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EDITORIAL BOARD


Chief Editor Panel

Dr. Mohinder Chand, Professor, Department of Tourism and Hotel Management,
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Faculties, Institute of Southern Punjab, Multan, Pakistan

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International University Perak, Malaysia


Executive Editor

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Faculty of Business, ASA University Bangladesh


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Dr. Bilkis Raihana, Dept. of Economics, Asian University of Bangladesh

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University, Pakistan

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Global Disclosure of Economics and Business
Blind Peer-Reviewed Journal
Volume 2, Number 2/2013 (Forth Issue)

Contents

1. China‘s Economic Growth - 21
st
Century Puzzle
Prof. Dr. Abdul Ghafoor Awan
9-29
2. Agricultural Adaptation to Climate Change: Issues for Developing
Countries
Md. Atiqul Islam
30-41
3. Role of Guava to National Economy of Bangladesh: An Empirical Study
Sayed Mohibul Hossen
42-49
4. Current Account Dynamics, Adjustment and Capital Mobility in
Bangladesh
Mohammad Masud Alam, Rezai Karim Khondker, & Mohammad
Shahansha Molla
50-59
5. Organizing: An Islamic Perspective
Dr. Md Golam Mohiuddin; Gaffar Olanrewaju Yusof; & Afroza
Bulbul
60-72
6. Assessment of CSR Performances in Some Selected Commercial Banks
in Bangladesh
Md. Abul Kalam Azad, Mohammad Zahir Raihan, & Mohammad
Zahid Hossain Bhuiyan
73-83
7. Employees‘ Motivation in Public and Private Commercial Banks in
Bangladesh: A Study on Need-Based Approach
Md. Hasebur Rahman
84-91
8. Goodness of Cloud Computing: does Bangladesh ready for it
Md. Ahsan ul Hasan
92-100
9. Consumers‘ Perception and Performance Appraisal of Mobile Phone
Companies in Bangladesh
Tajul Islam; Rajidul Hoque; & Md.Ashraful Alam
101-115
10. Employee-Organization Congruence and Job Performance:
Development of a Conceptual Model
Perera, G.D.N., Prof. Dr. Khatibi, A., & Dr. Navaratna, N.N.J.
116-124
11. HRM Practices and its Impact on Employee Performance: A Study of
the Cement Industry in Bangladesh
Mst. Momena Akhter; Md. Nur-E-Alam Siddique; Md. Asraful Alam
125-132
12 A Study on SWOT Analysis of Pharmaceutical Industry: The
Bangladesh Context
Meem Rafiul Hoq, Md. Ali Ahsan, & Tanim – A – Tabassum
133-141
13 Micro Credit and Women Empowerment: A Study on Grameen Bank‘s
Strategy of Poverty Alleviation
Mohammed Thanvir Ahmed Chowdhury; Musa. Halima Begum;
Md. Ridwan Reza; & Tahrima Chowdhury Jannath
142-157

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China’s Economic Growth - 21
st
Century Puzzle
Prof. Dr. Abdul Ghafoor Awan

Dean of Faculties, Institute of Southern Punjab, Multan, Pakistan


ABSTRACT
China‘s fast economic growth since 1960s was the result of gradual shift in its
economic system, open door policy and its accession to the world trade
organization. The institutional reforms and access to foreign markets has
been followed by investment strategies expanded 45% of Chinese GDP
during last 40 years. The consistent vertical economic growth has no
precedent in the economic history of the world. China has increased its share
in world trade from 0.5% in 1960 to 10% in 2010 and accumulated foreign
exchange reserves of US$3.19 trillion by March 2013. It is not less than a
miracle.
The objective of this study is to investigate into the Chinese labour
productivity and output in the short and long-run perspective to detect the
real source of Chinese economic growth.
Our study is spread over a period starting from 1962 to 2010 because of
political and economic stability with minor crisis. The data was taken from
China Bureau of National Statistics, IMF, World Bank and relevant research
Journals and books. The variables included in this study are: labour
productivity, investment, exports, R&D expenses, capital stock, open door
policy, real exchange rate and US GDP. The VAR model proposed by
Johansen (1988), Johansen and Juselius (1990,1994) and Hendry and Mizon
(1993) was used to measure the nature of relations among the above
variables. Different tests including unit root test were applied to test the
stability of the model.
The Econometric results show that international trade and investment in
capital stock and R&D expenses by Chinese Government are the major
determinants, which are responsible for enhancing labour productivity and
output in the long-run, Similarly, real exchange rate appears as an important
determinant to explain change in output in the long-run. US GDP has played
no role in explaining Chinese output growth.

Key words: China, labour productivity, investment, R&D, Open door policy,
exports, Output.

