Understanding Poverty: Case Study of Bangladesh

This report discusses poverty in Bangladesh, its causes, and implications. It also recommends possible strategies to combat the problem efficiently.

Running head: UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
Understanding Poverty: Case Study of Bangladesh
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1UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
Table of Contents
Introduction................................................................................................................................2
Poverty: Definition, measurements and implications................................................................3
Bangladesh: Economic overview...............................................................................................3
Poverty in Bangladesh................................................................................................................4
Factors affecting the poverty issues in Bangladesh...................................................................6
Lack of education in Bangladesh...........................................................................................7
Impacts of lack of proper education.......................................................................................9
Lack of employment opportunities in Bangladesh...............................................................10
Implications on poverty levels of the country......................................................................12
Recommendation and Conclusion............................................................................................12
References................................................................................................................................14

2UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
Introduction
The wellbeing of people in any country across the globe is remains hugely dependent
on the overall social, political and economic performance of the country, which in turn can be
seen from the different indicators for measurement of these performances. Of these, the
economic performance of the country significantly influences the overall welfare of the
residents of the same as much of their employment status, purchasing power, income level,
economic abundance and standard of living, are dependent on the same (Agénor and Montiel
2015).
The economic aspects of different countries in the global framework, however, are
often subjected to several evils, of which one of the most significant and persistent one is that
of poverty. The term “Poverty” denotes that state of a person or a section of the population of
a region, where they suffer from the lack of access to basic materialistic amenities and to the
basic requirements for sustenance (Pearce, Barbier and Markandya 2013). The notion of
poverty is a multifaceted concept, including political, economic and social components,
having widespread and multidimensional implications, not only on the life of the residents of
the country but also on the overall economic health of the country as well. Poverty in an
economy, is again influenced by various inherent as well as exogenous factors present in the
economy (Ravallion 2017).
Keeping this into consideration, the concerned report tries to discuss the concept of
poverty in the context of the economy of Bangladesh, which has been facing this economic
evil for a prolonged period. The report also tries to draw the linkage of the presence of
poverty with the possible causal factors for the same, mainly those of lack of educational
scopes and presence of high unemployment, in Bangladesh, thereby recommending possible

3UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
strategy options which can be taken up and implemented by the government of the country to
combat the problem efficiently.
Poverty: Definition, measurements and implications
Poverty, as discussed above, is the lack of ability of people to meet their basic
sustenance needs and the pronounced deprivation in the wellbeing of the individuals of a
country. The same is generally measured in terms of the income earned by the people of a
country. In general, poverty, in its absolute sense, is measured in a country, by designating
the basic income level required by the people in the concerned country to meet the basic
requirements for sustaining and then calculating the share of population in the country who
are unable to achieve the target level of income (Barrett and Carter 2013). The targeted
minimum level is usually known as the “Poverty Line” and the same varies across different
countries.
Bangladesh: Economic overview
To understand the extent and magnitude of poverty in Bangladesh, it is of immense
importance to analyse the overall economic conditions of the concerned country. The
country, with 43rd rank in the global economy in nominal terms, is a market-based developing
economy, which is also classified among the eleven middle-income countries as the “Next
Eleven Emerging Market Income” (Rahman 2013). The country has a dominant agriculture
sector, which is also the source of major exports of the country, followed by the basic
manufacturing sector. The economy of the country has however, over the years, experienced
considerable growth in the last few decades, which can be seen as follows:

4UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
Figure 1: GDP of Bangladesh over the years
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, the GDP of the country has increased over the
last few decades, with the increase being more evident especially from 2002. The economic
growth of the country has been impressive in the last few years, much of which can be
attributed to the expansion of the industrial sector to a considerable extent and the country,
being a middle-income, is expected to be emerging as one of the global economies in the
coming years (Barai 2012). However, in spite of the robust economic growth of the country,
Bangladesh can be seen to be reeling under the pressure of several socio-economic issues,
primary one of which is that of persistent and long-term poverty in the country over the years.
Poverty in Bangladesh
The economy of Bangladesh has been suffering from long term and acute problems of
poverty in spite of being an independent country for nearly fifty years. The extent of poverty
in Bangladesh can be seen from the following figure:

5UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
Figure 2: Poverty Headcount Ratio of Bangladesh at the national poverty line
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, in spite of the considerable fall in the percentage
of population living below the poverty line of Bangladesh, there still remains considerably
high percentage of population below the same for Bangladesh, as compared to other middle-
income countries (Manni and Afzal 2012). The poverty line of the country is almost
equivalent to USD 2 per day and in the contemporary period (as can be seen in 2010) the
percentage of population of the country living below the poverty line is more than 30%,
which is much higher than that of India, Bhutan, Nepal, South Asia and Sri Lanka.
In this context, the concept of Purchasing Power Parity needs to be introduced, which
shows the amount of domestic currency of a country which is required to buy the same
commodity basket which can be bought by the numeraire currency (usually USD) taken as
the yardstick, in the country where the numeraire currency is used (conventionally the United
State of America). When seen from the aspects of purchasing power adjusted scenario, this
difference is seen to be even more acute Bangladesh can be seen to be lagging more behind
the other middle-income countries with highest percentage of people living below the PPP
incorporated income poverty line, which can be seen as follows:

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Figure 3: Percentage of the total population living below income poverty line (PPP
incorporated) for different countries
(Source: Scroll.in 2018)
This in turn indicates towards the lack of purchasing power in the hands of major
share of the population of the country, which is the reflection of the presence of poverty as a
serious problem in the concerned country, over the years (Imai and Azam 2012). The long-
term poverty crisis in the country can be attributed to various inherent issues in the country,
which are discussed in the following section of the report.
Factors affecting the poverty issues in Bangladesh
As discussed above, the economy of Bangladesh, over the decades, experience visibly
high levels of poverty, which seem to be sustaining and a long-term attribute of the country,
thereby affecting the lives of major share of the population in the country and the overall
health of the economy and its growth dynamics negatively.
There are different factors contributing to the acute as well as extensive levels of
poverty in the country, the primary ones being the lack of proper education facilities,

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especially for the under-privileged share of the population and also the presence of high
unemployment in the country, the two aspects being again interrelated (Khandker 2012).
Lack of education in Bangladesh
In spite of getting its freedom nearly fifty years, the education sector of Bangladesh
has remained considerably underdeveloped over the years. The extent of spread of education
among the population of a country can be broadly measured with the help of literacy rate,
which measures the dynamics in the share of population in the country who are literate. In
case of Bangladesh, the literacy rate can be seen to be experience the following dynamics:
Figure 4: Adult Literacy Rate in Bangladesh over the years
(Source: Knoema.com 2018)
The adult literacy rate, measuring the literacy rate of the population of age fifteen
years and above, in case of Bangladesh, can be seen to be rising over the years. In 1981, the
rate can be seen to be strikingly low (below 30%), which over the least few decades have
increased consistently, with the rate of increase slowing down to some extent in the recent

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period. The adult literacy rate in the country can be seen to be nearly 61.5% in the current
period (2015), which thought better than the situation prevailing in the education sector of the
country in 1981, can still be found to be comparatively much lower than many other countries
which started of from the same position as that of the country itself (Greenwatchbd.com
2018).
There are several structural problems underlying the education sector of the country,
some of the most crucial ones being as follows:
1. Lack of service providers- Bangladesh has one of the largest primary education
framework in the global scenario with nearly 37,670 government primary schools and with
nearly 10.7 million children between 6 years to 10 years of age who are supposed to avail
these services. However, the country suffers from lack of human resources in this sector.
There is an acute lack of qualified teachers in the country which in turn leads to the presence
of only one teacher for 53 students, while the general international standard for the same is
1:30 (Schreiner 2016). Also, apart from that, nearly 6,300 primary schools in the country
suffer from the lack of a headmaster.
2. Lack of amenities- Apart from the lack of teachers and other human capital resources
required in the education sector, the same in the concerned country also suffers from a
general lack in the aspects of basic school amenities like that of classrooms, libraries,
playgrounds, laboratories and others.
3. Stalled innovations and lack of inclusiveness- The teaching system in the country is very
much rigid as the teachers and the other service providers, mostly try to stick to the
conventional norms of knowledge imparting and do not usually take into account or
implement newer and more innovative methods. This in turn leads to the absence of industrial
or job-oriented education in the country, which in turn hampers the skill development of the

9UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
potential labour force, thereby hampering the employment prospects of the same, increasing
the probability of poverty in the country (Khan et al. 2012).
Impacts of lack of proper education
The lack of proper and age-appropriate job-specific education provision leads to the
following effects on the youth of the society, thereby affecting the society as a whole, which
are as follows:
 Lack of proper professional and technological skills
 Lack of capability of getting absorbed in economic welfare increasing employment
 Lack of capability of creating self-employment
 Inability to participate in the decision-making processes
 No development of leadership qualities
 Increased involvement of the youth in the anti-social activities
 Overall stagnation in productivity
 Lower standard of living (Sultana)
Together the absence of proper and job-oriented education in the country can be seen
to be affecting the total skill development of the country which in turn leads to lower ability
of the population to get engaged in productive economic activities, thereby decreasing their
overall welfare in terms of economic abundance. Due to lack of proper skill development, the
economy can also be seen to be experiencing stagnation, in the aspects of development,
thereby leading to sustained low levels of living and increased poverty levels in the country
over the years (Malak 2013).
This in turn, is a vicious cycle as with the lack of proper education, proper and
productive employment opportunities for the population of a country decreases, which in turn
leads to economic scarcity and lack of income among the population, thereby affecting the

10UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
aggregate demand negatively, which in turn decreases the overall productivity of the country,
thereby aggravating the poverty in the country.
Lack of employment opportunities in Bangladesh
Another aspect in the economy of the country which is directly affected by the
absence of proper job-oriented educational opportunities and which has direct implications on
the poverty crisis in the country is the lack of generation of enough employment and labour
market growth in the economy of the county over the years. The overall conditions of the
labour market of the country can be seen broadly from the rate of unemployment prevailing
in the country over the years, which measures the total share of the population in the labour
force of the country who are eligible and willing to work but do not get the opportunity to
engage in any kind of employment in the country. In case of Bangladesh, the same can be
seen as follows:
Figure 5: Rate of unemployment in Bangladesh (2000-2018)
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, the rate of unemployment which was 3.3% in
2001, increased to as high as 4.5% in 2004. The rate of unemployment then decreased
drastically to 3% post 2007, before rising strikingly to 5% in 2009. The rate of

11UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
unemployment then decreased to some extent post 2010. However, the rate of
unemployment, from 2010 to the current period, can be seen to be remaining at a moderately
high level (varying between the range of 4% to 4.5%).
However, the creation of employment, has not also been uniform in all the sectors of
the economy, as can be seen as following diagram:
Figure 6: Distribution of employment by sectors in the economy of Bangladesh
(Source: Statista 2018)
As can be seen from the above figure the lions’ share of the employment generation in
the country, over the years has been in the agricultural sector, with the share of employment
in the same sector being 62.1% in 2000. The share of employment in the agricultural sector
decreased over the years. However, in the contemporary period (in the year 2010), the
employment in the agricultural sector can be seen to be still as high as 47.49%. Compared to
that the industrial sector can be seen to be contributing nearly 17.71% of the total

12UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
employment generation and the service sector contributing nearly 35.31% of the total
employment in the country (Chowdhury and Hossain 2014).
Implications on poverty levels of the country
The moderately high unemployment trends in the country is expected to have direct
negative implications on the poverty levels of the country. On the other hand, the main
attribute of the employment trend in the country is that a major share of the employed
population of the country is absorbed in the agricultural sector, which is a low-wage
subsistence sector with less contribution to the economic welfare of the population of the
country.
Figure 7: Average nominal monthly wages of Bangladesh
(Source: Rmg-study.cpd.org.bd 2018)
The average wage level in the country can also be seen to be visibly low. This
together with the unemployment rate and the employment trends contribute towards the

13UNDERSTANDING POVERTY: CASE STUDY OF BANGLADESH
poverty crisis in the economy of the country as can be seen to be existing in the contemporary
period.
Recommendation and Conclusion
As is evident from the above discussion, the economy of Bangladesh, in spite of being
one of the eminent and emerging middle-income countries in the contemporary global
scenario, has been experiencing poverty crisis for a prolonged period of time, much of which
can be attributed to the lack of proper education and employment opportunities. The
government in this context, need to build up human capital in the educational sector by
providing the teachers with proper wages and incentives and also need to bear the expenses
of provision of primary education to the underprivileged children in the country. The schools
and the learning centres need to be more well-equipped and filled with amenities to attract
more number of students in the coming years. Apart from that, employment generating and
skill developing education also needs to be imparted to develop a productive labour force in
the country. The government also needs to emphasize on developing the industrial and the
service sector of the country in order to generate more number and higher quality of
employments to rule out the poverty crisis in the economy. All these factors can cumulatively
help in combating the problem of poverty in the country to a considerable extent in the
coming years.

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