Bangladesh: Economic Development Issues and Analysis (ECON 213)

This report provides a comprehensive overview of Bangladesh's economic and social landscape. It begins with background information on population, demographics, history, and languages. The report then delves into economic growth, analyzing GDP per capita and inflation trends, and examines the banking sector, trade, and social aspects like education and literacy. A significant portion of the report is dedicated to analyzing major development issues, including poverty, political instability, infrastructure, corruption, and governance. Finally, the report proposes potential solutions to these issues, such as measures to curb corruption, improve infrastructure, increase investment in education and healthcare, aiming to foster sustainable economic and social progress. The report utilizes data and statistics from reputable sources such as the World Bank, CIA, and Transparency International, and concludes with a list of references.

Running head: BANGLADESH
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Bangladesh
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1.0. Background
1.1. Basic information
1.1.1. Population and Demographics
Bangladesh is a state in southern Asia and is situated on the Bay of Bengal and is
surrounded India on both sides although it has a small border with Burma. As per 2018
estimates, Bangladesh had a population of 159,453,001. Those aged between 25 and 54 form
40.07 percent of this population while those who are 65 years and over form 6.42 percent of the
population (Central Intelligence Agency (CIA), 2019). Approximately 98 percent of population
in this country is Bengalis, and the remaining portion is made up of Biharis and other groups.
1.1.2. History and Languages
The official language is Bangla, also called Bengali. Before being named Bangladesh,
this country was referred to as East Pakistan. The animosity, as well as the need for greater
independence between the western and eastern wings of Pakistan culminated in Bengali
Independence Movement (Central Intelligence Agency (CIA), 2019). This movement got support
from India and managed to achieve independence in 1971.
The government encountered severe issues and was overthrown by the military in 1975.
This situation instigated a chain of military coups that culminated in military-supported regime
and successive formation of the Bangladesh Nationalist Party in 1978. In 1981, the government
was also overthrown, resulting in establishment military-the supported regime until 1991 when
democratic elections were conducted. From this year, Bangladesh experienced democracy except
in 2007, when parliamentary elections were suspended by military-backed rule in an endeavor to

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fight corruption and restructure the political system (Central Intelligence Agency (CIA), 2019).
This country returned to democratic rule in 2008, and since then they have been democratic
elections.
1.2. Economic growth
1.2.1. GDP per capita
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
200
400
600
800
1000
1200
1400
1600
1800
2000
GDP per capita (constant 2010 US$)
Bangladesh
India
U.S Dollars (Thousand)
Figure 1: Source: The World Bank, 2019.
Real GDP per capita entails the GDP divided by the total population. Therefore, real
GDP per capita represents the output generated by every person in the economy. Changes in the
real GDP per capita depict fluctuations in economic performance as well as the living standards
of people. From the graph above, the real GDP per capita of Bangladesh has been rising since
2008. This scenario implies that this country is growing and also the living standards of citizens
are increasing. However, when compared to its neighbor, India, the GDP per capita in

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Bangladesh is lower. This scenario depicts that the economy of India is doing well compared to
that of Bangladesh.
1.2.2. Inflation
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Bangladesh - Inflation, consumer prices
(annual %)
Bangladesh - Inflation,
consumer prices (annual %)
%
Figure 2: Source: The World Bank, 2019.
Inflation is a continuous increase in the price level in an economy. The variation in the
price level from one year to another is appraised through the inflation rate. Since the happening
of the Global Financial Crisis (GFC) in 2008-2009, the highest level of inflation in Bangladesh
was experienced in 2011, that is, 11.40 percent. Since then, the inflation rate has remained above
5 percent.
1.2.3. Banking sector
The banking sector in Bangladesh has attained noteworthy momentum in recent years.
This sector has experienced modernization, expansion, the adoption of international principles,

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enhanced the supervisory and regulatory environment as well as adoption of technology (Habib,
2018). Despite this progress, the banking sector of this country is characterized by poor asset
quality and underdeveloped compared to its neighboring countries such as Thailand and India.
As of 31st December 2017, the prime lending rate in Bangladesh was 9.54% (Central Intelligence
Agency (CIA), 2019). As of March 2019, this rate was 9.5 showing that the lending rate has not
changed much since last year. Despite this, the number of bad loans in Bangladesh has been
growing. For instance, in 2018 December, the number of bad loans increased by 11.23 percent
(Uddin, 2018). The rise in the default rate will not only impact the commercial banks negatively
but also the entire economy.
1.2.4. Trade
In 2016 and 2017, Bangladesh exported products and services worth $34.14 billion and
$35.3 billion, respectively. Similarly, in 2016 and 2017, Bangladesh exported products and
services worth $40.28 billion and $47.56 billion, respectively (Central Intelligence Agency
(CIA), 2019). It is clear that in 2016 and 2017, Bangladesh imported more goods than it
exported. In 2017, the exports of products as a percentage of GDP in Bangladesh were 15.04%
whereas the imports of products as a percentage of GDP were 20.27% (Globaledge, 2019). In
2016, this country recorded a current account surplus of $1.391 billion while in 2017 it recorded
a current account deficit of $5.322 billion.
1.3. Social
In Bangladesh, the school life expectancy from primary to tertiary education is
approximately 11 years. The expenditure on education is quite low. For instance, in 2016,
education expenditure was 1.5% of the GDP. The literacy level as 2017 was 75.7% (Central

