INDEPENDENT UNIVERSITY,

BANGLADESH

Economy of Bangladesh
ECN 220
Name: Deepita Muhaimen
ID: 0730149

Introduction
I chose the topic agriculture transformation in Bangladesh because of its importance both
practically and theoretically. Agriculture plays a pivotal role in Bangladeshs economy and in the lives of
the vast majority of its population. While this crucial sector accounts for about one fourth (19.6%) of
Bangladeshs Gross Domestic Product (GDP), and 63% of the national employment, it faces serious
challenges posed by low productivity and the decline of land availability. The situation is further
aggravated due to global warming scenarios. The GDP share of individual sub sectors are about 13% for
crops, 3% for livestock, 5% for fisheries and 2% for forestry.
Bangladesh is the most densely populated country in the world (953 person/sq km). The
per capita arable land is only 0.05 ha. In 1901 an average of 216 persons inhabited one square kilometer.
By 1951 that number had increased to 312 per square kilometer and, in 1988, reached 821. By the year
2000, population density was projected to exceed 1,000 persons per square kilometer. While there have
been significant achievements is family planning, the population continues to grow at a rate of 2.02% in
the year 2008, the level of urbanization remains low at 20%. This leaves 80% of the country's total
population of about 120 million to live in the rural areas which primarily depend on a poorly developed
agriculture for livelihood. The rapid growth in population with the decline in cultivable land threatened to
be a big problem for Bangladesh.
At present, Bangladesh has a population of about 132 million. The total
Geographical area of Bangladesh is about 56,000 square miles. (143,998 square
Kilometer) out of which about 9 million hectares are cultivable land. But every year the cropland is
shrinking for human settlement. It is estimated that the growing population pressure will use up 50 per
cent of the countrys cultivable land by 2025.Urbanization, industrialization and acquisition of land by
the government for different purposes have been causing negative impact on the life and conditions of the

peasants as well as socio-economic scenario of the country. Vast areas of land are also taken up by the
mighty rivers of Bangladesh. Moreover, land is fragmented every year in rural and urban areas due to
growing population and the law of inheritance. Every person working in the agriculture sector now owns
only an average of 0.12 hectares of cropland. According to the classification of land, out of the total area,
63 per cent are being used for cultivation while 4.38 per cent for rural and urban housing and the rest
includes forest & cultivable waste land.
In Bangladesh, most of the people living beneath the poverty line are farmers. These are the
people to grow the food that feeds us, but they themselves go hungry. This is mostly because natural
resource tends to an excessive amount of labor in its extraction. This causes a misallocation of labor so
that there is a productivity loss. For example, an unskilled rural adult who could earn about TK. 115 per
day working in the informal sector of the economy ( as a rickshaw puller, porter etc) ends up earning
only TK 55 per day as a fisherman. This adds up to a total of TK 60 of productivity loss per head per day.
The share of GDP in agriculture and its price is declining because there are too many people and
in this sector. Even though income is increasing for people working in service and industries sector, the
amount of food they consume is not increasing as much. But their demand for other goods is increasing,
hence creating more job opportunities in the non-farm sector.

Literature:
Many studies have been done on Bangladesh agriculture, and the following states some of the major
findings and thoughts of economists working in this sector.
Ren Dumont (March 13, 1904June 18, 2001) was a French engineer in agronomy, a sociologist, and
an environmental politician. Dumont started his career as a promoter of the use of chemical fertilizers and
mechanization. he traveled widely and had a good understanding of farming issues in underdeveloped
countries.
He was preaching for

demographic control

energy savings

international cooperation to help poor nations

soil quality preservation and remediation

He considered development not to be so much a question of money, fertilizer, or seeds, but a carefully
balanced result of the three. He advocated relations between humans and their fields relied foremost on
relations between humans themselves, social relationships being the basis for a proper agricultural and
industrial development.
Dumont was one of the first to explain the consequences of what was to be
called globalization, demographic explosion, productivism, pollution, shantytowns, malnutrition, rift
between northern and southern countries. He was also one of the first to use the word "dveloppement
durable" (sustainable development).