JEL Classification Code: F43; O47
INTRODUCTION
China‘s economic growth during last 40 years has been miraculous. The GDP growth of
China has showed an average growth rate of about 8% for the period 1963-1978, in spite of
the negative effects of the‖ Great Leap Forward‖ and the ― The Cultural Revolution‖
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Policies. Moreover, this growth has geared up since the start of 1980s and is continued till
2013 when the average annual growth rate was fluctuated between 10 and more than 7
percent.. This development has no comparison with other big economies of the world. The
vertical growth in the Chines GDP has substantially contributed into the world GDP
because its share in international trade has jumped from less than 0.5% in 1960 to 10 % in
2013. This in turn economic performance has led to more than proportional increase of the
market share in major economic regions (Japan, the United States, and European Union).
There are many factors that have played pivotal role in the China‘s economic growth. But
important among them are: savings and investment, which has increased to around 45%
and 35% respectively against 20 percent in 1950s and 1960s. However, capital accumulation
has not shown substantial impact on the improvement of total factor productivity (TFP)
(Chow, 1993), De Long and summer of 1991, and 1992). However, with the beginning of a
series of economic and institutional reforms in 1978, China‘s impressive export
performance has initiated debate about the role of exports in Economic growth. Public
interventions and institutional reforms were the dynamic process that transform the whole
the economic, financial and social systems during 1962-2010 but the reforms process was
gradual to consolidate growth momentum particularly in case of the liberalization of the
economy and opening it for foreign direct investment. Transition from planned economy to
the market economy has brought tremendous impact on the Chinese economy and society.
This process reached its peak gradually in 2001 when China joined the World Trade
Organization (WTO). It was the major event that shift world trade paradigm. Although the
reforms that took place in the Maoist era were not free from some shortcomings, but they
have provides basis for transition period. In Maoist period, priority sectors for investment
were transport ,infrastructure, and technical Improvements in agriculture. Without that
Moist‘s policies, rapid economic growthwas not possible during transition period.
Moreover, the industrial growth strategy promoted heavy industry representing 13% of
industrial output in 1952. This effect was intensified and reached 33% in 1965, and 42% at
the beginning of the reforms. On the other hand, light industry, which represents 52 % in
1952, shrinked to 30% to 20% in 1978. This indicates a high degree of the transformation of
China‘s industrial sector in the pre-reform period (Bramall, 2000). The investment
process was a prominent feature of Chinese policies before and after reforms periods.
Contrary to the pre-reform period both domestic and foreign investment was important, and
allowed a steady increase of China‘s productivity, which stimulated international trade
particularly exports. But before reform period, no foreign direct investment was allowed and
the economy was closed for foreign investment. One of the factors that contributed into the
success of Chinese economic reforms was high level of education vis-à-vis least developed
countries (Nolan, 1995). China‘s years of schooling in 2010 was 8.16 years as compared to
world average years of schooling of 8.12 years. In 1950 about 70 percent population of China
was illiterate. To eradicate illiteracy, China initiated a program of mass secondary education
in 1955 and it contributed in the industrialization of rural areas (Pepper, 1996). When reforms
started in 1978 there was macroeconomic stability, no political and economic crisis and low
public debt. (Bramall,2000; Rodrick, 1996; Lardy, 1995).
OBJECTIVE OF THE STUDY
The objective of this study is to study the main factors that are responsible for China‘s labor
productivity and output in the short and long-run during 1962-2010. For this purpose, we
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have intended to concentrate on two factors: capital accumulation and opening up of the
Chinese economy, which are the two main drivers of China‘s productivity growth puzzle.
Besides focusing capital accumulation and exports, we will analyze the role of Research and
Development (R&D) expenditures which has boosted Chinese economic growth. We will
also try to illustrate different aspects of technological Progress in this process. Since the
interaction between a large economy, Such as China and the rest of the world is known , we
have included two other variables such as the real exchange rate and the level of activity in
the United States in this study.
METHODOLOGY OF RESEARCH
Data and Source:
The secondary data was used in this study. The data was collected mainly from China‘s
Bureau of National Statistics, IMF and World Bank database, relevant books and research
journals, Robert and Lee database. Study Period: The study period was selected from 1962
to 2010 because it was mostly free of economic and political turmoil.
Variables:
The selected variables for our study are as under:-
1. Savings.
2. Investment.
3. Capital Stock accumulation
4. Openness.
5. Research and Development.
6. Technological Progress.
7. Real Exchange Rate.
8. US level of economic activity.
Estimation Techniques:
The VAR Model was proposed by Johansen (1988), Johansen and Juselius (19990:94) and
Hendry and Mizon (1993) was used to measure the strength of relationship among
selected variables. Time series data analysis techniques were applied to measure change of in
the Chinese GDP during the study period.
Hypothesis:
We frame the following three hypotheses for our study.
(i) The existence of a positive and stable relationship in the long run between these
variables is more consistent with the existence of a positive effect on technical
progress,
(ii) The labor productivity is increasing faster than the capital-labor ratio in the
majority of the period considered.
(iii) Unlike others studies export exogenously drive output and productivity in the
long run.
LITERATURE REVIEW (THEORETICAL BACKGROUND)
Classical economists, such as Adam Smith (1776), David Ricardo (1817), Thomas Malthus
(1798), Frank Ramsey (1928), Joseph Schumpeter (1934) and Frank Knight (1944) laid
foundation of theoretical framework of modern theories of economic growth. Their ideas
include the basic approach of competitive behavior and equilibrium dynamics, the role of
diminishing returns and its relations to physical and human capital, the interplay between
per capita income and the growth rate of population, the effects of technological progress
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in the form of increased specialization of labour and discoveries of new products and
methods of production, and the role of monopoly power as an incentive for technological
progress. The starting of modern growth theory is the classical article of Ramsey (1928), a
work several decades ahead of its time. Ramsey‘s inter-temporally separate utility function
is as widely used today as the Coo-Douglas production function. The economists did not
accept his approach until the 1960s. Between Ramsey and the late 1950s, Harrod (1939)
and Domar (1946) tried to integrate Keynesian analysis with elements of economic growth.
They used production functions with little substitutability among the inputs to argue the
capitalist system is inherently unstable. The most important contribution was those of
Solow (1956) and Swan (1956). The key aspect of the Solow-Swan model is the neoclassical
form of the production function, a specification that assumes constant returns to scale,
diminishing returns to each input, and some positive and smooth elasticity of substitution
between the inputs. This production function is combined with a constant-saving rate to
generate an extremely simple general equilibrium model of economy. One prediction from
these models is conditional convergence. The lower the starting levels of per capita GDP,
relative to the long-run or steady-state position, the faster the growth rate. The economies
that have less capital per worker relative their long run capital per worker tend to have
higher rates of return and higher growth rates.The convergence is conditional because the
steady-state levels of capital and output per worker depend on the saving rate, the growth
rate of population and position of the production function-characteristics that might be
vary across the countries. Another prediction of Solo-Swan Model is that, in the absence of
continuing improvements in technology, per capita growth must eventually cease. This
assumption, which resembles those of Malthus and Ricardo, also comes from the
assumption of diminishing returns to capital. It has been observed that positive rates of
per capita growth can persist over a century or more and that these growth rates have no
clear tendency to decline.
After the mid-1980s, research on economic growth experienced a boom, beginning with
the work of Romer (1986) , Lucas (1988) and Rebelo (1991) built on the work of Arrow
(1962), Scheshinski (1967) and Uzawa (1965). In these models, growth may go on
indefinitely because the returns to investment in a broad class of capital goods, which
include human capital. Spillover the knowledge across producers and external benefits
from human capital are parts of this process, but only because they help avoid the
tendency for diminishing returns to accumulation of capital.
The clear distinction between the growth theory of the 1960s and 1980s is that the recent
research pays close attention to empirical implications to the relation between theory and
data. However, much of this applied research involved application of empirical
hypothesis from the older theory, notably neoclassical growth model of conditional
convergence. The cross-country regressions motivated by the neoclassical model surely
because a fixture of research in the 1990s. An interesting recent development in this area
involves assessment of the robustness of the kinds of estimates. Other empirical analysis
apply more directly to the recent theories of endogenous growth, including the role of
increasing returns, R&D activity, human capital, and the diffusion of technology.A
question arises here is that whether it is possible for an economy to enjoy positive growth
rates forever by simply saving and investing in its capital stock.A look at the cross-country
data from 1969 to 2000 show that the average annual growth rate of real per capital GDP
for 112 countries was 1.8 percent and average ratio of gross investment to GDP was 16
percent. However, for 38 sub-Saharan African countries, the average growth rate was only
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0.6 percent and the average investment ratio was only 10 percent. At the other end, for
nine East Asian ―miracle‖ economies, the average growth rate was 4.9 percent and the
average investment ratio was 25 percent. These observations suggest that growth and
investment rates are positively related (Sala-i-Martin et al,(2004)
There is no doubt that investing in equipment and infrastructure, R &D or human capital,
and other institutional factors along with more (Such as openness, regulations, property
rights, and a mechanism for distribution, etc.), are responsible for the dynamics of the
activity and productivity levels observed in most economies. However, very little
consensus exists about the preponderance of different factors in these processes. This
question will be not greater importance if it were not for the foreseeable differences in
relation to the long-term sustainability of growth and its impact on economic development
policy. Have policies that encourage savings at the expense of domestic consumption
contributed since the long-term growth view? Is the adoption or maintenance of export
programs really an appropriate strategy in China? Is there any evidence Integration
between the different sources of growth considered to-date , ore there are yet, or is there
Certain periods of certain alternation?
Therefore, explaining whether the economic growth that the Chinese economy has
experience has been caused only by high domestic savings and high investment rates, and
the consequent accumulation of capital, or if on the contrary, there is another case of
export-led growth due to the open-door policy. The basic issue is re-evaluation of the
controversy that emerged in the mid-nineties for sources of economic growth in the Asian
economies with high performance (package and Page,(1994) and Young, (1992) and (1994).
There is abundant evidence to show that those countries that invest more tend to grow
more. However, this effect appears to be transitory and could disappear in the absence of
other factors that stimulate growth. In other words, the differences in investment rates do
not explain the persistent differences in economic growth. The result will be that the
country will have the largest per capita income, and that economic growth has stabilized
the price of a "normal" after a certain period of time. From this perspective, investment
cannot be considered a source of sustainable economic growth. This target can only be
reached by other factors (i.e, openness and human capital accumulation, and investment
in research and development, etc.), and to the extent that these factors Increase the total
factor productivity, it is likely because it involves a larger effort in the field of investment.
On the other hand, defenders of another point of view focus their attention on to the
greater importance of capital accumulation as is the main factor of economic growth, and
on increase trade as being more consequence than a cause of economic growth process. so
than the cause of the process of economic growth.
Regardless of what we think in terms of neoclassic growth models, like that by Solow
(1956), or in terms of endogenous growth models, the accumulation of the productive
factors plays an important role in economic growth in both the initial ―AK‖ models or
R&D based models. In the absence of technological progress however, which is widely
understood as improved technical skills and management that allow sustained increases
of the productivity of these production factors, it is not possible to obtain a maintained
positive effect in the dynamics of the output level in the long run. Thus according to the
most widespread view, investment only affects the output level in the short run. This is
true in the neoclassical growth models, but also in the literature on endogenous growth.
However, De Long and Summers (1991 and 1992) argue that equipment investment is
apparently associated with higher growth, due to the embodied technological progress,
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and the positive role of government infrastructure investment in improving economic
activity and productivity is well-known. Finally, as the Schumpeterian version of
endogenous growth models implies, long-run growth and productivity levels are
endogenous and depend on innovation and capital accumulation among other factors. In
this kind of models, "capital and knowledge are two state variables determining the level
of output at any point of time" and "capital accumulation and innovation should be
complementary processes, both playing a critical role". In this sense, both investments in
equipment and R&D expenditure can interact to reinforce this relationship. It is relevant
that this complementary relationship is mainly supported by the existence of the
embodied technological progress in equipment investment. However, capital
accumulation is not free of certain ambiguity with regard its relationship with the level of
GDP or labor productivity. From the perspective of conventional growth models, saving
and investment precede and are among the most important determinants of output and
economic growth. Nevertheless, the opposite view may be found in the empirical
literature. More specifically, if capital investment is driven fundamentally by supply side
factors (such as the embodied technological progress), it is expected that investment
determines output. In contrast, if demand factors dominate among the determinants of
investment, it is not unexpected to find causality relations from output to investment.
There is little empirical evidence in the literature on the investment-led growth effect in
China. However, any evidence to this effect seems to recognize that capital accumulation
has played an important role in the process of economic growth.
There is fewer consensuses on the role of capital accumulation as a source of technological
progress. For example, Chow (1993) emphasized the role of capital accumulation as the
main source of Chinese economic growth since the fifties until the end of the eighties.
However, there was no evidence of technological progress during this period.
Nonetheless, Yusuf (1994) argued that not only was capital accumulation an important
determinant of economic growth, but that technological progress also played a significant
role from 1978 to 1993. In addition, Wu (2000) found evidence that investment has been an
important stimulus for TFP in Fujian, Guangdong, Taiwan and Hong Kong. Unlike
previous studies, Qin et al. (2005) found some recent evidence that output drives
investment in the Chinese economy.
The evidence found in the literature suggests that capital accumulation has been an
important factor of China‘s successful growth. However, there is debate about whether
capital accumulation is the only factor to explain the high growth rates in China similar to
other planned economies, or if other additional factors intervene together with capital
accumulation, which could help explain the dynamics of the Chinese performance. For
example, factors such as foreign trade which especially in China has shown spectacular
development given its high growth rates. Openness, especially exports expansion, has
been considered to be one of the key factors to promote economic growth in developed
and developing countries. Among the channels identified in the literature as potential
generators of positive effects on output and productivity, the most immediate the most
immediate is the possibility that the exposure to trade will induce a self-selection of the
firms (Melitz, 2003) being the most productive that finally become in exporters and
affecting therefore positively to the aggregated productivity. In addition, access to foreign
markets positively affects productivity in the presence of economies of scale. However, the
literature on this question emphasizes the existence of positive spillovers associated with
the exporting activity. Several channels exist in which these spillovers can affect
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productivity. The interaction with firms from others countries and increased competence
tend to improve the competitiveness of the firms operating in the exporting sector.
Moreover, there is a learning-by-exporting effect that tends to generate productivity and
enhances the effects among exporting firms which, in turn, can generate positive
externalities on the rest of the economy since more efficient management and
organizational styles, labor training and improved production techniques are adopted.
Finally, the exporting activity allows foreign exchange constraints to be relaxed, thus
permitting increased imports of capital and intermediate goods. Nevertheless, and in spite
of all these arguments, there is certain skepticism as to openness explaining the success in
foreign markets, or to exporting firms being more productive than non-exporting ones.
Alternatively, we could find the presence of a growth-driven exports hypothesis,
according to which, countries with higher incomes engage in more trade, i.e. Helpman
(1988). In fact, the endogeneity problem of trade has been a recurrent aspect in the
empirical literature on openness and growth, and there are no conclusive results,
especially in the time series analysis.
The evidence found in the Chinese economy is in agreement with the rest of the empirical
literature. Shan and Sun (1998) show a wide selection of empirical studies on the export-
led growth hypothesis, and all papers seem to support the hypothesis. However, their
results indicate that bidirectional causality exists between exports and output in China.
This result coincides with that found by Liu et al. (1997) and (2002), but with different
specifications. Finally, in a recent paper, and contrary to the general perception, Hsiao and
Hsiao (2006) found that exports do not cause China‘s GDP and consequently its growth.
Thus, the current empirical literature on the role that exports play in the Chinese economic
development seems inconclusive.
Regardless of the controversial aspect of the direction that causality runs between
investment and output, an investment-led growth in China should be reconciled with the
spectacular growth of Chinese exports. This possibility was underlined by Rodrik (1995)
when explaining Korea and Taiwan economic growths in the sixties. According to Rodrik,
the outward orientation of these economies was more the result of the investment boom than
the consequence of an export-led growth effect. The increase in exports was the result of
export-oriented policies that enabled the increase in demand of imported capital goods, a
consequence of the investment boom, to be met. However, the opposite point of view is also
feasible, as Baldwin and Seghezza (1996) argue; a trade-induced investment-led growth
could have taken place, and in line with our results, there is evidence that both exports and
investment are determinants that boost output growth (Yu, 1998, and Kwan et al., 1999).
The question is not whether it is necessary or not that permanent productivity shocks
exist to guarantee a sustained growth in the long run, rather what factors can be the cause
of these shocks. Nobody questions that the accumulation of productive factors, especially
capital accumulation, has positive effects on output and productivity in the short run.
The question is whether that effect is permanent or it affects both variables in the long
run. Our objective is not to test alternative specifications of the relationship between the
accumulation of productive factors and other sources of economic growth, as found in
the empirical literature of economic growth. Indeed, our objective is something more
basic, to detect the regularities and interactions between the different sources of growth,
and to identify the direction of the causality in the both long and short run in the singular
process of the Chinese economic growth. Our analysis consists in a previous step to
consistently explain this process, and it is an additional piece in the puzzle that
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politicians and economists attempt to solve.
DISTINCTION OF THE STUDY
As compared to previous empirical studies, our study differentiates and contributes to the
empirical literature in three ways:-
i) In our view, capital accumulation and innovation play a complementary role and
foreign trade is assumed to be the main channel that stimulates economic activity;
ii) Unlike Yu (1998), we have extended sample in the post-reform period until 2010
because investment has played a key role in both pre-reform and post-reform
periods. Although the share of export was low in the pre-reform period, presently it
is one of the most important channels to accelerate economic growth.
iii) The co-integrated VAR model used in this study has facilitated us to carry out a joint
modeling in a context in which variables are closely related to each other. This
methodology does not impose any restriction upon our analysis and allows the data
to reveal real relationships between different variables in the long and short-run.
EMPIRICAL FRAMEWORK
Now we initiate empirical analysis with a general and the least possible conditional
assumptions, thus allowing the data to reveal the nature of the interactions among them.
From these relationships, it is possible to advance with the hypothesis about the nature and
causes of the forces that have stimulated the rapid economic growth in China in recent
decades.Our empirical analysis basically uses Chinese annual data for the period 1962-2004
derived from the NBS of China which has currently published the latest compilation of the
Chinese economy in 2004. Our data set consists of GDP (lgdp), labor productivity - output
per worker- (lprod), investment (linv), exports in FOB terms (lexp), R&D expenditure (lrd) of
the Chinese economy, the US GDP(lgdpusa) and the real exchange rate (lrer). All variables
are in logs and real terms, and have been deflated by the GDP deflator.
The real exchange rate has been calculated using the nominal exchange rate between the
Chinese currency and the US $ (Renminbi/$) and the consumer price indices
(CPIs).Although data are available from China since 1952, we preferred to move to the
beginning of the effective sample until 1964 given the difficulty to perform a sufficiently
homogenous treatment during such a turbulent period as that between 1958 and 1962,
with the Great Leap Forward and the consequent economic collapse that produced
abnormally low values of macroeconomic aggregates for the period 1961-1963. However,
it is well-known that the period under study is not void of shocks, and this led us to use
different level-shift dummies in the empirical analysis. An analysis of the stationary
properties of our variables can be seen in the Appendix. It is possible to see from the unit
root test (PhillipsPerron and ADF), that all our variables considered are I(1) in the levels,
and which also show the rejection of the order of integration equal to two. We focused on
the time series evidence in our empirical analysis and we have used the methodology of
the cointegrated vector autoregressive (VAR model) proposed by Johansen (1988),
Johansen and Juselius (1990), Johansen and Juselius (1994) and Johansen (1996). This
methodology is based on the principle of "general to specific" discussed in Juselius(1992)
and in Hendry and Mizon(1993). We start the analysis with a broad general specification
in which certain restrictions will be imposed both of statistical and economic origins, until
the most irreducible form possible is reached. We consider that this methodology is
