other small parties and individual candidates. The Bangladeshi parliament has a single legislative chamber with 330 members. Three hundred members are directly elected on the basis of adult franchise while 30 women members are elected indirectly.

Bangladesh has emerged as a leader of the movement of developing countries. The country maintains close ties with Saudi Arabia and other Middle Eastern countries, which employ large numbers of Bangladeshi workers. Relations with India have improved considerably due to the pragmatic approach taken by the current government. More recently, an influx of Burmese Muslim refugees across the Southeastern border has created tensions with the Burmese authorities.

The Economy
Bangladesh is one of the most populous and poorest developing countries. The annual per capita income is about US$265. With its newfound political stability, Bangladesh has undertaken an ambitious program of economic reforms, and opened its doors to foreign investment. A large workforce, and low wages and costs make Bangladesh an attractive base for setting up manufacturing and assembling facilities.

The present government has initiated several measures to stimulate economic growth. New businesses are being encouraged and there are generous tax incentives for exporters. Foreign-exchange restrictions have been eased. Overseas businesses are being wooed as foreigners are now allowed to own ventures wholly and are permitted to invest in the stock market. The mobilization of domestic resources is a key priority of the program.

The results have been satisfactory. Economic growth has improved steadily since 1991. Inflation has been substantially reduced and the external current account balance has also improved.

As a result of more rapid growth in the services sector, overall real GDP growth was 5.5 per cent in 1996, 5.9% in 1997 and 5.6% is the preliminary estimate for 1998. Encouraged by the government\'s policies of deregulation and financial sector reform, both private and public sector investments and national savings have increased steadily. Investment was equivalent to 12.1 per cent of GDP in 1992, 12.7 per cent in 1993, 14.6 per cent in 1994 16 per cent in 1995, 16.5 per cent in 1996 and 16.75 per cent in 1997. The national savings rate was 9.6 per cent of GDP in 1992 and continued to grow through the years to 12.95 per cent in 1997.

With a steadily improving external environment as the world economy slowly recovers, as well as a more stable political environment and speedier implementation of policy reforms, gross domestic investment is expected to increase to 17.4 per cent of GDP in 1997.

Developmental Situation
Against this background of poverty and underdevelopment, rapidly growing numbers of people are finding themselves without enough land to satisfy their basic needs and without any substantial