Dr. Ric Shand, Executive Director, Australia South Asia Research Centre,
Australian National University, presented his paper on Economic Reforms and the Poor: Unearthing
New Linkages.
Dr. Shand argued that causality in growth from agriculture-to-industry could occur through both
production and consumption linkages. On the production side, growth in agricultural output increased
supplies of raw materials for processing, stimulated the demand for industrial inputs such as fertilisers
and pesticides, pump sets, tractors and agricultural equipment, and raised investment. On the
consumption side, higher agricultural incomes raised demand for consumer goods produced by the
manufacturing sector. Thus output, employment, wage levels, incomes and investment were raised in the
manufacturing sector.
He also argued that causality in growth from manufacturing-to-agriculture operates through
higher employment, wages, and incomes in manufacturing. These led to increased demand for
agricultural products. Thus growth in manufacturing output led to higher output, employment, wage
levels and incomes in agriculture and might stimulate increased investment in agriculture. These
relationships would be stronger if the location of manufacturing was rural based and if it was supported
by public investment, particularly in physical infrastructure linking manufacturing locations with rural
markets. In this process, expanding availability and variety of consumer goods in rural areas might also
act as a stimulus to the aspirations of rural producers and thus indirectly lead to further expansion of
agricultural production provided profitable opportunities exist. This again was all the more likely if
transaction costs of marketing were lowered in rural areas with improvements in infrastructure, and if
manufacturers of consumer goods target growing rural markets.

Dr. Ric Shand finally argued that absolute poverty could be reduced more speedily in the
future provided direct reforms are implemented which would encourage faster growth rates of
agriculture and of labour intensive manufacturing.
More rapid growth in each sector would not only increase employment and wage levels within
the sectors but would strengthen unidirectional growth relationships between the sectors. To the extent the
incidence of bi-directional relationships could be increased, synergistic growth of both sectors was
possible, further enhancing the growth contributions of each sector. The addition of the contribution of
strong sectoral interrelationships could significantly raise the overall growth rate of the economy.
According to Mahbub Robbani, Salah Uddin Siddiquee, Sourovi Zaman, and Hiroshi Nakamura,
faculty members in Shinshu University, for a developing country like Bangladesh, self sufficiency will
remain the key focus of food production strategy, in order to meet food deficiency. Bangladesh
agriculture is now in the process of transforming from subsistence farming into commercial farming.
Bangladesh has now entered into the European market of exports for vegetables and other high value
crops. This process opens a vista to private sector investment in the areas of production of high value
crops, seeds (esp. hybrid seeds), agro-processing enterprise etc. An investigation by Food and Agriculture
Organization (FAO) of the United Nations on the current status of land productivity in Bangladesh
revealed that there is a general trend towards declining and stagnating crop yield. These adverse trends
are considered to be due to intensive cropping through indiscriminate use of fertilizers, pesticides, use of
water irrigation, total removal of biomass from the agricultural fields.
Opportunities in the agricultural sector are:
1) agriculture is the single largest contributor to GDP.
2) Crop production system is highly labou intensive and there is abundance of labor in the county
3) Agriculture is the largest source if employment for skilled and unskilled labor

4) Favorable natural environment gemerally exist throughout the year for crop produ tion
5) Wide range of biodiversity exists for different crops,
6) Agriculture commodities are the main source of nutrition including protein, minerals and vitamins

Constraint in the agricultural sector:

1) Agriculture is dependent on the vagaries of nature and is risky
2) Availability of cultivable land in decreasing
3) Widespread poverty among the population engaged in agriculture
4) Lack of required capital for agricultural activity
5) In adequacy of appropriate technology considering farmers socio-economic conditions
6) Uncertainly of fair price of agricultural commodity due to underdeveloped marketing system
7) Agricultural commodities and rapidly perishable and post harvest losses are too high
8) Limited knowledge of common people about nutritional value on agricultural commodities
including fruits and vegetables.