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Intelligence Agency (CIA), 2019). Although Bangladesh has improved on fighting poverty,
income inequality and poverty are still an issue of concern.
1.4. System of Government and Politics
Bangladesh has a parliamentary democracy with the Prime Minister as the head of
government and the President as the head of state. The government has three branches, namely
the judiciary, executive, and legislature and the current political party in power is Awami
League. Bangladesh is one of the countries in the globe with a high level of corruption. On
Transparency International ranking, Bangladesh has a score of 26 out of 100(Transparency
International, 2019). Furthermore, this country participates in several international organizations
such as the World Trade Organization (WTO).
2.0. Analysis
2.1. Major development issues in Bangladesh
Like any other country, Bangladesh is struggling with several problems that are
detrimental to its progress. Foremost, poverty is still rampant, and the gap between the haves and
have not is still wide. Since it gained independence, Bangladesh has experienced several military
coups. This situation shows that this country is yet to attain political stability that is conducive to
businesses. Apart from political instability, the business environment in this country is also
worsened by several problems. Some of these issues include poor infrastructure, rampant
corruption, and poor governance in the banking sector.
Some of the neighbors of Bangladesh such India have better infrastructure. Good
infrastructure has been a vital role in propelling India to economic prosperity. The government of
India has invested heavily in developing critical infrastructures like roads, railway, and ports.

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When it comes to corruption, India has a lower level of corruption compared to Bangladesh.
Furthermore, India has developed the banking industry is politically stable.
2.2. Solutions to Issues facing Bangladesh
Foremost, the government of Bangladesh should put stringent measures in place to
prevent the corruption and misuse of public resources. Corruption curtails the operations of
businesses as investors have to bribe government officials to get business permits or government
tenders. Therefore, the government should establish better systems that can detect incidences of
corruption. The corrupt officials should be prosecuted, and resources stolen recovered.
The government should set aside sufficient funds to improve the infrastructure of the
country. Better infrastructure draws investors due to the lower cost of doing businesses. Hence,
enhancing essential infrastructures such as roads, railway, and airports will help to attract both
foreign and local investors and thus contribute immensely to economic growth.
Furthermore, the government should increase its spending to boost education and health
care of citizens. Through better education, the government will increase the supply of highly
qualified personnel to deliver the needed labor. Since education provides equal opportunities to
all, it will also help to eradicate poverty and income inequality. Finally, a healthy population is
crucial since it will ensure the availability of labor and also reduce the time and costs used in
seeking health care.

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References
Central Intelligence Agency (CIA). (2019, May 13). SOUTH ASIA: BANGLADESH. Retrieved
May 17, 2019, from The World Factbook: https://www.cia.gov/library/publications/the-
world-factbook/geos/bg.html
Globaledge. (2019). Bangladesh: Economy. Retrieved May 17, 2019, from Globaledge:
https://globaledge.msu.edu/countries/bangladesh
Habib, S. M. (2018). Banking industry: Bangladesh perspective. Retrieved May 17, 2019, from
Financial Express: https://thefinancialexpress.com.bd/views/banking-industry-
bangladesh-perspective-1544538692
The World Bank. (2019). GDP per capita (constant 2010 US$). Retrieved May 17, 2019, from
https://data.worldbank.org/indicator/NY.GDP.PCAP.KD?locations=IN-BD
The World Bank. (2019). Inflation, consumer prices (annual %). Retrieved May 17, 2019, from
https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?
end=2017&locations=BD&start=1981
Transparency International. (2019). Bangladesh. Retrieved May 17, 2019, from
https://www.transparency.org/country/BGD#
Uddin, A. Z. (2018). Default loans at all-time high. Retrieved May 17, 2019, from The Daily
Star: https://www.thedailystar.net/business/default-loans-in-bangladesh-all-time-high-
1669894