appropriate given the potential interdependence between the different variables
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considered. Furthermore, joint modeling is suggested and the convenience of
distinguishing between the short-run and long-run relationships between them, which in
our case is the key element of the analysis proposed. The analysis can be seen for the fixed
properties26 of our variables in the Appendix. It is It is possible to see the unit root test
(Phillips Peron and ADF), that we have all the variables Consider the first (1) levels, which
also appear on the system's rejection of integration Equals two. Two types of variables
available investment in China: Gross fixed capital formation, as is common in the majority
of national accounts and fixed assets. According to the manual OECD (2001) on capital
Measures, and a more precise definition in China is a constant in assets. However, this
variable is limited, so we have The use of total fixed capital formation in our analysis. In
future research, we will try to use fixed assets. To More details on the management of
physical capital, see the Halls (2006).
We focused on time-series evidence in our analysis and we used the experimental self
vector regression methodology (model VAR) co-integrated proposed by Johansen. The
methodology is based on the principle of "public to private" discussed in Juselius (1992)
and Hendry and Maison (1993). We start with the analysis of the broad general
specifications. Some restrictions will be imposed on both statistical and economic assets
and even the most form is reached irreducible possible. We consider that this
methodology appropriate given the potential correlation between the different variables
into account. It is suggested modeling and comfort to distinguish between short-term and
long-run Relations between them, which in our case is a key element of the proposed
analysis. In particular, we start with the unrestricted VAR model; a linear trend is
restricted in Common space of integration and unrestricted constant of dimension RX 1:
In this analysis, we have assumed a restricted linear trend in co-integration space, because
variables in the model have linear trend during the period of analysis, which appears to be
difficult to prove from economic view point. From empirical view, however, the
deterministic linear trend may be an alternative to the stochastic trend (Nielson and
Christensen,2005).The VAR model considers that residuals are not auto correlated and are
distributed normally. To meet this criterion of VAR model, we have chosen an
unrestricted permanent dummy variable,Ds89 and two level-shift dummies restricted to
co-integration spaces Ds 78 and Ds94.The dummy D89p attempts to capture the political
and economic restrictions in 1989 ( a fiscal and monetary policy was enforced by Chinese
Government at the end of 1988 to stop sharply rising inflation. This policy effect was noted
visible impact on gross fixed capital formation, caused a fall of around 14% on investment
and trade. China suffered a significant loss of trade and investment in the late 1980s
(Bramall,2000).Conversely, justification of the level shift dummies is immediate. The
dummy in 1978 is related the beginning of political and economic reforms process,
initiated after Cultural Revolution, whereas dummy in 1994 mainly corresponds to the
exchange rate. Unification of exchange dual exchange rate that caused 43 percent
depreciation of exchange rate (Adams et al,2006) is still in existence. Apart from this,
lifting price restriction in 1994 accelerated efficiency of allocation framework in the
Chinese economy. Aunced in1994 precipated the effectiveness of the whole public finance
due to decentralization of decision-making process as well as reducing enforcement cost.
PRODUCTIVITY MODEL
Primarily, the endogenous variables in this model are: (1) (labour productivity, (2)
investment, (3) exports, (4) real exchange rate and (5) Research & Development outlay.
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Productivity was corrected by applying methodology suggested by Nielson (2004). In
order to measure external influence on the Chinese economy, the level of US economic
activity was inducted in the model as a weakly exogenous variable. In sequential analysis
of the model, however, exports and R&D outlay were finally assumed to be weakly
exogenous variables. Initiating from a four equation system (labour productivity, investment
as exogenous variable, showing r=1 P-value 0.90. In this new specific scenario of four
endogenous variables (productivity, investment, real exchange rate and R&D outlay), we
have intended to used exogenous test to highlight that R&D outlay can also be assume
Hannan and Quinn indicated that two lags are sufficient to capture the dynamics effects of
model and to remove the possibility of auto correlation. Thus, we have considered a VAR (2)
model with three exogenous variables (exports, R&D outlay and US economic activity), with
their corresponding deterministic components.Avariety of misspecification tests for residual
of the model shown in Table 1, where neither autocorrelation nor normality exists. In this
univariate analysis, no ARCH effects are noted while in multivariate analysis, a small ARCH
effect is detected. Rahbek et al (2002) and Juselius (2006) suggested that statistical inference,
the determination of rank test, in the co-integrated VAR model is robust to a moderate
ARCH effect, and that, overall, the model is well behaved.
LONG-RUN RELATIONSHIP
Based on a statistical model, we can get a number of long-term relationships (r), and
number of common trends (p - r) by the LT test. Given in Table 2 that shows Trace Test
where everything indicates that two long-term relationship (R = 2) exist in this Model as
well as a common trend (p - r = 1). Moreover, the root of the inverse characteristic
Polynomial of this rank is 0.80, less than the unit, which shows that the model is Fixed.
The co-integration vectors in the model are as under:
The equation (2) describes how both exports and investment account for the level of
productivity in the long term. It means that relationship between investment and exports
are long-term nature. The equation (3) shows that R & D outlays boosted investment. The
coefficients attached with both variables are statistically significant and show expected
signs. The restrictions levied in both relationships were accepted with p-value of 0.175.
The coefficients of adjustment toward equilibrium are statistically significant and negative,
and take a value of -0.36 (-5.55) for first co-integrated vector and -0.66 (-5.86) for the
second. The reduced form model is stable in the forward and backward analysis.
The findings are consistent with an export-led productivity growth effect and reflects a
positive relationship between productivity and exports, where the causality runs
unidirectional from exports to productivity in the long-run. Opposite to other empirical
analysis, we have not found a bidirectional causality relation as exports become exogenous
in our model. However, this relationship is only possible when investment is assumed
jointly with exports. The two have positive effect on productivity. We conclude that both
exports and capital accumulation contribute to enhance productivity in the long-run.
Our results are consistent with existence of an investment-led productivity growth effect.
The second co-integrated vector shows that investment and R&D expenses are co-
integrated. An interesting result drawn from this analysis is that R&D expenses directly
and positively affects investment with moderate co-efficient and it had an indirect effect
on productivity through investment.A positive sign in dummy variable Ds78 in the ecm2
means that real investment growth rate was scaled down since 1978. When we compare
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with other countries, however, the growth rate of China was appeared to be spectacular.
This was due to four reasons:
- The environment in Maoist regime;
- Decrease in the growth rate in two sectors such as construction and transportation;
- The re-allocation of investment from traditional to more dynamic sectors such as
electronic appliances, plastics, pharmaceuticals and chemicals due to fiscal incentives
given by Chines Government;(23) =31.669 (0.1072).
We can observe in the Appendix that both the null hypotheses of the absence of co-
integration and the existence of one co-integration vector are clearly rejected. In our
model, therefore, we accepted the null hypothesis of the existence of two long-run
relationships ( r = 2 ), and a common trend ( p –r = 1), where both p-values accept the null
hypothesis, and the inverse roots of characteristic polynomial for r = 2 is 0.78 less than the
unit. This shows that our relationships are stationary and adjust toward equilibrium. In
the model we selected, the following co-integration vectors can be found to be expressed
as error correction mechanisms (statistics in brackets):
The coefficients associated with the variables in both relations are statistically significant
and show the expected signs. The restriction imposed in both co-integration vectors are
accepted with a p-value0.425. The adjustment coefficients toward equilibrium are also
statistically significant and negative, and show a value -0.42 (-7.21) and -0.82(-6.47) for the
first and second relationship, respectively (ecm1 and ecm2). Finally, the reduced form
model is stable in the forward and backward analysis. Similarly to the previous model
however, the complete parameter constancy is difficult to guarantee. In this sense, our
estimates should be considered to be average effects. The first relationship corresponding
to (4) shows a positive relationship among China‘s output, investment, real exchange rate
and exports. Our findings are consistent with the export-led growth hypothesis which
predicts that a positive relationship exists between the level of domestic activity and
exports, where the direction of the causality unidirectional runs from exports to the GDP
in the long run. However, the literature has also emphasized a positive effect of
investment on output in the long run. A close relationship remains between investment
and technology transfer since capital formation remains obsolete in the absence of
technological progress and it would have no effect on economic growth in the long run
(Howitt, (2000); Arayama and Miyoshi, ( 2004). New technological advances require an
investment that enables its incorporation into the productive process and which favors the
output growth in the long run. We observe that investment played a significant role in the
first co-integration relationship, and is similar to exports in the output growth of the
Chinese economy. Our findings are consistent with Yusuf (1994), who found that capital
accumulation is one of the most important factors in the economic growth process in
China. Unlike other studies on China, we included the real exchange rate as a proxy
variable to measure terms of trade in the analysis given that a close relationship is
maintained between the real exchange rate and exports. Unlike the previous productivity
model however, the real exchange rate affects output in the long run. The effects of R&D
expenditure on investment can be observed in the second relationship (5). This result is
interesting in the sense that investment is affected by the innovating effort of the Chinese
economy in both the models analyzed as it allows investment to increase and stimulates
the accumulation of physical capital, which also favors economic growth. The
interpretation of the deterministic components is similar to the productivity model. In the
first co-integrated vector however, it is possible to observe that dummy Ds78 has a
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positive effect on the real GDP, showing that the output level had increased after that year,
as already pointed out.
SHORT-RUN RELATIONSHIP
Table 3 shows the dynamics of short-run structure. Like long-run identification, the
starting point consists of a general model in which the restrictions that are imposed on
coefficients show a sequential form. Then variables with non-significant coefficient are
eliminated until irreducible model is reached. The over-identification restriction LR test is
accepted and distributed as χ (23) = 31.669 (0.1072).Table 3 represents the in Annex
dynamics of structure in the short term. To determine the long-term, the starting point
consists of a model year in which restrictions Levied on transactions show a sequential
form. Then, with the variables is large transactions are excluded until access to the form
most irreducible. And over identifying LR restrictions are accepted and distributed test as?
(23) = 31,669 (0.1072). Productivity adjusts toward equilibrium with the export-led and
investment Productive relationship (ECM 1) Investment carriers (ECM 2). Alpha
coefficients show speed and direction towards equilibrium.
Labor productivity in the equation, it is possible that adjustment relatively slowly, almost
every two years, productivity adjusts towards equilibrium, and possibly associated with
continuous transformations in the Chinese economy between the various sectors. In
addition, we can note in the dynamics of the model that R & D spending has a positive
effect on the productivity equation in the short term. This shows that it is not limited to the
transfer and absorbforeign technology through the generation of the indirect effects of
exports in favor of efficiency and productivity efforts, but this is in the field of innovation
play a effective role to improve productivity in the Chinese economy. Moreover, foreign
demand, and the measured activity of the United States level, and shows the performance
of procyclic, which favors the growth of productivity. Investment also adjusts towards
equilibrium with vectors found in the long term. Alpha coefficients in the investment
equation that show Similar to the previous equation, the adjustment with the first vector is
relatively slow. But with the second adjustment Vector co-integrated (Vector investment)
indicates to adapt fairly quickly toward equilibrium almost every year. Moreover, the
investment in its own equation shows a minor overreaction given the negative coefficient
in the ecm 1. It is difficult to explain the reasons for this effect in a model where the
parameters are conditioned in conjunction with each other, and where there is Tankers
more than one. However, a positive sign is compensated in an overreaction with higher
value and negative in the ECM2. An interesting result in the short term is that the
investment. It also accelerates the increase in productivity since the positive productivity
shock attracts perhaps through investment expectations for returns in the future. In
addition, we note thatboth foreign demand and R & D expenses increase investment.
However, one unexpected cause we have found is that exports will have a transient and
negative impact on investment Equation.
Third equation reveals that the real exchange rate is increased when Investment is less than the
steady-state (ECM2). Here real exchange rate has been included into the model as a control
variable. This result explains the fact that When the investment is above its value in the long
term, it leads to inflationary impact due to the an increase in aggregate demand, and the
consequent appreciation of the real exchange rate. In the dynamics of this model we can
observe that exports will have a positive impact on the real Exchange rate. In other words,
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increasing exports decreased the value of the real exchange rate. However, the activity level of
the United States has a negative impact on the real exchange rate.
Table 6 in the Appendix shows the dynamic structure of the output model. Similarly to the
previous model, we started with a general specification in which restrictions are imposed
on the coefficients of the variables analyzed sequentially, and the non-significant variables
are eliminated until the most irreducible model is reached. The over-identifying
restrictions LR test is accepted and is distributed as χ (25)=32.606 (0.1412).
The Chinese activity level adjusts toward equilibrium with the two co-integrated vectors
found. Conversely to the previous model, the alpha coefficients in this model show a
reasonable fast adjustment approximately every year and a half, when the first co-
integrated vector adjusts toward equilibrium, as does the second vector to a lesser extent.
This result is interesting since both the trade-oriented policy and the accumulation of
physical capital increase output in the long run. In addition, the technology embodied in
investment and exports allows the generation of spillovers that increase the activity level.
Moreover, the specific policy regarding the exchange rate that the Chinese government
applied has accelerated the activity level through gains in competitiveness. On the other
hand, and unlike other studies, a positive effect in investment is noted when the R&D
variable is included in the model. In the dynamic model, the US activity level displays a
procyclic performance which is similar to the productivity model. Furthermore, R&D
expenditure, investment and exports positively affect output in the short run. However,
the real exchange rate shows a transitory and negative effect. Similarly to the productivity
model, investment adjusts toward equilibrium with the two vectors found. In this
equation, it is possible to observe that both vectors show a relatively fast speed of
adjustment. The investment vector adjusts approximately every year, and the output
vector adjusts every year and a half. Similarly to the productivity model, investment
overreacts in its own equation, but is also compensated with the negative coefficient in
ecm2. The R&D expenditure, which allows the absorption of knowledge or innovations,
has directly favored increased investment in China, and has also allowed the overall
growth rate to accelerate in the last two decades. The dynamics of this model shows that
investment, R&D expenditure and the real exchange rate has a transitory and negative
effect in the short run. The real exchange rate adjusts toward equilibrium with the second
co-integrated vector found (ecm2). Unlike the previous model and in relation to the output
model in this equation, the alpha coefficient shows a reasonable speed of adjustment
toward equilibrium, at approximately a year and a half. When investment is below its
steady-state, the real exchange rate is appreciated in the long run. This result is probably
similar to the previous model and may be justified by an increase in the aggregate demand
owing to investment growth that not only favored pressures on domestic prices, but also
the consequent appreciation of the real exchange rate. In the dynamics of this model, we
observe that the Chinese activity level has a positive effect on the real exchange rate
equation. However, investment shows a negative effect in the short run.
OUTPUT MODEL
Like the previous model, our starting point is a simple form that contains the following
variables: the level of Chinese activity (GDP), exports and investment and the real
exchange rate and the level of activity in the United States. Once relationships were
common integration of this new model. If any, will be included variable R &D, and
specifications are maintaining the same model. Once more, either the erogeneity or
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endogeneity of the variables considered in the simple model is analyzed under the
assumption that the US activity level is weakly exogenous. Similarly to the productivity
model, the exogeneity test shows us that exports are exogenous with a p-value of 0.27.
Therefore by following the same sequence as the previous model specification, we also
found that R&D expenditure is exogenous with a p-value of 0.09. Thus at the end of this
process, our model contains three endogenous variables (China‘s GDP, investment, and
real exchange rate) and three exogenous variables (exports, R&D expenditure and the US
activity level). Finally, the determination of the number of lags in accordance with the
criterion of Hannan and Quinn shows that two lags are enough to capture the dynamics
effects and to avoid autocorrelation problems.
Table 4 in the Appendix shows a battery of misspecification tests for the residuals of our
model, where this model does not display autocorrelation and normality problems.
Similarly to the productivity model, a slight ARCH effect is observed in the multivariate
analysis. Nevertheless, the model is well behaved (Rahbek et al.( 2002); Juselius ( 2006).
FINDINGS & RESULTS
In this study, we have examined whether the rapid economic growth process in China since
the sixties, especially in labor productivity and output, can be mainly explained by an
investment-led growth effect, or export-led growth effect. Unlike others studies, we included
investment and exports in our models, together with other relevant factors such as R&D
expenditure. The reason for this was that investment has played an important role since the
fifties when massive investment in infrastructure was made, which laid foundation for
economic growth since 1978. As China is a large economy and it has interactions with other
world big economies, we also included the real exchange rate and foreign output in our study.
Our empirical evidence shows that an export-led growth effect in the first co-integrated vector
can be found in the productivity model. This vector describes a positive relationship among
labor productivity, exports and investment in the long run. The second vector shows that R&D
encourages investment with a moderate coefficient in the long run. An interesting result in the
equilibrium is that exports show a greater effect on productivity than investment, and are
likely associated with the economies of scale and the positive effects of spillovers from
technology transfer, more efficient reallocation of resources, and competitiveness in the
international market. In the dynamics, we found common positive effects of the lag of
productivity and the R&D effect on the productivity and investment equations in the short run.
Similarly to the productivity model, we found an export-led growth effect in the output model.
The first vector describes the relationship among output, exports, investment and the real
exchange rate. The second vector shows that an increase in R&D encourages investment. In
contrast to the previous model, we found that the real exchange rate played an important role
in determining the output level. Our findings are interesting in the sense that trade, exports,
and investment all promotes productivity and output. However, exports seem to stimulate
more productivity than output, reinforcing their role as a source of technological progress.
Additionally, we found that R&D favored an increase in investment in all the models. In the
dynamics of the output model, we found that the US GDP, exports and R&D positively and
regularly affect to output equation, but only US GDP and R&D have a positive effect on the
investment equation in the short run. In contrast, the real exchange rate has a negative and
transitory effect in both the aforementioned equations. Although our empirical analysis cannot
disentangling whether the positive effect of investment on output and productivity is caused
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by an increase in capital accumulation or by improvements in total factor productivity or both,
we can hypothesize that both channels are relevant because:
- The existence of a positive and stable relationship in the long run between these variables
is more consistent with the existence of a positive effect on technical progress,
- The labor productivity is increasing faster than the capital-labor ratio in the majority
of the period considered.
- Unlike others studies export exogenously drive output and productivity in the long
run. This is a precondition to accept the export-led growth hypothesis and we have
provided evidence that in both models exports exogenously drive growth. In line with
Bramall (2000), however, the existence of some additional preconditions, for example,
a rising share of exports in GDP, are needed to completely accept the hypothesis
together with the casual linkage between exports and economic growth, and we have
shown clear causality between exports and output or productivity. Looking
investment and export growth rates and their shares to GDP, there are two clear sub-
periods along the period considered. Investment is growing faster than exports from
1962 to the end of seventies, and the reverse is true since then until now.
Thus, the ratio of exports to GDP is increasing clearly in the second period considered, from
the end of seventies until now, while the ratio of investment to GDP is increasing along the
two periods. This suggests that investment has been a permanent source of growth along the
four decades analyzed, while exports as a source of growth appear to be especially relevant
only during the post-reform period, initiated at the end of the seventies in China. In short,
our results support the idea that the investment efforts and trade openness have played a
significant role in China since the sixties until the present-day, and have encouraged output
and productivity. Our findings suggest that investment and openness, especially exports, are
jointly the most important determinants of productivity and output in the long run. In
addition, R&D expenditure has a positive effect on investment in all the models analyzed.
These results are consistent with the theory that both export-led growth effect and an
investment-led growth effect are significant in Chinese economic performance, and in
accordance with the Schumpeterian version of the endogenous growth model, which
suggests that trade and investment- oriented policies play an important role in economic
growth process. the investment policy duringTo sum up, the pre-reform period has probably
created favorable conditions to gradually and successfully implement the economic reforms
made by Chinese government since 1978 while the open-door policy, the progressive
deregulations of the market, R&D investment, and greater efficiency in resource allocation,
etc, have helped maintain the high growth rates in China for almost four decades.
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Appendix
Unit Root Test


