The economy of Bangladesh is a free market. It is now ranked as the 44th largest economy in the world and has the second-highest economic growth rate.
Since 2004, this nation has seen a growth rate that has been pretty consistent at 6.5%. It reached 7.1% in 2016, and its current value is over $180 billion. By the year 2021, it is anticipated that this figure will have increased to $322 billion.
Industries like textiles, pharmaceuticals, leather, fisheries, steel, natural gas, shipbuilding, telecommunications, and food processing are necessary to Bangladesh’s economy. In addition, its finance industry is the second largest in the whole Indian subcontinent.
Investors from other countries have been interested in this economy because of its moderate degree of volatility. In 2015, direct investments from overseas topped 2 million dollars, a 44% increase over 2014.
These investments were made in several of the businesses discussed before and in the production of oil and electricity.
One of the reasons why Bangladesh is appealing to a large number of international investors is because of its open policy, which permits the use of 100% foreign investment in specific industries.
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The Modern Economy Of Bangladesh And Its History
In 1971, Bangladesh successfully wrested its independence from Pakistan. During that period, the newly formed nation based its economic system on socialist principles. All of the country’s businesses were nationalized and controlled by the state under this system.
This decision led to sluggish economic expansion, food shortages, and inefficient manufacture of commodities. The inefficiencies resulted in the loss of outside customers. This, however, was no longer the case in 1975, when the government of Bangladesh began its work to restructure the economy.
The reform made it possible for private sector members to participate in the market. The government made slow but steady progress on privatizing state-owned firms, such as those in the telecoms, banking, media, and jute production industries.
By the 1980s, there were signs of progress across the country, and legislation was enacted to facilitate the increasing privatization of industry.
During the 1990s, internal political instability led to a failure to adhere to structural adjustment policies recommended by the International Monetary Fund (IMF), which led to a decline in international investors.
Between 2003 and 2010, Bangladesh was granted access to several different lines of credit. These lines of credit included $70 million from an IMF plan to reduce poverty worth $490 million, $536 million in interest-free loans from the World Bank, and a $1 billion line of credit from India.
The nation’s foreign reserve holdings have grown to $30 billion.
The Most Important Aspects Of Bangladesh’s Economic System
Agriculture, manufacturing, and the financial industry are the three most significant contributors to Bangladesh’s economy.
Agriculture
Agriculture is the primary means of subsistence for a significant proportion of Bangladesh’s people. Rice is the most important crop, although jute, corn, and several different types of vegetables are all becoming increasingly important. Many individuals in Bangladesh are forced to go hungry due to the country’s rapidly expanding population.
Expansion opportunities are hampered when there is a risk of adverse weather and natural calamities. In addition, there has been an increase in the number of people living in rural regions who do not own land.
The inherent dangers of agricultural production have hampered investments in innovative farming techniques.
Manufacturing
When it comes to contributions to the economy, the garment industry is far and away the leader. Clothing manufacturers are responsible for nearly 3 million employees, the vast majority of which women hold.
Despite recent increases, wages remain among the lowest in the world, even though the minimum wage has been raised.
The textile and apparel sector currently accounts for 80 percent of the nation’s exports. Bangladesh is the second largest exporter of textiles in the world. Shipbuilding, medicines, leather goods, and the information technology sector are some more examples of manufacturing businesses.
Finance
As noted earlier, the state-controlled Bangladesh’s banking industry until the 1980s. The creation of risk-based rules was a primary emphasis for the nation between 2000 and 2006.
There are now 39 private banks, 9 commercial banks owned by foreign countries, and 4 specialized banks controlled by the government.