Agriculture development strategy:

The government commitments towards the agricultural development include:
1) Timely supply of agricultural inputs at affordable prices
2) Appropriate action plan for agricultural credit and marketing of agricultural products
3) Government support to agriculture
4) Priority for the development of agro-based small and medium industries
5) Enhanced rate of private sector participation in different sectors of agriculture i.e. seeds,
fertilizers, agro machinery and also in established agribusiness

6) Agricultural mechanization
7) Pest management
8) Greater co-ordination between the government, NGOs and private sectors
9) Food based nutrition
10) Environmental protection in agriculture and finally involvement of women in agriculture.
11) Involvement of women in agriculture.
According to official statistics, the real value of all crops and of agricultural production rose every
year in the 1980s, but except for a 6.1-percent surge in FY 1981, the gains did not exceed 3.8 percent,
and in 3 of the years it was less than 1 percent. The goal of food self-sufficiency by 1990 was asserted as
part of the Third Five-Year Plan, but it could be achieved only under optimal conditions. Bangladesh was
still importing an average of 2 million tons of food grains each year to meet minimum needs for the
subsistence of the population. Most of the imports were on a grant or concessional basis from the United
States, the World Food Programme, or other food aid donors. The 3 main cropsrice, jute, and tea
have dominated agricultural exports for decades, although the rice is grown almost entirely for domestic
consumption, while jute and tea are the main export earners. In addition to these products, Bangladeshi
farmers produce sugarcane, tobacco, cotton, and various fruits and vegetables (sweet potatoes, bananas,
pineapples, etc.) for the domestic market. Fishing is another important activity in the country,
contributing 4.9% to the GDP and providing about 6% of the total export income. The overall fish
production was around 1.6 million metric tons Bangladesh mainly exports its shrimp to the international
market.
Rice is the staple food in the everyday diet of Bangladeshis. The production of rice, which can be
harvested 2 or even 3 times a year, reached 19.9 million metric tons in 1998-99. The production of wheat
reached about 2 million metric tons in 1998-99. Both crops play an important role in achieving self-

sufficiency in food production. However, due to weather conditions the production of rice and wheat
fluctuate greatly, forcing Bangladesh to import food from the international market or turn to international
aid. Bangladesh imported 1.6 million tons of wheat (mainly from the United States) in 2000 in order to
meet the demand in the local market.
Jute, often called the "golden fibre" of Bengal, is the main export-earner for Bangladeshi
agriculture, as Bangladesh remains the world's second-largest producer of jute (after India) and the
world's largest exporter of fiber. Jute is traditionally used for the fiber of carpet backing, burlap bags,
cheap paper, and various other purposes. Its importance for the Bangladeshi economy comes from the
fact that almost 3 million farms are involved in jute production. In 1999 Bangladeshi export earnings
from jute amounted to US$55 million, with the country producing 720,000 metric tons of jute, although
this is about one-third of the jute production of the middle of the 1980s. The decline in jute production is
attributed to declining world prices for this crop and to farmers switching to other crops.
Table 1:Agriculture of Bangladesh at a glance( Agriculture census 2008):
SL. No.
1
2

Data Item
Total Dwelling
Households
Agriculture
Labor
Households
Percent of Total
Households
Households with
no own land
Percent of Total
Households
Tenant
Households
Percent of Total
Households
Farm
Households

National
28,670

Urban
3,315

Rural
25,335

8,927

78

8,849

31.14

2.35

34.90

4,477

1,221

3,256

15.62

36.83

12.84

38,418

460

7,958

29.36

13.86

31.39

14,717

330

14,387

Percent of Total

51.33

9.94

56.74

Households
6
Hybrid Boro
Rice Cultivators
Percent of Farm
Households
BBS, Agriculture Census 2008,Table 5.6