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Table (7): China‘s Economic Growth Rates during 1960-2004






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Agricultural Adaptation to Climate Change: Issues
for Developing Countries
Md. Atiqul Islam

Assistant Professor, Department of Economics, University of Rajshahi, Rajshahi, Bangladesh


ABSTRACT
One of the burning issues of the world is climate change. The objective of
this paper is to review the issues of agricultural adaptation to climate
change in the context of developing countries. Literature review type
methodology is used here. Total 54 numbers of secondary materials
comprising journal articles, books, working papers and documents are
used for this research. It is found that Climate Change is real but highly
uncertain. It poses threat to agricultural sector of developing countries and
adaptation would be a possible solution. Apart from the perception of
farmers other factors like the farm family characteristics (e.g. farmers‘
education level, farm size, and farm‘s financial health) and government
support (e.g. access to extension, credit and climate information) could be
the potential factors to influence adaptation. There could also be several
barriers to adaptation from farmers‘ perspective in the face of climate
change. Lack of awareness, access to credit, information, knowledge and
education to evaluate and implement new methods are the major
constraint on adaptation. The appropriate science, actions and policy is
required to improve the capacity and to facilitate adaptation in developing
countries.

Key Words: Climate Change, Adaptation, Vulnerability, Agriculture,
Developing Country

JEL Classification Code: Q02; Q18
1. INTRODUCTION
Climate change is one of the burning issues of the world these days. Recent events like the
forth assessment report of the IPCC, the documentary ‗An Inconvenient Truth‘ by Al Gore, and
the Nobel Peace Prize in 2007 given to IPCC and Al Gore are some big events related to this.
Research is expanding into the possible drivers of climate change (natural as well as
anthropogenic), the understanding of the climate system, the character and magnitude of
changes, their impacts on human living conditions and ecosystems, and the possible
approaches to the human responses to climate change. This paper reviews the issues related to
those to have a laconic understanding about climate change scenario, it‘s probable effects, and
possible solution to that. More focus is given here to agriculture in developing countries.


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1.1 Review of Literature
Reports of Intergovernmental panel on climate change are the most widely acceptable
documents related with climate change. The first assessment report was published in 1990
and the latest one is the forth assessment report which is published in 2007. The fifth
assessment report is in under construction and will be completed in 2013/2014. These
reports provide an update of knowledge on the scientific, technical and socio-economic
aspects of climate change. Hundreds of experts around the world are involved in writing
these reports. These reports are the most complete review paper related with climate
change which covers almost all aspects of climate change. The problem is that it is quite a
huge volume of text with detail and technical explanation. That is why this present
research tried to have a gist of knowledge related to climate change. Moreover, apart from
the IPCC‘s report, to the best of my knowledge no other review paper is available related
with the issues of agricultural adaptation to climate change for developing countries. The
present research is an attempt to fill that gap.

1.2 Objectives of the Research
The main aim of this paper is to review the issues of agricultural adaptation to climate
change for the developing countries. For the convenience of our analysis we are making
some specific objectives for this study as follows:
- To discuss the understanding and knowledge about climate change.
- To find the effects of climate change and possible responses to that.
- To understand about adaptation to climate change.
- To find the possible adaptation option on agriculture in the face of climate change.
- To find out some pertinent policy implication.

1.3 Methodology and the Data Used
This research uses the literature review method where different secondary materials were
reviewed. Those secondary materials are journal articles, books, documents and working
papers related to our research topic. The text and findings of those materials are reviewed
thoroughly to have the findings related to our research objectives. Total 54 materials are
used where the numbers of journal articles are 33, the numbers of books are 4, the
numbers of documents are 13 and the numbers of working papers are 4. As this is a review
type of research so the findings related to the objectives are discussed is textual format
with topic headings and to substantiate the findings the proper reference is given during
the discussion.
2. RESEARCH FINDINGS
Findings of this research are discussed using related topic headings in accordance with the
research objectives. First of all the findings related with the climate change understanding
and knowledge are discussed as climate change scenario with observed climate change and
projected climate change sub-headings. Then findings related with the effects and responses
are discussed in the subsequent sections in the name of effects of climate change: especially on
agriculture and possible responses to climate change. Findings related with the concepts of
adaptation to climate change are discussed later on with development of climate change
adaptation agenda, vulnerability and adaptation and concerns of adaptation to climate change sub-
headings. Then findings related with adaptation options are discussed in the name of
agricultural adaptation to climate change with barriers to adaptation.
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2.1 Climate Change Scenario
The climate system is a complex and interactive system of atmosphere, land surface, snow
and ice, oceans and other bodies of water, and living things. Among all these components
the atmospheric component, often referred as weather, mainly characterizes climate. In
terms of weather components the climate is usually describe as mean temperature,
precipitation and wind over a period of time. The climate change issue thus seen on the
basis of those variables. For this issue Intergovernmental Panel on Climate Change (IPCC)
was established in 1988 brings together the world‘s top climate scientists to assess the
scientific, technical and socioeconomic information relevant for understanding the risk of
human induced climate change. Though their previous assessments in 1990, 1995 and 2001
had provided strong indications that by various measures Earth‘s climate are becoming
warmer – but with the latest report in 2007 the picture had become clearer. In the
following two sections a brief description of the observed and projected climate change is
summarized by reviewing the IPCC‘s latest report and recent literature.
Observed Climate Change
The global mean surface temperature has risen over the last century (1906-2005) and the
rate of warming is almost double in the last half than the first half (Trenberth et al., 2007).
The largest temperature increases have occurred over the past 30 years, mostly over the
continental interiors of Asia, north-western part of North America, and over some mid-
latitude ocean regions of the Southern Hemisphere. Consistent with this observed
increases in temperature, it has also been found an almost worldwide reduction in glacial
mass, melting of Greenland Ice sheet, decrease in snow cover in many Northern
Hemisphere regions, decrease in sea ice thickness in the Arctic, warming of the oceans,
and rising of sea level due to thermal expansion of the oceans and melting of ice.
Precipitation trends also have a noticeable change after 1970, significantly wetter in eastern
part of North and South America, northern Europe, and northern and central Asia, but
drier in the Sahel, the Mediterranean, Southern Africa and parts of southern Asia
(Trenberth et al., 2007). Droughts have also become more common, especially in the
tropics and subtropics, since the 1970s (Dai et al., 2004).
There is a significant upward trend of destructiveness, longer lifetime and greater
intensity of tropical cyclones since the mid-1970s (Emanual, 2005). This trend is also found
strongly correlated with the higher tropical sea surface temperature and global warming.
There also found a large increase in numbers and proportion of hurricanes that reach
categories 4 and 5 since 1970 and the largest increase was in the North Pacific, Indian and
southwest Pacific Oceans (Trenberth et al., 2007).
Projected Climate Change
The report of IPCC (2007) has attributed the observed changes as anthropogenic. If the
current trends continue then the equilibrium global mean surface air temperature (SAT) is
likely to increase by 3°C by 2050 (Meehl et al., 2007). However, warming is projected to be
similar to this in Southeast Asia (Cruz et al., 2007) and Latin America (Magrin et al., 2007)
but well above in central Asia and Africa (Christensen et al., 2007). Variability of
precipitations is projected with reduced rainfall in subtropics and increases at high
latitudes and parts of the tropics (Meehl et al., 2007; Christensen et al., 2007; Magrin et al.,
2007; Boko et al., 2007; Dai et al., 2005). It is likely to increase tropical cyclones in East Asia,
Southeast Asia and South Asia (Christensen et al., 2007) with more destructive power
(Emanual, 2005). Moreover, the sea level is projected to rise on an average 0.02 meter by
the middle and 0.15 meter by the end of 21
st
century.
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In summary, many changes are expected in the global climate system during the 21st
century that would even very likely to be larger than those observed during the 20th
century (Meehl et al., 2007). Of course, it is difficult to produce a credible projection of
climate over the next century but the problems posed by climate change require our
immediate attention.

2.2 Effects of Climate Change: Especially on Agriculture
The scientific evidence of climate change is now overwhelming (Stern, 2007; Stern, 2009),
although some may disagree to some extent because of uncertainty (Lomborg, 2001). The
effects of climate changes on natural and human environments are already felt, although
many are difficult to discern. The ultimate significance of this issue is related to its global
reach, affecting sectors and regions throughout the world in complex and interactive ways.
This would affect the world in terms of access to water, food production, health and the
environment. Thousands of people would suffer from hunger, water shortages and coastal
flooding (Stern, 2007). Although the scientific evidence of anthropogenic causes are
associated with mainly rich industrialized and post-industrial countries but the impacts are
expected to be felt more severe on the regions of poor developing countries (IPCC, 2007).
One of the severe impacts of climate change is expected to be on agriculture (IPCC, 2007;
Mendelsohn, 2009). The changes will in turn alter the availability of water resources,
productivity of grazing lands and livestock, and the distribution of agricultural pests and
diseases (IPCC, 2007). This will not only affect the productivity of crop species but also
their geographic distribution (Reilly, 1995). So a changing climate will affect agro-
ecosystems in heterogeneous ways, either benefits or negative consequences, depending
on domination of factors in different agricultural regions (Figure 1).
The adverse effect of climate change on agricultural production are likely to be felt more
on the lower latitude countries where most developing countries are situated (Parry et al.,
1999; Mendelsohn, 2009). The empirical evidence shows that the agro-ecological shift is
likely to reduce not only the yield but also affect the national income and employment of
many developing countries as they rely heavily on agriculture (Zilberman et al., 2004).
Therefore, a key challenge is to identify actions to reduce vulnerability of each and every
sphere of our life, especially agriculture in developing countries, so that impacts can be
avoided or at least reduced.


Figure 1: Effects of Changing Climate on Agro-Ecosystem (Bongaarts, 1994)


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Possible Responses to Climate Change
Mitigation and Adaptation is the two main responses that we have in our hand in relation
to climate change (Stern, 2009; Ayer and Huq, 2009). Mitigation refers to limiting the
production of greenhouse gases (GHGs)
1
against further anthropogenic climate change. It
is mostly related with developed countries as they are the main producers of these GHGs.
On the other hand, adaptation simply refers to as the adjustment made in the changed
circumstance to reduce the adverse effect.
In agricultural sector farmers have to adapt as well as reduce emissions at the farm level.
But choosing effective adaptation and mitigation strategies is a key challenge for them.
Optimal strategies could be careful management of land, increase the resilience and
stability of production systems, and while sequestering soil carbon and reducing
emissions from farm activities (Rosenzweig and Tubiello, 2007). Although many positive
interactions can be identified but it is important to note that synergies will not be possible
under all socio-economic scenarios and regions. Therefore adaptation strategies will likely
to take precedence over mitigation, especially in developing countries, to maintain
production and livelihood. It is no longer possible to prevent climate change because of its
inertia, but possible to minimize the effect through adaptation (Stern, 2007). Moreover,
there are nothing much to do in terms of mitigation except adaptation in some sectors and
regions especially agriculture in developing world (Tingem and Rivington, 2009).
Adaptation strategies are also considering now in line with the poverty reduction
strategies in developing countries (Halsuæs and Traerup, 2009).

2.3 Adaptation to Climate Change
Scholarly literatures are many those explain the concept of adaptation related to climate
change (Burton et al., 2008; Smit et al., 2000; Smit et al., 2001; Smit and Wandel, 2006; Leary
et al., 2007; Mitchell and Tanner, 2006; Stern, 2007). Simply, it is the adjustments in
ecological, social or economic systems to better cope with or adjust to the conditions,
stresses, hazards, or risk associated with climate change. Though the main objective of
adaptation is to reduce vulnerability but it will also enhance the capability to capture any
benefits of climate change. The forms of adaptation can be technological, economic, legal
or institutional. It can also be specific actions, a systemic change or an institutional reform.
As specific action farmers may switch from one crop variety to another which is better
suited in changed conditions. As a systemic change it can be diversifying rural livelihoods
against climatic risks. It even includes learning about risks, evaluating responses, creating
the conditions for adaptation, resource mobilization, and continuous revision of choices
with new learning. As an institutional reform it can be revising ownership rights of land
and water for better resource management. Adaptation can also be autonomous or
planned (Smit et al., 2001; Stern, 2007). It is autonomous when done independently, and
planned when done with setting policies or taking direct actions through public initiative.
Development of Climate Change Adaptation Agenda
Adaptation did not get much attention in the early stages where more attention was given to
mitigation and impacts (Kates, 2000). When the climate change issues were first addressed by
the UN General Assembly in 1988 then the focus was on mitigation. The global campaign on
climate change issues then associated with only emissions trajectories and mitigation
responsibilities. Adaptation got its recognition in climate change science and policy after

1
A greenhouse gas is a gas that traps heat in the atmosphere. The principal GHGs that enter the atmosphere
because of human activities are Carbon Dioxide, Methane, Nitrous Oxide, and other Fluorinated gases.
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publishing IPCC‘s third report in 2001. It argued that mitigation efforts would not prevent
climate change impacts, particularly in low and middle-income countries. Adaptation began to
attach mostly with the developing countries after then. So to assist adaptation in developing
countries three new fund
2
were created then at the seventh Conference of the Parties to the
UNFCCC (COP7) in 2001: 1) fund to support 49 least developed countries (initially finance the
design of National Adaptation Programmes of Action – NAPA); 2) fund to support climate
change activities; and 3) fund to support concrete adaptation projects. Adaptation gradually
gained prominence in climate change literature. Later IPCC‘s Fourth Assessment Report in
2007 also emphasises it. Adaptation now is seen as a legitimate policy option for developing
country. Even these days it is considered in development effort (Adger et al., 2002; Ayer and
Dobman, 2010). NGO communities have incorporated this in the name of Community Based
Adaptation (CBA) into the design and development of their projects to increase resilience of
local livelihoods (Reid et al., 2010; Blanco, 2006; Klein et al., 2007).
Vulnerability and Adaptation
Climate change issues are also now seeing with vulnerability and adaptation. The term
vulnerability was coined in development debates from 1990s (Mertz et al., 2009a). Several
literature of climate change explains adaptation with relation to vulnerability (Smit and
Wandel, 2006; Adger et al., 2007; Schneider et al., 2007). Vulnerability to climate change is the
degree to which geophysical, biological and socio-economic systems are susceptible to, and
unable to cope with the adverse impacts of climate change. It is very much contextual and
linked with specific hazards. Effective adaptation will manage or reduce the vulnerability and
even maximise the potential benefit from changes. But the vulnerability of a community not
only depends on the magnitude, rate and the impacts of climate change but also on their
adaptive capacity which are constrained by a lack of resources, poor institutions and
inadequate infrastructure (Adger et al., 2002). The linkage between vulnerability and
adaptation are portrayed by Smit and Wandel (2006) in their nested hierarchy model of
vulnerability (Figure 2). It argued that generally a community will be more vulnerable if it is
more exposed or sensitive to climate stimuli, or hazards. On the other hand a community that
has more adaptive capacity will tend to be less vulnerable. This approach is being identified as
a key response to climate change by development organizations. That is why it is focuses more
on enhancing adaptive capacity by improving access to education, financial resources, and
information such as climate forecasts or diversifying livelihood. So adaptations in this sense are
nothing but ways of reducing vulnerability.


