Market Failure of the Brick Making Industry in Bangladesh

3544 Words May 25th, 2012 15 Pages
Brick-Making Industry
An Analysis on Market Failure

Table of Contents Brick Making Industry in Bangladesh 2 Undesired Current Status 3 Impacts of Brick Making Industry 4 Environmental Impacts 4 Social Impacts 5 Reforms and Developments 7 Implemented/In-process 7 Proposed Reforms 7 Aftermaths of Proposed Reforms 9 References 10

Brick Making Industry in Bangladesh
Present-day Status
Brick making is indispensable for the economy of Bangladesh. Though not formally recognized as an industry, brick-making is a significant economic activity in Bangladesh. The country’s overwhelming dependence on bricks is due to its lack of stones in any sizable quantity or other alternative building materials at comparable cost.
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Most kiln operators have a weak financial base, with limited or no access to bank financing. Because brick-making is not formally recognized as an industry, kiln owners cannot avail themselves of the concessional loan windows of financial institutions for the SMEs. In addition, most kilns are established on rented lowlands that cannot be used as collateral to access finance. As a result, only short-term working capital financing is available to kiln owners.

Impacts of Brick Making Industry
Brick production is one of the most environmentally and socially damaging activity in the industrial sector. Despite the industry contributing to almost 1% of the GDP, the industry delivers more social costs and benefits and thus major reforms are required in this sector if the industry is to be brought at an advantageous level.

Environmental Impacts
The main environmental impacts of operating brick kilns, which are particularly evident for the FCKs, are as follows:

• Health. Pollutants from brick kilns contribute to health problems of the exposed population. These include: (i) Adult mortality from cardiopulmonary diseases and lung cancer caused by long-term exposure (Pope et al. 2002); (ii) Infant and child mortality from respiratory diseases caused by short-term exposure (Ostro 2004); and (iii) All-age morbidity resulting from PM10 exposure (Ostro 1994; Abbey et al. 1995).
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