BBS: Statistical yearbook 2007

2,775

50

2,725

18.85

15.12

18.94

Data Analysis
Overall decline of agricultural shares in GDP
In 1970, Bangladesh's agricultural sector consisted, mainly rice and jute. Rice is the staple food in
Bangladesh and dominated three- fourths of the total cultivable land. Rice was also a major source of
income and employment fir the foreign exchange that helped the finance of development activities. The
growth in the agricultural sector centered on the growth in the increase in rice production. But gradually,
the overall share of agriculture in GDP is declining.
Engles law states that as income rises, food consumption does not increase in the same proportion. As a
result, most people in Bangladesh living below the poverty line are farmers.
1) By Engles law it shows that share of agro in GDP will continue to decline. It indicates that
people will have to move out of this sector.
2) So people will have to move into industry and service sector
3) Prebisch thesis states that terms of trade deteriorates in rural areas compared to urban areas. The
price of agro products in actually decreasing in real terms. { financial repression( high interest
rate) + deteriorating term of trade= transfer of assets from rural areas to urban areas.
Another factor responsible for the poverty among farmers and the decline of agro share in GDP, is
capitalism. Capitalism leads to a decrease in cost (economies of scale) and hence an increase in
production. Since most crops are cultivated outside the cities and in rural areas, economies of scale is not
possible as rural area can not undertake massive production, or any production except cottage industry,
because there are not enough people in rural areas. The lack of people makes it impossible to enjoy
economies of scale, and scope and neither of these are possible in cottage industries. Furthermore, since
farmers live in rural areas and mostly sell their products (what is left after own consumption) in urban
areas, they do not enjoy economies of nearness. It is often seen that the cost of transporting agricultural
products to cities leaves a huge dent in the farmers net income.

Sectoral shares of GDP in Bangladesh at current prices(as %)

Source: BBS:Statistical Yearbook 1986 Table 11.5, 1996 Table 11.05, 2008

1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08

Large
Small
Agriculture Crops
Forestry Livestock Fisheries Industry Scale
Scale
46.7
35.9
2.5
5.3
3
9.8
5.7
4.1
45.9
35.8
2.4
4.8
2.9
9.7
5.6
4.1
47.1
36.2
3
5.1
2.8
9.7
5.4
4.3
48.4
37.1
3.4
4.8
3.1
8.8
4.9
3.9
50.1
36.9
3.3
6.4
3.5
8.3
4.6
3.7
51.6
37.8
3.4
6.8
3.6
7.8
4.4
3.4
36.38
26.32
3.59
3.43
3.49
8.74
5.09
3.65
36.03
26.11
3.43
3.18
3.31
8.73
5.07
3.66
34.47
24.54
3.42
3.1
3.41
9.11
5.44
3.7
30.47
19.48
3.42
3.34
4.23
9.7
6.02
3.68
29.69
18.21
3.27
3.5
4.7
9.85
6.24
3.6
30.88
19.24
3.33
3.45
4.86
9.63
6.25
3.38
29.96
18.07
3.31
3.6
4.98
9.56
6.25
3.31
19.67
14.59
1.89
3.19
5.67
15.88
11.29
4.59
19.35
14.33
1.9
3.12
5.93
15.6
11.2
4.4
19.49
14.59
1.88
3.02
6.09
15.4
11.01
4.39
19.51
14.7
1.87
2.95
5.51
15.59
11.13
4.46
18.58
13.75
1.88
2.96
5.4
15.76
11.16
4.6
18.22
13.43
1.86
2.93
5.25
15.97
11.29
4.68
17.97
13.23
1.83
2.91
5.11
16.16
11.41
4.76
17.27
12.51
1.82
2.95
5
16.51
11.66
4.85
16.98
12.28
1.79
2.92
4.68
17.08
12.14
4.94
16.64
12
1.76
2.88
4.73
17.55
12.47
5.08
16.23
11.7
1.75
2.79
4.64
17.77
12.6
5.16

Rural to urban migration

In recent years, Bangladesh has also seen an explosive go growth of urban population fuelled by
never-ending and increase in migration rural of workers to the urban areas. Despite the green revolution,
the rural areas cannot offer jobs to the young people of today who have come to expect wealth. They
have come to urban areas in large numbers to look for jobs that are not available. The Harris-Todaro
migration model explains this nicely:
equilibrium real wage (rural) = expected urban wage
Expected wage = wage * probability of employment
Problem with model: does not consider factors behind productivity difference and wage difference;
assumes that rural and urban wage will be same. It does not recognize the productivity differential owing
to high density of infrastructure in the cities with economies of scale, scope and nearness.
Bangladesh experienced a rapid growth in urbanization since 1961. The proportion of urban population
increased gradually from 5.2% in 1961 to 20% in 1991 with an average growth of about 7% per. year.
Inability of rural economy and agriculture to absorb the growing population, a drastic fall in the
availability of arable and cropped land, landlessness, fall of real income pushed rural people to migrate to
the cities. Unfortunately majority of the recently migrated people could not be provided with good job in