Figure 2: Nested Hierarchy Model of Vulnerability (Smit and Warden, 2006)

2
Also known as Kyoto Protocol Adaptation Fund, for more information see
http://unfccc.int/kyoto_protocol/items/2830.php
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Concerns of Adaptation to Climate Change
Adaptation to climate change is fraught with difficulties and challenges. Several concerns
could be identified there in relation to climate change adaptation. Firstly, how it will occur
in the grass root level? Because the adaptation decisions are embedded in social processes
that depend upon the relationship among individuals, their networks, social capital, risk
acceptance attitudes and the state (Adger, 2001; Adger et al., 2009a; Adger et al., 2009b).
Secondly, if it occurs then is it correct or not? , mal-adaptation may occur. So the
adaptation involves a governance issue through which it can be guided to the society or to
the sectors. In this respect the threshold
3
for adaptation is important. Adger and others
(2009b) argue that the limits to adaptation depend on social, physical and ecological
factors, and so the integration of all these is very much important. In this respect
government intervention is expected. Economists called this as the issue of market failure
to justify government intervention. There could be three types of market failure which
prevent efficient adaptation: uncertainty and imperfect information, missing and
misaligned markets, and financial constraints (Aakre and Rubbelko, 2010).
Lastly, where and how government intervene? In the climate change literature
government‘s adaptation support is predominantly recommended in the areas of
education, livelihood assistance, and compensation to catastrophic losses (Aakre and
Rubbelko, 2010). At the national level it is necessary to encourage research, training, and
communication concerning the most appropriate adaptive measures. Development
agencies are pressing to incorporate climate change adaptation into mainstream
development assistance and policies. But it is not easy to undertake these policies in an
effective and equitable way to design effective adaptation at the local level. Overall, it is
recommended to introduce more climate resilience development strategies to support
climate change adaptation.

2.4 Agricultural Adaptation to Climate Change
Climate change literature on agricultural adaptation shows a wide range of options based
on experience, observation, and speculation (Adger et al, 2007; Burton and Lim, 2005;
Leary et al., 2007; Bryant et al., 2000; Smit and Skinner, 2002; Maddison, 2007; Yang, 2007;
Bryan et al., 2009; Deressa et al., 2009). The list typically includes (1) changes in seasonality
of production, dates of sowing, choice of crop varieties or species, and tillage practices, (2)
development of new varieties, (3) improved water supply and irrigation systems like
construction of water reservoirs and distribution systems, (4) inputs and management
adjustments like disaster management and insurance, and (5) improved short-term
weather and seasonal climate forecasting. The stakeholders in agricultural adaptations are
the farmers, non-governmental organizations, credit organizations, technology
dissemination groups and central and local governments. Adaptation done by farmers
differs from place to place, availability and need.
Several factors could influence farmers‘ adaptation decision at the farm level (Bryant et al.,
2000; Maddison, 2007; Yang, 2007; Bryan et al., 2009; Deressa et al., 2009). Farmers‘
perception of climate change could be a factor to influence adaptation, but studies do not
found strong relation to them (Bryant et al., 2000; Bryan et al., 2009; Mertz et al., 2009b). It
is found that despite having perceived changes in temperature and rainfall, a large
percentage of farmers did not make any adjustment to their farming practices. At the same
time it is also found that those farmers who perceived about the changes in climate

3
Simply it is the level or point at which something starts or ceases to happen or come into effect.
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variables done at least one changes in their farming practices (Maddison, 2007). Apart
from the perception other factors like the farm family characteristics (e.g. farmers‘
education level, farm size, and farm‘s financial health) and government support (e.g.
access to extension, credit and climate information) could be the potential positive factors
to influence adaptation.
Barriers to Agricultural Adaptation
There could be several barriers to adaptation from farmers‘ perspective in the face of
climate change in developing countries (Leary et al., 2007; Bryan et al., 2009; Maddison,
2007; Croppenstedt et al., 2003; Chauhan et al., 2002; Kaliba et al., 2000; Hintze et al., 2003;
Maddison, 2007; Ransom et al., 2003). These barriers could be related to financial, natural,
physical, human and social capital. It is also found that sometimes people have knowledge
of many traditional practices for coping with climatic stresses, but have little knowledge of
new or alternate methods due to poor access to inputs and information. Even some places
farmers are reluctant to change their inherited traditional practices. In general lack of
awareness, access to credit, information, knowledge and education to evaluate and
implement new methods are the major constraint on adaptation.
Even from the planning perspective there could be several technical and institutional barriers
to adaptation (Bedsworth and Hanak, 2010): (1) uncertain information on climate-related
impacts, (2) conflicting goals and tradeoffs, (3) backward-looking regulatory regimes, (4)
coordination failures, and (5) limits on institutional authority. Uncertainty about the extent and
nature of some climatic impacts pose a significant barrier to decisions on appropriate
adaptation measures. Again adaptation planning will face problem because some strategies
may cause conflicts among different goals and interests. Then adaptation planning requires to
affects a range of future physical conditions, but many current regulatory frameworks are built
around historical data. Then adaptation planning will face an inadequate coordination among
relevant public entities with overlapping geographic and functional boundaries. Last but not
the least, legal limits on institutional authority can prevent agencies that might like to engage in
more extensive adaptation planning.
3 POLICY SUGGESTIONS
Related to agricultural adaptation certain policy suggestions are presented below:
a) Apart from other factors government support is one of the vital factors to influence
agricultural adaptation. So government support like extension services, credit facilities
and the climate information have to be provided to the agriculturist to facilitate
agricultural adaptation.
b) Appropriate adaptation measure suitable for particular area is still not certain. Proper
science and research is required for deciding appropriate adaptation option.
Government has to encourage and facilitate research to find appropriate adaptation
options for regions.
c) Government has to facilitate the dissemination of the knowledge related to adaptation
options. Both knowledge and technology required for appropriate adaptation option
should available to the door steps of the farmer.
d) Lastly, inadequate coordination among relevant public entities with overlapping
geographical and functional boundaries creates a barrier for the successful adaptation.
So government should take these into consideration and maintain a more coordinated
approach in planning adaptation.
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 38


4. CONCLUSION
Developing countries have specific needs for adaptation because of their geographical
exposure, low incomes and greater dependence on climate sensitive sectors such as
agriculture. Economic and technological capacities are the main limitation for them. In the
micro level farmers‘ are the most affected portion of human in relation to climate change.
A better understanding of their social and institutional frameworks and demand-side
strategies is needed for an effective adaptation. There are significant gaps in
understanding the processes by which adaptation is occurring and will occur in the future.
But this area is very much important for future policy and action to increase adaptation
and adaptive capacity. Though most agricultural adaptation to climate change will
ultimately be taken at the local level but their speed and spread depend on national policy.
So the appropriate science, actions and policy is required to improve the capacity and to
facilitate adaptation.
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Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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Role of Guava to National Economy of
Bangladesh: An Empirical Study
Sayed Mohibul Hossen

Senior Lecturer in Statistics, Department of Business Administration, NUB, Bangladesh

ABSTRACT
Guava, which is a very delicious fruit, is rich in vitamin C and contains the
appreciable amount of vitamin A too. It is also a good source of pectin –a
dietary fiber. Different types of favorite dishes are made from guava such
as guava jelly, guava syrup, guava cheese, guava roll, etc. Many countries
export these types of foods and earn a lot of foreign money. Although
Bangladesh is one of the best producers, there is no industry for preserving
this fruit. So, all the production become indeed in consumption.The aim of
the research is to know the cultural practices of guava in Bangladesh and
how to make sweetened guava dishes which can play a vital role to our
economy and to identify the best model that may be used for forecasting
purposes. The present study attempts to do a statistical analysis of current
guava production and its prospect in Bangladesh by considering the
various sources of variations on the time-series data for 23 districts of
Bangladesh and over a period of 27 years (1981-82 to 2007-08). The study
was considered for whole Bangladesh.

Keywords: Guava, Significant, National Economy, Production, Bangladesh

JEL Classification Code: E01; E20

INTRODUCTION
The long history of guava's use has led modern-day researchers to study guava extracts.
Its traditional use for diarrhea, gastroenteritis and other digestive complaints has been
validated in numerous clinical studies. A plant drug has even been developed from guava
leaves (standardized to its quercetin content) for the treatment of acute diarrhea. Human
clinical trials with the drug indicate its effectiveness in treating diarrhea in adults. Guava
leaf extracts and fruit juice has also been clinically studied for infantile diarrhea. In a
clinical study with 62 infants with infantile rotavirus enteritis, the recovery rate was 3 days
(87.1%) in those treated with guava, and diarrhea ceased in a shorter time period than
controls. It was concluded in the study that guava has "good curative effect on infantile
rotavirus enteritis." In a recent study with guinea pigs (in 2003) Brazilian researchers
reported that guava leaf extracts have numerous effects on the cardiovascular system
which might be beneficial in treating irregular heart beat (arrhythmia). Previous research
indicated guava leaf provided antioxidant effects beneficial to the heart, heart protective
properties, and improved myocardial function. In two randomized human studies, the
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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consumption of guava fruit for 12 weeks was shown to reduce blood pressure by an
average 8 points, decrease total cholesterol levels by 9%, decrease triglycerides by almost
8%, and increase "good" HDL cholesterol by 8%. The effects were attributed to the high
potassium and soluble fiber content of the fruit (however 1-2 pounds of fruit was
consumed daily by the study subjects to obtain these results!). In other animal studies
guava leaf extracts have evidenced analgesic, sedative, and central nervous system (CNS)
depressant activity, as well as a cough suppressant actions. The fruit or fruit juice has been
documented to lower blood sugar levels in normal and diabetic animals and humans.
Most of these studies confirm the plant's many uses in tropical herbal medicine
systems.(Conde Gracia,E,et al2003)
Scientific classification
Psidium Guava . L
Kingdom : plantae
Division :magnoliophyta
Class :magnoliopsida
Sub class :rosidae
Order :myrtales
Family :Myrtaceae
Sub family :myrtoideae
Genus :Psidium
Species :Guava
Guavas are plants in the myrtle family (Myrtaceae) genus Psidium, which contains about
100 species of tropical shrubs and small trees. Native to Mexico and Central America,
northern South Africa, parts of the Caribbean and some parts North Africa. Guava are
now cultivated naturalized throughout the tropics and are also grown in some subtropical
regions. (Jimmy Wales, 2008)
WORLD-WIDE DISTRIBUTION AND PRODUCTION OF GUAVA
Today, the fruit can be found growing in more than fifty countries throughout the tropics
and subtropics, including some of the Mediterranean areas. In Europe guava is grown in
Spain, Portugal, Southern France and Israel. In the United States, guava can be found in
California, Florida and Hawaii. In its native habitat of central and northern South
America. Well in Mexico, Panama, El Salvador, Costarica, Nicaragua, Bolivia and
Brazil.The major producers of guava in the world are India, Brazil and Mexico. Other
leading countries are South Africa, Jamica, Kenya, Cuba, the USA (Mainly Florida and
Hawaii), Egypt, Columbia and the Philipines.(Mathew Montoya)
Country Amount grown
( in Metric tons)
India 200,000
Mexico 175,000
Cuba 90,714
Egypt 34,000
South Africa 13,000
Bangladesh 146,077
It is palpable from the chart below that the Production of guava in Bangladesh is
increasing year to year. From the chart we can say that the maximum and minimum
production of guava in India and South Africa respectively. It is also clear that Bangladesh
has the 3
rd
position in the world for its guava production.
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Different kinds of Guava In Bangladesh
Mainly two types of guava are cultivated in our country commercially.
1. Kazi Peara (guava)
2. Bari Peara
Kazi Peara : Year round high yielding variety fruit weight 445.5 gm, shape pear to round
length 9.37 cm, breadth 9.66 cm, skin colour yellowish green flesh colour whitish texture
crispy taste slightly sour TSS 8.2-13.2% vitamin c content 202.4 mg/100 g fruit.
Shelf life 7-10 days. Yield 84 kg/plant. Released from the horticulture research centre
Joydebpur, Gazipur.(BARI, 2003)
Bari Peara- 2: Year round high yielding variety fruit weight 240 gm shape roundish length
6.4 cm breadth 7.4 cm skin colour greenish yellow flesh colour whitish texture crispy taste
sweet TSS 7.8-12.8%. Shelf life 7 days. Yielding 90kg/plant. Released from the regional
horticulture research station Akbarpur , Moulovibazar.(BARI, 2003)

Total cultivated area of guava in six divisions
The graphic representation given below, it is observed that the cultivated area of guava in
six divisions is increasing year to year. From the year 2004-05 area is considered only fruit
bearing garden so the line represents decreasing from 2004-05. The chart also represents
that the highest cultivated division is Dhaka and Chittagong.


Area wise Production of guava in Bangladesh
0
50,000
100,000
150,000
200,000
250,000
0
2000
4000
6000
8000
10000
12000
14000
1
9
8
1
-
8
2
1
9
8
3
-
8
4
1
9
8
5
-
8
6
1
9
8
7
-
8
8
1
9
8
9
-
9
0
1
9
9
1
-
9
2
1
9
9
3
-
9
4
1
9
9
5
-
9
6
1
9
9
7
-
9
8
1
9
9
9
-
2
0
0
0
2
0
0
1
-
0
2
2
0
0
3
-
0
4
2
0
0
5
-
0
6
2
0
0
7
-
0
8
x1=Chittagong
x2=Sylhet
x3=Dhaka
x4=Barisal
x5=Khulna
x6=Rajshahi
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It is observed from the graph below that the area wise production of guava is increasing
year to year. The highest increase in the area wise production of guava is in the year 2004-
05 and for the next three years, the areas increase gradually and also the production.

MATERIALS AND METHODS
Regression analysis
Regression analysis is a branch of statistical theory that is widely used in almost all the
scientific disciplines. In economics it is the basic technique for measuring or estimating the
relationship among economic variables that constitute the essence of economic theory and
economic life. for example, if we know that two variables price (x) and demand (y) are
closely related we can find out the most probable value of x for a given value of y or the
most probable value of y for a given value of x. similarly, if we know that the amount of
tax and the rise in the price of a commodity are closely related, we can find out the
expected price for a certain amount of tax levy. With the help of regression analysis, we
are in position to find out the average probable change in one variable given a certain
amount of change in another.(Shil & Nath, 2008)
The Log-Linear model
Let us consider the following regression model;
ui
i i
e X Y
2
1
|
| = …………….(1)
This may be expressed as,
i i i
u X Y + + = ln ln ln
2 1
| | ………(2)
Where ln=natural log (i.e., log to the base e, and where e=2.718)
If we write as
i i i
u X Y + + = ln ln
2
| o …………(3)
Where
1
ln | o =
This model is linear in the parameters
o
and
2
| , linear in the logarithms of the variables
Y and X, and can be estimated by OLS regression. Because of this linearity, such models
are called log-log, double-log, or log-linear models. If the assumptions of the classical
regression model are fulfilled, the parameters can be estimated by the OLS method by
letting
0
20000
40000
60000
80000
100000
120000
140000
160000
1
9
8
1
-
8
2
1
9
8
3
-
8
4
1
9
8
5
-
8
6
1
9
8
7
-
8
8
1
9
8
9
-
9
0
1
9
9
1
-
9
2
1
9
9
3
-
9
4
1
9
9
5
-
9
6
1
9
9
7
-
9
8
1
9
9
9
-
2
0
0
0
2
0
0
1
-
0
2
2
0
0
3
-
0
4
2
0
0
5
-
0
6
2
0
0
7
-
0
8
Area
Production
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Copyright © 2012, Asian Business Consortium | GDEB Page 46


i i i
u X Y + + =
*
2
*
| o
Where
i i
Y Y ln
*
= and
i i
X X ln
*
= . The OLS estimators o

and
2
|

, respectively.
Feature of the log-linear model
Two special features of the log-linear may be noted:
1. One attractive feature of the log-linear model, which has made it popular in
applied work, is that the slope coefficient
2
| measures the elasticity of Y with
respect to X. which means that the percentage change in Y for a given (small)
percentage change in X.
2. Another feature of the model is that although o

and
2
|

are unbiased estimates
of
o
and
2
| ,
1
| (the parameter entering the original model) when estimated as
) log(
1
o |


anti = is itself a biased estimator
RESULTS AND DISCUSSION
The coefficient of determination
2
R of the equation is 0.55, which indicates that 55% of
the total variation Of the Dependent variable has been explained by the Independent
variable. It can be said that the goodness of fit is good on the average. This result also
suggests that, if the cultivated area increases thousand hector then production/supply will
increases on the average by 1.15 thousand metric ton.



