Barriers to Economic Growth in Bangladesh

1885 Words May 11th, 2011 8 Pages
“For a developing country of your choice, identify and critically evaluate the barriers to growth and development. How can public policy attempt to lift those barriers?”

This piece will look to identify and evaluate barriers to growth and development in Bangladesh, and then suggest ways of overcoming those barriers. Bangladesh has achieved significant results in her economic sector since her independence in 1971. Through the Nationalization Order of 1972, all key industries including jute, cotton textiles and sugar were vested upon the public sector. The wholesale nationalization of industries resulted in a low growth of the economy. The Gross National Product (GNP) per capita of the country grew at an average annual rate of 0.4 per
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In South India the earnings connected to corruption for an executive engineer were as much as nine times his salary in the 1970s (Easterly, 2002 p.244). Increasing the salary of the employees would therefore reduce corruption. With Bangladesh’s high corruption levels and apparent lack of institutional quality, there is certainly scope for more FDI and therefore higher growth and development levels if bureaucratic corruption and institutional quality can be improved.

Another major impediment to growth in Bangladesh is a rapidly growing labor force that cannot be absorbed by the agricultural sector. The agricultural sector is one of the main markets for Bangladesh, and a large proportion of Bangladesh’s FDI is concentrated on this sector. Underemployment is still a serious problem, and an increasing burden for Bangladesh’s agricultural sector will be its capability to absorb additional manpower. This is put into context by Todaro and Smith (2009, p.94), “Bangladesh has approximately half the population of the United States, squeezed into an area less than half the size of Wisconsin”. Finding alternative sources of employment will continue to be a daunting problem for future Bangladesh governments, especially with the increasing numbers of landless peasants who already account for about half the rural labor force. The overwhelming levels of manpower in the labor force tie in with another barrier