the formal sectors and accommodation in the cities and most them are living in urban slums. The urban
areas

expanded

in

an
Year

Both
Sex

Male

Female

and

1984
1991

4.29
5.62

3.82
4.29

4.8
5.73

public amenities and facilities

2001

11.98

11.67

12.13

unplanned
adequate

way

without

infrastructure

including housing, water and power supply, sanitation, waste disposal rather increasing air and water
pollution in the city areas.

Rural to urban migration in Bangladesh

Source: population census 2001 table 3.6

From the figure we see more females migrate to urban areas. This might be because of the fact
that they get married to guys living in urban areas, or they come to urban areas looking for jobs in
garments industries and as household maids.

The change in overall composition of agriculture

The overall performance of the agriculture sector in a1980s compared to the long-term trend can
be reviewed from table1. The growth of the agriculture sectors as a whole has been spectacular in the late
1990s at 4.8 percent per year compared to the long-term growth of 2.6 percent since independence. It is
the acceleration of the agriculture growth that contributed to improved performance of the overall
economy. The annual growth of the GDP increased to 5.6 percent in the late 1990s from 4.5 percent in
the early 1990s and the long-term growth of 4.1 percent during the pervious two decades.

The overall performance on the agriculture sector in recent years can be noted in the following table:
Overall trend:

1980-81
1985-86
1989-90
1995-96
2000-01
2004-05
2007-08

Agriculture
46.7
51.6
36.38
29.96
19.51
17.27
16.23

Crops
35.9
37.8
26.32
18.07
14.7
12.51
11.7

Forestry
2.5
3.4
3.59
3.31
1.87
1.82
1.75

Livestock
5.3
6.8
3.43
3.6
2.95
2.95
2.79

Source:BBS, Statistical yearbook 1986, 96,2008

Fisheries
3
3.6
3.49
4.98
5.51
5
4.64

The non crop agriculture sectors are forestry fisheries and livestock. The dramatic growth in the
non-crop agriculture sector becomes visible since the late 1980s, stirred by the accelerated economic
growth. The high income elasticity of demand for the non- crop agro products was highly visible in the
late 1990s. The growth in the crop sector was accelerated to 4.3 percent compared to 4.0 percent for the
late 1990s and complete stagnation in the early 90s. An important point to note that would have
implication for changing strategies and policies for promoting and sustaining future development is that
agriculture sector is now much more diversified than at the time of independence. The share of livestock,
fisheries and forestry in agriculture value added was nearly 20 percent during 1973-74 by 1998-99 they
contributed 42 percent to agriculture incomes.
Commercialization, monetization and mechanization
In terms of employment, Bangladesh still consists of mostly farmers. Agriculture is a subsistence
occupation. People produced what they could consume. Not much buying and selling. Farmers only
bought things like ploughs and pottery etc. Agriculture was a very stagnant sector of productivity.
However total quantity kept increasing due to increase in population. Preponderance of subsistence
agriculture existed in Bangladesh until recently. Now about 50% of what is produced is consumed by the
producer and the rest is sold for profit. What was before a subsistence economy started becoming a
commercialized one fast. After 1947 a slow progress began in terms of technology, and money transition
in effect commercialization came into play, in 1965 green revolution started with the help of the govt.
Rapid urbanization and modernization led to fast growth of agro-production. Since population was
increasing dramatically till very recent years, demand for agricultural goods was also increasing .This
led to a fast rise in nominal price and hence incentive for commercial production.