Finally we have concluded that the production of guava in Bangladesh is increasing day
by day. The soil and weather condition of our country is excellent for guava cultivation.
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From this study it is clear that the production is responsive to its area. That is, as expected
area rises, the corresponding supply rises. This indicates that there is a direct relationship
between expected production of guava and the cultivated area

Favorite guava Dishes & medical uses:
Guava is very delicious fruit. Many favorite and tasty items are made from guava and
these products are imported by many country. Such as, guava jelly, guava syrup, guava
cheese, guava roll, etc. (K.Y. and M.G. Brown, 1980)
Preparation of guava jelly
Item Quantity
Clear fruit juice 1 liter
Sugar 1 kg
Citric acid 10 gm
Sodium benzoate 1 gm
Color/flavor To taste
Procedure
1. Extract juice from fruit of good quantity and keep for a day or two for the co are
particles to settle down.
2. Filter/siphon clear juice.
3. Mix juice and sugar in a kettle and start boiling with continuous string.
4. When total soluble solid reaches 68* c stop boiling.
5. Add Sodium Benzoate, CS and flavor according to the formula.
6. Mix thoroughly fill in clean sterilized jars.
7. Cap, cool, wash, label store in a cool and dark place.
Preparation of guava syrup
Item Quantity
Juice 1 liter
Water 1 liter
Sugar 4 kg
Citric acid 30 gm
Potassium Metabisulphite 4 gm
Procedure
1. Select healthy white fleshed fruit
2. Wash thoroughly with tap water
3. Sort carefully, discard diseased, wormy and undesirable fruit
4. Cut into pies
5. Beat with about 20% of water and extract pulp passing it through juices/pulped of
muslin cloth
6. Boil sugar and water according to the formula
7. Add pulp (juice) as per formula and stir well
8. Add citric acid and KMS as usual and mix thoroughly
9. Fill in clean, sterilized glass bottles, cap, wash, label and store in a dark, cool place.
Guava cheese
Guava cheese can be prepared from fresh fruit slices or from the puree extract.

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Procedure
1. To 1 kg of puree extract
2. Add 1.5 kg of sugar
3. Add 2.5 g of butter
4. Heat until thick
5. Add 2g citric acid
6. One tb of salt
7. Pour into buttered trays in 0.5 cm layers.
Guava Roll
A cookie-like pastry is rolled around sweet guava paste into a loop shape. Guava rolls are
only moderately sweet .compared to some other Cuban-style pastries.
Masa Real
Another guava pastry, masa real comes in two forms; both are made with the same dough
and filling. One looks like a giant thumbprint cookie, round with a patch of guava in the
center. The other is like a very large guava-cookie sand-witch, with the guava filling
between two layers of the cookie-like pastry.
Brazo de Gitano
These jelly roll style cakes, fancifully named ―gypsy‘s arm‖ (presumably because of their
shape) are doused with rum syrup and then filled with custard or guava filling.
Worldwide Ethno-medical uses

(Leslie Taylor, 2005)
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POLICY IMPLICATIONS
While the production of guava is increasing and it has a great opportunity to play vital
role in our economy but there is no technique has been taken for its preservation. So, all
the production become indeed in consumption. To improve our economy government
needs to take some necessary steps.
1. Since the production of guava is responsive to area, by increasing cultivated area
of guava it is possible to raise its production.
2. By preserving and manufacturing different guava dishes we can fulfill our food
requirement (nutrition) all the year round and can improve our economy by
importing its sweetened dishes.
REFERENCES
[1] BADC: Directorate of agriculture marketing, Bangladesh Agriculture Develop Council,
Khamar Bari, Farm-gate, Dhaka.
[2] BARI,(2003) Joydebpur, Gazipur-1701, Bangladesh
[3] Conde Garcia, E. A., et al. ―Inotropic effects of extracts of Psidium guajava L. (guava)
leaves on the guinea pig atrium.‖ Braz. J. of Med. & Biol. Res. 2003; 36: 661-668.
[4] Jimmy Wales, Wikipedia Founder.Wikipedia® is a registered trademark of the Wikimedia
Foundation, Inc., a U.S. registered 501(c)(3)tax-deductiblenonprofitcharity.
[5] K.Y. and M. G. Brown [1980], ―economic effectiveness of brand advertising programmes
for u.s.orange juice in the European market. An statistical analysis‖.journal of agricultural
economics, 37,pp.385-395.
[6] Leslie Taylor,‖The Healing Power of Rainforest Herbs‖
[7] montymex@ocf.berkeley.edu
[8] Shil & Nath (2008): ―An introduction to the theory of STATISTICS‖







GDEB!!!
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review system, Open access policy, Indexing in world known citation
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Current Account Dynamics, Adjustment and
Capital Mobility in Bangladesh
Mohammad Masud Alam
1
; Rezai Karim Khondker
2
; & Mohammad Shahansha Molla
3


1
Assistant Professor of Economics, Shahjalal University of Science & Technology, Sylhet, Bangladesh
2
Professor, Dhaka School of Economics, Dhaka, Bangladesh
3
Assistant Professor of Finance, Leading University, Sylhet, Bangladesh


ABSTRACT
This paper examines current account (CA) dynamics, its relationship with
the degree of capital mobility and the state of integration of the Bangladesh
capital market with the global capital market. For the period 1976-2012,
findings of AR (1) process shows a rigid CA position along with its slow
adjustment and its inflexibility against real shocks, lower degree of capital
mobility and a slow progress of capital market integration with the rest of
the world. Compared to the period of fixed exchange rate regime, lesser
degree of rigidity has been observed during the flexible exchange rate
period suggesting a smooth and flexible current account position; but shows
an increased degree of rigidity and capital immobility for the overall time
period under consideration. These findings reveal some important policy
implications in respects of current and capital account liberalization,
deregulation of domestic markets and removing entry barriers on the part of
Bangladesh to boost up FDI and remittance inflows.

Key words: current account dynamics, capital mobility, Bangladesh

JEL Classification Code: F32; E22

INTRODUCTION
The scenario of persistent inflation, slow improvement of balance of payments (BoP)
condition and a moderate but steady growth rate of GDP while an ongoing global
slowdown, has been the focus of a lively debate among policymakers and economists in
Bangladesh. Much of the debate has concentrated on the large current account (CA)
surplus along with sustained sizable trade deficits and an incessantly increasing trend in
remittance inflows during the last three decades. One of the leading issues confronting
policy makers in Bangladesh is the pattern of CA dynamics and the adjustment process
i.e., whether CA would be back towards its equilibrium or the ‗steady-state‘ value
following an adverse shock or not. There are wide-ranging views on Bangladesh‘s CA
position of a surplus in excess of 1.77% of GDP (WDI, 2012). The question of CA dynamics
and post-shock adjustment is certainly an important issue for Bangladesh which is
increasingly in the focus of global investors. For, a CA surplus (deficit) of an economy may
indeed be a superb (disturbing) sign for the future economic growth; or whether there
would be any possibility to undergo severe external shocks (Lane & Milesi-Ferretti 2004,
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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Freund 2000). In fact, some literatures present evidences (Mann, 1999, Freund, 2000 &
Chinn and Prasad, 2003) concerning the threshold level of CA deficit as a fraction of GDP
and the timing of adjustment, which show that on average CA tended to adjust when it
approached levels around 4–5% of domestic GDP.
Seen from this perspective, first objective of this paper is to deal with the issue of
dynamics of the Bangladesh‘s CA position. Secondly, applying the Autoregressive (AR 1)
process this paper will examine the adjustment speed of CA that can tell us a great deal
about capital mobility (Bulut 2013, Taylor 2002). The previous studies focus mainly on the
CA sustainability, CA dynamics and capital mobility in developed countries especially in
the U.S. and for the EU countries. Considering the recognized information of huge
differences between Bangladesh and most developed countries, not only on policy making
institutions but also on planner‘s views in various macroeconomic and trade problems, it
is worthwhile and necessary to study the CA dynamics and capital mobility in this
country. However, there has been no literature published to date that has examined this
issue on Bangladesh. This gap of previous literature must be filled. The main purpose of
the analysis of CA is to inform the government about the global competitive position of
the nation, both future and current economic trends and to help in formulating country‘s
monetary, fiscal and trade policies in a more prudent way. Some policymakers and
economists argue that the balance of payments no longer matters as a noteworthy policy
on globalization and, because globally integrated capital markets along with financial
liberalization can assist a country to diminish their trade and current account deficits
(Feldstein & Horioka 1980). Trade openness, international capital mobility and easier
access to global financial markets has allowed open economies to increase their domestic
investment further than what could be financed by a country‘s own savings and reducing
the cost of current account adjustments (Clower & Ito 2012, Faruqee & Lee 2009).
Considering country‘s monetary and trade policy, how smooth the adjustment speed of
current account balances (CABs) in Bangladesh would be and how the global capital
mobility and financial flows can play a significant role in the adjustment process? This
paper examines these questions by using AR (1) process of current account dynamics and
the associated degree of capital mobility in Bangladesh over the past four decades. The
remainder of this paper is as follows. Section II provides a theoretical framework on the
model of AR (1) process of current account dynamics. This section also outlines how an
econometric parameter can depict dynamics, adjustment process and can explain real
shocks of an open economy resulting from a variety of sources. In Section III we present
our data and conduct stationary tests employing conventional unit root and Dickey-Fuller
test. Section IV builds on the analysis of results to examine the current account dynamics
and degree of capital mobility. We present concluding remarks in section V along with
some policy recommendations.
METHODOLOGY
Econometric framework
A number of approaches have been employed to investigate the CA dynamics and the
adjustment process of CAB and its relationship to gauge the degree of capital mobility.
While the AR (1) approach to the current account is a standard and parsimonious
framework (Obstfeld & Taylor, 2005) for analysis of dynamics and capital mobility, it is
not particularly well corroborated by others (Bulut 2012, Raybaudi et. al. 2004, Calderon et
al , 2002) for assessing current account dynamics. The AR (1) is the simplest but significant
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linear time-series process which captures dynamics. It indicates the notion that what we
know about the future depends on realizations from today, yesterday, and so on
(Hamilton 1994). In this section we model the dynamics of CA/Y that can give us inkling
about capital mobility. Using simple AR (1) process we can also investigate the adjustment
speed of CA/Y to check whether it will eventually move back towards its equilibrium or
‗steady-state‘ value after an adverse shock (Bulut 2013, Taylor 2002).
Following Brockwell, Peter and Davis (1987), Hamilton (1994) and Gunnip (2006), let time
be indexed with t and let t ∈ {− ∞….− 1, 0, 1, 2 ...∞}. Let
t
c ~N (0, 1) be an identically and
independently distributed (or i.i.d. shock). This means that, no matter what the date is, the
distribution of
t
c follows the standard normal distribution. The random variable X
t

follows an AR(1) if we can write it as

t t t
X X ¢c µ | µ + + ÷ =
÷1
) 1 ( …………………..(1)

If we consider the stationary assumption of – 1 < µ < 1 and let time t→∞ then
¿
·
=
÷
+ =
0 j
j t
j
t
X c µ ¢ | …………………………..(2)

where ρ, ɸ and ѱ are fixed scalars, or the parameters of the process. Equation (2) is the infinite-
order moving average. Using equation (2), the AR (1) variable, X
t
can be presented as an
infinite sum of past shocks, where more distant shocks get smaller and smaller weights. It is
because the coefficients in equation (2) are geometrically declining since µ < 1.
The dynamics of the AR (1) are summarized by its ‗autocorrelation parameter ρ. It is a
measure of the linear dependence of today‘s value X
t
on previous time value X
t-1
. It is
defined as:
) (
) , (
) , (
1
1
t
t t
t t
X Var
X X Cov
X X Corr
÷
÷
= ………………… (3)
where,
) (
) , (
, ) 1 ( ( ) , (
1
1 1
1 1 1
÷
÷ ÷
÷ ÷ ÷
=
=
+ + ÷ =
t
t t
t t t t t
X Var
X X Cov
X X Cov X X Cov
µ
µ
¢c µ µ |
(4)

Since these are unconditional moments of a stationary time series process, we must have
that
) ( ) (
1 t t
X Var X Var =
÷

Therefore, µ = ) (
t
X Corr ………………………………………………… (5)

If ρ = 0 then there are no dynamics and showing X
t
is i.i.d., follow normal distribution. If |
ρ | < 1 then the process is said to be stationary and the distant past is matters. If ρ = 1 then
the process is called a ―unit-root process‖ and its memory is infinite. If | ρ | > 1 then the
process is ‗explosive.‘ Thus, for |ρ| < 1, the system is considered stable, or the further
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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back in time a given change occurs, the less it will affect the present. The given change
eventually dies down over time. For |ρ| > 1, the system blows up. A given change in the
past time period increasingly affects the future as time goes on. Under this framework, to
investigate the current account dynamics and its relationship with capital mobility we
used simple AR (1) regression of the following form:

t t t
U
GDP
CA
GDP
CA
+ + = A
÷1
) ( ) ( | o ………………………(6)

Where, CA= current account
GDP= Country‘s gross domestic product
t= Time period
U= Random error term
∆ = First difference operator

The main task is to examine the convergence speed β and error variance σ
2
. How should
we interpret the model parameters? If β is small (close to zero) we would infer that the
country has a flexible current account and the capacity to run persistent deficits.
Conversely, if β is high (close to one) the country has a rigid current account where
deviations from balance are hard to sustain. In this framework, we might consider the
former to be an evidence of higher degree of capital mobility as compared to the latter.
We can estimate the adjustment speed of CA/Y to know whether it will return toward its
equilibrium or ‗steady-state‘ value or not. Using dynamic version of our above mentioned
AR (1) model of the current account we can write down a long run or asymptotic variance
of CA/Y, as it is
2
2
1
) (
µ
o
÷
=
Y
CA
Var ………………………………(7)
Y= GDP, Country‘s gross domestic product

Where ρ = 1 − β<1 is a persistence parameter. Hence, as it is intuitively obvious, countries
will only have large current accounts surplus or deficits (according to this variance measure)
only if their dynamics would allow it: if shocks are large or if the convergence speed is slow.
How should we interpret the shocks U
it
? Using Bartlett (1948) residual periodogram, these
can be construed as real shocks to the open economy resulting from a variety of sources, e.g.
technology, taste, world interest rates, currency crises and so on. These will be considered
the forcing terms for the equation and for the present purposes assumed to be exogenous. If
the error variance σ2 is high, it indicates a large range of real shocks to the current account; a
small variance indicates more tranquil times in the external balance.

Data
The data for the empirical analysis consist of annual observations over the period of 1976
to 2012 on GDP and current account, exports of goods and services (X), imports of goods
and services (M), net income payments (NIP) and net current transfers (NCT). GDP and
current account data, collected from World Development Indicator (WDI) of World Bank
are expressed in U.S. dollar and all other variables, collected from Economic trends of
Bangladesh bank are expressed in domestic currency unit, Bangladeshi taka (BDT).

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Figure I: Bangladesh Current Account (US$) Source: World Development Indicator (2013)

Figure I show the fact of current account position in Bangladesh. As reported by
Bangladesh Bank (BB), Bangladesh recorded a CA surplus of $708 Million in the fourth
quarter of 2012. Reviewing time period of 2005-2012, Bangladesh Current Account
averaged $ 427 Million reaching an all time high of $ 1417 Million in September of 2009
and a record deficit of $1638 Million in December of 2011.

A long term deficits during the 1997-2000 periods turned into surpluses at the period of 2001 – 2004
and reverted to deficits in 2004-05. Because of increasing demand of merchandise export and smooth
inflow of inward remittances, CAB showed a surplus of US$850 million during the six months of the
current fiscal year 2012- 13 (July 2012-June 2013) while it recorded a surplus of $1.704 billion in the
fiscal year (FY) 2011-12. In the context of CAB as a percent of GDP which is an indication of the level
of international competitiveness, figure II shows that Bangladesh recorded a CA surplus of 0.90
percent of the country's GDP in 2011. For the period of 1980 - 2011, Bangladesh CA to GDP averaged
-1.2 % reaching high of 3.7 % in December of 2010 and a record low of -4.4 % in December of 1988.
Despite a small CA surplus of 0.21 % of GDP in 2011, Bangladesh's CA surplus is expected to be .85
and 0.62 percent of GDP in 2014 and 2015 respectively (IMF 2012).
-6
-5
-4
-3
-2
-1
0
1
2
3
4
1975 1980 1985 1990 1995 2000 2005 2010 2015
C
A
B
_
t
o
_
G
D
P

(
%
)
Period (Year)
Figure II: Current Account to GDP (%)
Record Deficit
Record Surplus
Forecasted
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ANALYSIS OF RESULTS
We summarize the results of the AR (1) model in table I. As Taylor (2002) argued, these
results are very remarkable in the sense that they confirm a dynamic pattern of current
account adjustment and the stylized facts of macroeconomics of capital mobility.

Table I: Current account dynamics and adjustment parameter
Periods β σ
2
R
2
p

1976-2003 0.72(1.83) 0.42 0.18 0.087
2004-2012 0.32(2.14) 0.37 0.099 0.002***
1976-2012 0.63 (2.81) 0.34 0.45 0.008***
F(1, 32) : 22.89 with P-value of 0.00003 ; D-W : 1.98
*** Indicates that coefficient is significantly different from zero at 95 % level of confidence; Significant at 5 % level

First, we have examined our model for two sub-periods, for fixed exchange rate regime of
1976-2003 and for the period of flexible exchange rate regime of 2004-2012. Second, we
estimated AR (1) model for overall period of 1976-2012. We considered two sub-samples
with a view to compare the CAB position of the two different exchange rate regimes the
―Fixed Exchange Rate‖ and the ―Free Flexible Exchange Rate‖ as Bangladesh Bank declared
‗Free Floating Exchange Rate‘ of its domestic currency in 2003 (Bangladesh Bank, 2003).
Looking at the results in Table I, we see that the convergence speed (β) was quite high in the
pre-2003; about 72% per annum suggests a considerable inflexibility to smooth shocks over
medium to long horizons. This rigidity to adjust was reduced in the flexible exchange rate
period, as the convergence speed decreased to about 32 % per annum, suggesting in favor of
smooth and flexible current account position. Surprisingly we see that the convergence
speed (β) is quite high for the overall period (1976-2012), about 63 % per annum. For overall
period, result suggests that CA has remarkable inflexibility to return to its path of steady
state, with a convergence speed of 63%. Other parameters validate our findings as value of
R
2
(0.45) is quite high with p-value of 0.008 and with the significant t value of 2.81.
We have performed Cochrane-Orcutt iterative calculation of rho and estimated the value
of error variance (σ
2
) to be 0.34 for the overall period, and 0.37 for the flexible exchange
rate time period. In both cases the error variance σ2 is quite higher indicating lesser degree
of flexibility and ability against a wide range of real shocks to the current account.
Although forecasting by IMF for the period of 2013-15 is indicating a more tranquil times
in the external balance, but our estimated results show dissimilarity for the value of CA to
GDP. Our findings show that Bangladesh will have a rigid current account position and
any deviations from balance are hard to be sustained. Therefore, forecasted values show a
deficit of CA to GDP is 0.41 and 0.48 for the period of 2014 and 2015 respectively. Figure
III shows dynamic forecasted value of AR (1) process for CA to GDP at 90% confidence
interval. Visual inspection also reveal the dynamic forecasting error for overall time period
upon which we may be skeptical on the forecasted value of CA to GDP for 2014 and 2015
time period. In order to avoid such skepticism, we have extended our investigation to an
estimation of the spectrum of the residual periodogram (figure VII) using Bartlett lag
window by setting manually, using the bandwidth parameter up to a maximum of half the
sample size (18). We can observe a ―locally‖ smoothed periodogram trend of current
account balances as the spectrum decomposes the content of a stochastic process into
different frequencies present in that process. Therefore, using spectral density estimation
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of a random signal of CA to GDP for the sequence of time periods of 1976-2012 shows that
variance decreases substantially, especially in the years of flexible exchange rate period,
i.e. 2005-2012 as we observe an increasing trend of current account surpluses, implying
higher degrees of current account flexibility for that period.

Figure III allows us to make two observations. First, the behavior of the AR (1) coefficient‘s
standard deviations confirms the differences between actual and forecasted values for any
given time period, suggesting increasing idiosyncratic shocks to CAB for the period of
2012-2015. Second, the relatively stable standard deviations in the last three decades do
not suggest a smooth and persistent CA surplus for forecasted time periods. Therefore,
system is not considered quite stable, or the small possibility of further back in time if a
given change occurs, i.e., the less it will affect the present. But dynamic pattern of AR (1)
coefficient shows the possibility to adjust the CAB system to more stable one as we have
|ρ| < 1 (0.34), the given change or impact of adverse shocks eventually dies down over
time. Adjustment speed and implementation of dynamic system require country‘s prudent
monetary, trade and exchange rate policy interventions. More specifically, what kind of
policy interventions would lead a country to enter into a flexible system for its current
account process? And how do they affect the degree of country‘s capital mobility and
integration with the rest of the world? Future research will lead to explore these questions.
Given our estimated results, a brief look at the error variance (σ) reveals no surprises for
the degree of capital mobility. Shocks were largest during the fixed exchange rate periods
with higher value of β and σ2, indicating lower degree of capital mobility. In contrast to
the flexible exchange time period (2003-2012), shock is also quite higher for overall
periods, and that seems entirely consistent with the long-lasting impact of a highly
controlled system designed by monetary authority of Bangladesh to both limit capital
mobility and prevent shocks. The pre-flexible exchange rate periods had shocks larger
than the flexible exchange rate periods, showing comparatively increased degree of
country‘s integration with the rest of world‘s capital market. Furthermore, all diagnostic
tests give evidence in favor of reliability of the estimated model.
-6
-5
-4
-3
-2
-1
0
1
2
3
4
1975 1980 1985 1990 1995 2000 2005 2010 2015
C
u
r
r
e
n
t

A
c
c
o
u
n
t

t
o

G
D
P

(

%
)
Time Period ( Year)
Figue III: Forecasted Value of CA to GDP
CA to GDP
Forecast
90 percent interval
Forecasted
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We can consider a number of possible explanations for the figures presented in appendix,
displaying the series autocorrelation function, exponential moving average (EMA), cyclical
components of CA to GDP series and normality distribution of residual. EMA assigns a
weighting factor of 0.200 on each current observation in the data series while the most
recent data get the greatest weight and used with series to smooth out short-term
fluctuations and emphasize longer-term trends.
CONCLUSIONS
This paper aims to provide an examination at the pattern of dynamics of current account
balances and the degree of capital mobility of Bangladesh by using simple AR(1) process.
Empirical investigation mainly focuses the state of CAB position and its inflexibility against
real shocks, degree of capital mobility and progress of capital market integration with rest of
the World. There have been some substantive policy changes in the monetary policy and
capital market in Bangladesh in recent years and, these have pointed towards the flexibility
of CAB and increased degree of capital market integration. But the findings of AR (1)
regression reveals capital immobility and indicates the rigidity of Bangladesh‘s current
account position to smooth any external shocks over medium to long horizons. This rigidity
to adjust was reduced in the flexible exchange rate period, as the convergence speed
decreased to about 32 % per annum, suggesting in favor of smooth and flexible current
account position. But findings show a rigid current position for the overall time period.
These findings are noteworthy and reveal important policy aspects of Bangladesh‘s external
sector and the issue of capital account liberalization. The process of capital market
integration actually starts with the removal of capital market imperfection, such as current
and capital account liberalization, deregulation of domestic markets and removing entry
barriers for foreign financial institutions. FDI and remittance become the largest sources of
foreign capital flows for Bangladesh and both are continuing to exhibit an upward trend in
Bangladesh. Policy implication of this paper is suggesting a comprehensive policy options in
country‘s monetary and exchange rate policies to attract FDI, to ensure smooth flow of
remittance and strengthen integration with global capital market opportunities so that
country can sustain and maintain her stable and sustained current account position.
REFERENCES
[1] Bartlett, M.S. (1948). "Smoothing Periodograms from Time-Series with Continuous
Spectra". Nature 161: 686–687.
[2] Brockwell, Peter J. and Richard A. Davis. (1987). Time Series: Theory and Methods. New
York: Springer–Verlag.
[3] Bulut, L. (2013). Current account dynamics and degree of capital mobility. Applied
Economics Letters, 20(7), 697-701.
[4] Calderon, C., Chong, A. and Loayza, N. (2002). ‗Determinants of current account deficits
in developing countries‘, Contributions to Macroeconomics, vol. 2(1).
[5] Chinn, M. and Prasad, E. (2003). ‗Medium-term determinants of current accounts in
industrial and developing countries: an empirical exploration‘, Journal of International
Economics, 59(1), (January), pp. 47–76.
[6] Clower, E. and H. Ito. (2012) The Persistence of Current Account Balances and its
Determinants: The Implications for Global Rebalancing. ADBI Working Paper 400. Tokyo:
Asian Development Bank Institute.
[7] Faruqee, H., and J. Lee. (2009). Global dispersion of current accounts: Is the universe
expanding? IMF Staff Papers 56: 574–595.
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[8] Freund, C. (2000). ‗Current account adjustment in industrialized countries‘, International
Finance Discussion Paper 692, Board of Governors of the Federal Reserve System
[9] Gunnip, Jon. (2006). Analyzing Aggregated AR (1) Processes. University of Utah.
[10] Hamilton, James D. (1994). Time Series Analysis. Princeton, NJ: Princeton University Press.
[11] Lane, P. and Milesi-Ferretti, G-M. (2004). ‗International investment patterns‘, IMF Working,
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[12] Mann, C. (1999). ‗Is the US trade deficit sustainable?‘, Institute for International
Economics, September.
[13] Obstfeld, M. and Taylor, A.M. (2005). Global capital markets: integration, crisis, and
growth, Cambridge University Press, USA.
[14] Taylor, Alan M., (2002). "A Century of Current Account Dynamics," Journal of
International Money and Finance, Elsevier, vol. 21(6), pages 725-748.

APPENDIX

Figure IV: Residual periodogram using Bartlett lag window


Figure V: Series autocorrelation function (lag 8)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0 {/Symbol p}/4 {/Symbol p}/2 3{/Symbol p}/4 {/Symbol p}
radians
Residual spectrum (Bartlett window, length 17)
variance decreases
-1
-0.5
0
0.5
1
0 1 2 3 4 5 6 7 8 9
lag
ACF for CAB___of_GDP_
+- 1.96/T^0.5
-1
-0.5
0
0.5
1
0 1 2 3 4 5 6 7 8 9
lag
PACF for CAB___of_GDP_
+- 1.96/T^0.5
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Figure VI: EMA- original and smoothed value


Figure VII: Cyclical components of CA to GDP (%)



Figure VIII : Normality distribution of residual


-6
-5
-4
-3
-2
-1
0
1
2
3
4
1975 1980 1985 1990 1995 2000 2005 2010 2015
C
A

t
o

G
D
P

(
%
)
Time (Year)
Figure VI: EMA- Original and smoothed series
CAB to GDP (original data)
CAB to GDP (smoothed)
-6
-5
-4
-3
-2
-1
0
1
2
3
4
1980 1985 1990 1995 2000 2005 2010
CAB___of_GDP_ (original data)
CAB___of_GDP_ (smoothed)
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
1980 1985 1990 1995 2000 2005 2010
Cyclical component of CAB___of_GDP_
0
0.05
0.1
0.15
0.2
0.25
0.3
-4 -3 -2 -1 0 1 2 3 4
D
e
n
s
i
t
y
Residual (Uhat1)
uhat1
N(1.3184e-016,1.4873)
Test statistic for normality:
Chi-square(2) = 0.683 [0.7109]
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Organizing: An Islamic Perspective
Dr. Md Golam Mohiuddin
1
; Gaffar Olanrewaju Yusof
2
; & Afroza Bulbul
3


1
Associate Professor, Faculty of Management and HRD, University Technology Malaysia, Malaysia
2
Faculty of Management and HRD, University Technology Malaysia, Malaysia
3
Assistant Professor of Management, Department of Business Administration, IIUC, Bangladesh

ABSTRACT
The issue of organizing and orderliness is paramount in Islam, it connotes an
act of placing things in its proper place which is otherwise known as Hikmah
(wisdom) in Islamic term. Today many organization exist, but are not aware of
the act of organizing, according to Islamic perspective. Some people equate
some Muslims or Islamic NGOs with the true Islamic act of governing this
could be misconception on their part. Hence this study wishes to elucidate on
act or organizing according to the injunctions of Allah and the practice of the
holy prophet. This study employs documentary/library research method and
data were collected through both primary and secondary sources. It is found
from the study that Islam has its own perfect way of carrying out its
organizational function as exemplified by the holy prophet which aims at
improving the quality of life and the welfare of the society. It is now the hopes
of all nations to direct attention to the way Islam portrayed organizational
management and have a fruitful goal in this world and the hereafter.