The serious scarcity of draft power necessitates the use of mechanical power for agricultural
production. The govt. has therefore attached a special importance to agricultural mechanization. The
following steps are being taken by the govt. to promote agriculture mechanization:
1) In order to reduce dependence in draft power, efforts will be made to grow farmers interest on
mechanization as well as provide credit facilities.
2) Production and import of agricultural machines is specially being encourages so the farmers can
procure machines from the market according to their choice and convenience.
3) Machinery workshops and industries engaged in agricultural mechanization activities will me
provided with appropriate taxes/ duties facilities for the import of raw materials. This is expected to
keep price within purchasing capacity of farmer.
Mechanization in agro production process has been recognized as a potential contributor for
advancement in rural economies through rural income generation. Most farms now use machine for
land preparation of potatoes (72%), followed by Boro rice (65%) and aman rice (56%). Irrigation is
mainly dependent on the power-operated pumps.
The effects of mechanization are:
Increase yield per unit of land and hence to increase in cropping intensity through timeliness of
cropping
Increases yield through improved water control, better soil preparation and better harvesting and
post- harvesting processing.
Reduced cost of cultivation and add value to production.
Following operations of the agricultural production and processing have been mechanized to
greater extent in the country.
Land preparation- tillage

 Irrigation
Chemical spraying
Husking and milling
Non-farm sectors of rural areas
A significant development in the rural economy relates to changes in livelihood systems
and expansion of rural non-farm sector. In Bangladesh, the labor force grew at a much higher
rate than the population and demand for labor. During 1961-1991, the total population increased
from 50.8 million to 111.5 million an increase of 120 percent while the labor force grew from
16.9 million to 51.2 million an increase of 203 percent. In terms of employment, agriculture
was the largest sector and recent employment generation has taken place mostly in the informal
sector. (This indicates a growing informalization of the labor market. )
In rural areas, dependence on agriculture for livelihood shows declining trends, with increasing
importance of rural non-farm activities.
Table 3: Annual Growth Rates of GDP
(Percent)
Item
A. GDP
1. Agricultural GDP

1984-1999
4.4
2.3

1984-1992
3.9
2.0

1992-1996
4.6
1.2

1997-1999
5.4
4.8

2. Non-agricultural

5.7

5.2

6.5

5.9

B. Per Capita:
1. GDP

2.5

1.9

2.6

3.8

2. Agricultural GDP

0.4

0.1

(-) 1.1

2.4

GDP

A.GDP growth.
In 1997, 66 percent of the earning members of rural households were dependent on agriculture:
28 percent in farming activities and 35 percent as agricultural labor. Only 4 percent were
involved in other agriculture e.g. fishing or livestock raising as principal occupation. The nonagricultural activities engaged 34 percent of the rural households. These activities comprised
petty trade, shop keeping and business, trade and transport and other non-farm activities. In the
case of rural poor households, nearly 71 percent were dependent on agriculture, of which 47
percent worked as agricultural labor. The average monthly per capita income from nonagricultural activities was higher compared to agricultural occupations: 18 percent for all rural
households and 11 percent for poor households. The average per capita income of poor
households, in both agricultural and non-agricultural occupations, was substantially low.
The expansion of non-farm sector has, however, not led to much increase in per capita income.
The labor force has increasingly been pushed out of agriculture into low-productivity selfemployment activities in the non-farm sector. In 1995/96, more than 79 percent of those
employed in the informal sector worked as unpaid family workers or were self-employed

(BBS 1998b). When non-farm activities supplement farm employment, even a low return
increases household income.

Education and urbanization

Educated people go to cities / educated people constitute the largest stock of capital of a modern
commercial nation. To get a job in the city, because of the high level of competition, education is
essential. Education equalizes opportunity and liberalizes the culture and political system. It brings about
institutional equilibrium. Education also promotes gender equity and caste assimilation. With education,
efficiency and productivity increases. As more and more people get education, they will move to the
cities from rural areas in search of jobs with comparatively higher wager than in the rural areas.
Consequence of education on fertility: Urban girls want to finish studying and work for a while
before they settle down with a husband and children. This delays child bearing and by the time the girl
settles down, more or less 10 years of child bearing age has passed taking with it the opportunity to have
6 to 7 children.
High cost of childbearing / fertility reduction.- urban parents want to make their children fit for
urban life by giving them proper education, healthcare facilities and other privileges in life. This is costly
both in terms of time and money. Thus urban parents have less children. They focus on Quality instead of
quantity.

Conclusion:

After thousands of years of very little noticeable growth, the economy of Bangladesh began to
grow at fast pace since the mid 1990s, at a rate nobody would have imagined possible. Though the
traditional economy began to grow slowly since the beginning of the 20th century with the advent of the
railways, and with some amount of industrialization, the economy began to grow at a faster pace after the
end of colonial domination in 1947, when the-then Pakistan government undertook various planned
efforts to achieve development. A notable achievement in the Pakistan era (1947-1971) was the
beginning of green revolution, coupled with a health revolution that spread antibiotics and other
medicaments widely to bring about drastic declines in mortality. This meant that the population began to
grow very fast.
Bangladesh was in desperate need of foreign aid and the donor community did not like the idea of having
to keep giving aid.

Then a series of events created an economic revolution. Since the mid 1990s, the economy picked
up steam and by 2005 reached growth rates in excess of 5%. This has led to transformations in almost all
spheres of economic activity. It has also struck at the root of traditional culture and politics, stirring up
severe political unrest and confrontation, an outburst of frantic efforts to create new social institutions
especially non-government organizations (NGOs) and may have engendered a militant fundamentalist
backlash against the rapid encroachment of ideas alien to the traditional rural society.
The agricultural sector was the traditional sector that existed for thousands of years, with very
little change in orientation or structure or productivity. It was largely subsistence oriented, based on
family farming with some amount of paid work, and used traditional technology. Its technology was
dependent on muscle power of people and farm animals (cows and horses). Cottage industry was an
appendage of the agricultural sector, and survived for thousands of years with very little expansion in

productivity or social prestige. Traditional smiths and potters, weavers and cobblers and carpenters and
such others were minorities with little social influence on the overwhelmingly peasant-centered economy.
Agriculture was the backbone of the economy, contributing to nearly all the income, with little from
industry and service sectors. Indeed, the cottage industry model was even more limited in terms of
services: barbers or fishers or ferry carriers or peddlers were often single person, at most with some
family tradition in the occupation.
The old structure has changed beyond recognition, beginning with the green revolution in the mid sixties
and then the financial transformations in the mid nineties leading to increasingly commercialized
agriculture.
There is significant transformation of the subsectoral structure of agriculture. The e production of
staple food grains (rice) was dominant before the transformation began, but now fisheries have grown
significantly faster, and commercial poultry sub sector has shown remarkable growth. The dairy
component of the livestock subsector remains small owing to paucity of grazing pastures, and yet
Bangladesh is one of the densest habitats of cattle, with about 20 million cows. The forest subsector has
largely stagnated, especially with the rapid advent of plastic.
Jute was the principal commercial nonfood crop in the 20th century, after cotton enjoyed the long
era of prominence for nearly two thousand years. However, the production and acreage of jute has
declined, especially owing to competition from much cheaper plastic and polythene based substitutes.
Jute is no longer the most important agrarian export. This place has been taken by shrimp and other fish.
In addition to Modernization,(the green revolution and mechanization), plus the growth of fisheries and
poultry, the rural economy and society have undergone very significant transformations. This occurred
after thousands of years of little change, beginning after the end of colonial rule in 1947, and with

significant government effort and some foreign aid. Though the overall nature of the economy now is
movement away from rural areas and agricultural sector into urban areas and service industries. What
was a subsistence economy before, is fast becoming a commercialized one.
Green revolution: use of hybrid seeds, HYV, chemical fertilizers, insecticides, better irrigation, and
cropping techniques.
Mechanization: use of tractors instead of wooden ploughs pulled by cows.
The rural non-farm sector covers the rural industries and services. These implant urban-based and
urban-oriented enterprises, and thereby integrate the rural economy with the urban. Most rural industries
are devoted to grain milling and food processing, with a tendency to acquire urban features as the mils
tend to locate around road networks and commercial hubs. The most important difference from the past is
the commercial orientation of this new rural feature.
A significant element of the rural non-farm sector is the technology-based services of agromachinery and the rapid spread of electrical appliances with the progress of rural electrification. Various
rural growth centers have emerged around commercial hubs. Government efforts have led to nationwide
networks of schools and hospitals with associated services. The advent of cellular phone has added to the
tempo of this transformation.

Reference

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