Key word: Organizing, Specialization, Islamic consultation, Delegated
authority, Accountability

JEL Classification Code: M12; M54

INTRODUCTION
Organizing is a process of identifying and grouping works to be performed, defining and
delegating responsibility, authority and establishing relationship for the purpose of enabling
people to work effectively together in accomplishing the desired objectives.
There are many management thinkers who have contributed to the study of organizations in
many ways. The classical theorists are F. W Tayler (1927), Henry Fayol (1929) and Islamic
thinker Abbas J. Ali (2005) who studied various aspects of organizations and developed
many management principles that might be interested to learner. The origin of the theory
that brings about the issue of organizational structure, is a German Writter named Max-
Weber (1974) who wrote about the idea of Burucrracy. The issue of organizing is not only
restricted to this world alone, it is also has something to do with the hereafter. That is why
Allah mentioned in the holy Quran thus-
O you who believe! Obey God and obey the Messenger and those from among you who are in charge of
your affairs; and if you differ over any matter, refer it to God and the Messenger, if you do believe in God
and the last day." (Al-quran 4:59)
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If we ponder on the hadith one will see how Allah organizes the sentences, in an orderly manner and
thereafter, emphasize the issue of leadership, whose responsibilty is to organize and manage the affairs of
poeple, (Ahmad Shaffat, 1984).
Islam is a universal religion followed by over one billion people living in different geo-
political systems and of various professions. The need for knowledge in Islam especially
applicable within an organisational setting is increasingly becoming more important.
Applied in any organization, Islam stresses co-operation and a sense of collective efforts of
people in a working, situation should aimed at achieving a certain goal. Since organizations
are composed of very distinct people, with each and everyone of unique character
contributing in particular ways based on the culture of unity in diversity.
ISLAMIC DIMENTION OF ORGANIZING
Organizing is one of the basic function of management or administration it involves the
practical, ordered, and step by step way of implementing a program, project, events etc. This
term is used differently by poeple, the usage is largely influenced by the area of
specialization of the user. Robert and Judy (2002), state that organizing entails the giving of
tasks, the grouping and sorting of tasks into departments and the allocation of resources to
departments. Organizing also involves creating communication flow between leader and
the leads within the organization. However the basic idea of organizing is to arrange things,
or event in order to follow a mannner so that the set goals or objectives could be achieved. In
order to get clearer picture of the concept, one need to explain the basic functions of
Organizing and its principles .
Basic Functions and Principles of Organizing
A manager performs organizing function with the help of following steps:
(a) Identification of Activities;
(b) Departmentation the Activities;
(c) Classification the authority;
(d) Co-ordination;
(e) Effective Administration;
(f) Growth & Diversification;
(g) Sense of Security;
(h) Scope of new changes.
Principles of Organizing
The organizing process can be done efficiently if the managers have certain guidelines so
that they can take decisions and can act. To organize in an effective manner, the following
principles of organizations can be used by a manager:
(a) Principle of Specialization;
(b) Principle of Functional Definition;
(c) Principle of Span of Supervision and Control;
(d) Nerrow Span of Control;
(e) Principle of Scalar Chains;
(f) Principle of Unity of Command;
Classification of Organizations
Organizations are basically classified on the basis of relationships. There are five types of
organizations formed on the basis of relationships in an organization:
(a) Formal Organization;
(b) Informal Organization;
(c) Line Organization;
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(d) Line & Staff Organization;
(e) Functional Organization;
Abbas. J. Ali (2005), stated that organization Structuring was already established by
prophet Mohamad (S.A.W) during the early years of Islam. In the history of state
philosophy, the Islamic state established at Madina by the Holy Prophet (S.A.W) was a
unique example of division of labours. For the proper executionand direction of
administrative activities, planning and executive, integration of the competency and it
ensure the effective patronization in every field, the strong parliament of Madina was
organized through the process of Labour Division. In that Partiament, the name of 24
divisions was detected. For example president‘s personal division, sealing division, Wahy
(Revelation Division) Composing division, reception division, defence division etc. To
acquire competency in these divisions, sub-divisions were moduled. The organization
structure as can be seen on the figure bellow was very simple and flexible since all officers,
regardless of their level in the organization, had the right to approach the prophet or his
deputies and report their problems. But as for the expansion of Islamic state across
borders of geographical regions, the organization structure became more complex and the
authority lines became clearer.
Chart 1



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SOME DISCUSSIONS ON DIFFERENT TYPES OF ORGANIZATIONS
The evolution of formal structure of organizations in Muslim World resembles that of the
rest of the world. The nature of the evalution, however, has been influenced by two factor:
Sudden and rapid integration in the world economy and the religious emphasis on
maintaining order. Unlike Britain or the United States, for example, most Muslim States
have not passed through a gradual economic progress and integration on the world after
building sound economic and legal institutions. Their involvement in the world economy
was introduced mostly by colonization and the exploitation of their natural resources by
Western Corporations, while organization structure existed but was not formally drawn.
Most of the organizational charts were structured according to functional
departmentalization, product on geographical divisional structure existed but were not
that common and the mixture of functional and divisional structure were the second most
popular structure after functional organization.
About line and staff organization, specialized and supportive activities are attached to the
line of command by appointing staff supervisors and staff specialists who are attached to
the line authority. The power of command always remains with the line executives and
staff supervisors fields, advice and councelling in the line executives. We find numerous
examples about the line and staff types of organizational practice during the time of
prophet Muhammad (S.A.W) as well in Chalaphat.
It appears that Muhammad (S.A.W) practised Shura in the battle of Ditch (Khandaq) the
whole strategy of war was adopted on the suggession of Salman Al-Farisi, who was being
Persian freed slave would never have been enjoyed the ordinary rights of citizenship in
the pre-Islamic polity.
Summing up, it must be observed that from the very inception of the Islamic Polity,
Muhammad (S.A.W) set up the precedent of consulting Muslims generally and a few men
having acumen in the religions, economics, social and political affairs of the state in
particular. Actually it was the precedent established by the prophet of consulting men of
supreme wisdom that played a very significant role on the legal and political development
of Islam after the demise of Muhammad (S.A.W).
It has been recorded in the annals of Islam that whenever Abu Bakar had to make a
decision, he looked forward to the Quran in the absence of clear nass (textual injunction) in
the Quran, he used to refer to the Sunnah and Tradition of the Prophet (S.A.W). But if that
failed, then he used to consult the members of the Shura. Regarding the Shura or Staffs of
Abu Bakar (R.A) we have the following report from Ibn Sad: ―Whenever some important
problems were brought to Abu Bakar, he called on the Muhajirin and Ansar and invited
‗Umar‘ in particular, Ali, Uthman, Abu Ubaydah, Abdur Rahman bin Auf, Muadh bin
Jabal, Ubayy bin Kab and Zaid bin Thabit for Consultation. It is the example of line line &
staff types of Organization.
Here it is mentionable that during the golden ruling of Umar (R.A), Hazral Ali (R.A) was
working with him as close advisor or staff. In numerous cases, it was found that Amirul
Mominun Hazral Umar (R.A) had taken very stiff decisions, but some times considering
the surroundings these verdict were wrong which are drawn attention by Hazral Ali (R.A)
as a staff member and Umar‘s decisions were corrected by his companion Ali (R.A). Thus
once Hazral Umar (R.A) Commented ―If Ali (R.A) was not available, Umar (R.A) would
destroyed/spoiled‖.
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DELEGATION OF AUTHORITY
A manager alone cannot perform all the tasks assigned to him, in order to meet the targets,
the manager should delegate authority. Delegation of authority means division of
authority and powers down wards to the subordinates. Delegation in about entrusting
someone to do parts of your jobs. Delegation of authority can be defined as subdivision
and sub-allocation of powers to the subordinates in order to achieve effective results.
Islam Underlines the three main aspects:
- Authority
- Responsibility and
- Accountability
Islam has unitary view of life (an off-shoot) of Tawheed as an inter-connected and
homogenous which clearly contradicts the secular view that sees life as an intricate
mechanism of materialism, therefore in many cases Islam views things against western
views base on the fact that the Islamic worldview is different from the west. As result we
need to look at how Islam views the above concepts.
Authority
In context of a business organization, authority can be defined as the power and right of a
person to use and allocate the resources efficiently to take decisions and to give orders so
as to achieve the organizational objectives.
Now a days, many Muslim-Owned Corporations base their organization structures on
some factors ranging from strategy, to type and nature of business and management that
is able to manage its stakeholders relationship is likely to gain greater success. Many
studies have been conducted on the management and organizational style of ―Umar-Bin
Khattab (Jabnann, 2001) which was successful due to his well defined relationship among
members of his team, discipline of members and mutual respect among themselves.
Howeverthis secular world view as adopted by secular nations in the West has a great
influence on the organizational culture. They have for a long time prized highly the
technical skills requirement and largely ignored the interpersonal relationships in the
organization.
Organizing from an Islamic perspective should emphasize the fair relationship within and
outside the organization. There are internal stakeholders, such as the managers and
employees, as well as external stakeholders such as the customers, community, and
government. Islam underlines the three main aspects: Authority, responsibility and
accountability in defining these relationships which are elaborated to further study is of
high importance due to two fundamental reasons. The establishment of this
administration was very successful;
(a) He was the most outstanding person in terms of his religions practice after the
prophet (S.A.W) and Abu Bakar, and nobody would accuse him of ―Compromising‖
his faith and discipline;
Generally, he delegated his authority to governors or the officials, by applying the basic
principles of decentralization. Probably, more notably important, would be the fact that
he was quite happy to incorporate useful concepts/institutions/technology borrowed
from non-Muslims. In his administration, the King of Persion used to have a ―Ministry of
Finance‖, Umar borrowed this idea and introduced it in Medina to handle the financial
affairs of the Umah, there was also an understanding at this time that his administration
would benefit from changes in the economic and social environment. In some cases,
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Umar(RA) changes some rulings that were made by prophet (S.A.W) him self, not due to
disobedience, but to find a fit to changes in the environment.
About the booties that were received from the land that had been conquered in war was to
distributed among those who fought in Jihad. But for better decision, Umar (R.A)
gathered a Shura and invited more people than usual. It proves to consider in this context
would be the difference between the level of authority (which rests at the top) and power
(which needs to be shared with subordinates.
The Islamic perspective on authority encompasses with the classical view and the
acceptance view. In fact, the two views can not be mutually exclusive. The term authority
has not been used in Islamic materials. Instead, Islam uses the term ―Incharge‖. Islam
emphasized discipline and obedience. Allah (S.W.t) Said- ―Oh you who believe! Obey Allah
and obey the messenger; and those in charge among you.‖ Sura Nisa(4:59).
Authority in Islam in limited within the framework of the mission of Muslims and the
interest of the organization. Besides, authority is balanced by the process of enjoining
what in right and forbidding what is wrong. It is the duty of subordinates rather than
their right not to comply with orders that flagrantly contradict the mission and objectives
of Islam or those of the organization. It is also to be understood that the leader should
only give feasible and beneficial orders. Most importantly, the nature and scope of
complainer should be agreed upon in the job contract, or the job description, and then
both the manager and the subordinate have to abide by the contract: ―And fulfill (every)
engagement, for every angagement will be enquired into on the day of Reckoning‖. Sura Bani
Israil(17:34).

Responsibility
Responsibility means the obligation owed by subordinates to their superiors for exercising
authority delegated to them in a way to accomplish results expected. In Islam every body
is responsible. Fox example, a teacher has the responsibility for teaching the assigned
subject to his/her students and to test them on it. On the other hard, the students are
expected to gain knowledge in their courses and to do their assignments, and are thus
ressponsible for these duties. Prophet Said ― Behold! Each one of you is a gardian and
each one of you will be asked about his subject.‖ ( Bukhari & Muslim).
Corporate management is difficult when there are unfair and biased dealings with the
many stakeholders and non seems to bother about organizational resposibilities. In Islam,
mas’uuliyah solves this problem. The term mas’uuliyah (responsibility) is not mentioned as
such in the Holy Quran, although a large number of the epistemological derivations of the
verb sa’ala may be found. Amanah was mentioned by the most high, as one of the
attributes of the angels, of Gabriel, the trustworthy Spirit, and of the Apostles and the
Prophets:

“I am to you an apostle worthy of all trust‖ Al Quran(26:107).

As human being are the vicegerents of Allah, certainly a huge responsibility he has
assumed. Allah (SWT) said:

“Lo! we offered the trust into the havenes and the earth and the hills, but they shrank from learing
it and were afraid of it and man assumed it. Lo he had proven a tyrant and an ignorant”. Surah
Alizab (33:72)
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Ali Abdul Kader states that this trust was nothing more than the responsibility that man
decided to undertake because of his freedom of choice and his faculty of intellect. Further,
it is the responsibility of people to change their status for the better:

“Lo! Allah Changeth not he condition of a folk until they change that which is in their hearts”.
Surah Yousof (12:11)

Infact, most of the time our Muslim brothers & sisters are not serious up to the level of the
obligation to accomplish or the set target, but not everybody possesses the same level of
responsibility. Managers have heavier responsibilities than subordinates. Therefore,
every manager should feel deeply responsible for whatever under his/her authority, more
so, responsibility entails accountability in this world and in the hereafter.
First, a religious aspect which concerns the relationship with the Almighty Allah; second,
the worldly aspect which concerns relationship with people and one‘s society, and a third,
internal aspect, which is related to one‘s conscience and inner self. The three aspects were
summed up by the Holy Quran in the following verse:

“O ye who believe! Betray not Allah and His messenger, nor knowledge betray your trust.”
Al-Quran (8:27)

The last religions scripture, the Holy Quran mentions that everybody have to be
accountable on the Day of Judgement and this on the basis of these three aspect: the
religious, the worldly and the innermost one. the Most High says – “And Say – “Work
(righteourness): Soon will Allah observe your work.” Al-Quran
ACCOUNTABILITY
Accountability means giving explanations for any variance in the actual performance from
the expectations set. Being accountable means being innovative as the person will think
beyond his scope of Job Accountability. In short, accountability means, being answerable
for the result. Accountability cannot be escaped. It arises from responsibility.
In Islam this accountability is two folds. First of all an employee is accountable to
almighty Allah (SWT), side by side he in also accountable to his immediate loss. It has
been prescribed

“ Then shall anyone who has done an atom’s weight of good, see it! Any one who has done an
atom’s weight of evil, shall see it” Sura Zura Zilzal (99:7-8).

One of the famous letter of Ali (R.A) was a letter wrote to his governor Malik Astari about
accountability-

“Malik you should never forget if you become their monarch, Khaliq will be your monarch and
Allah is even highest supremacy than the Khaliq.”

To ensure accountability, Islamic management has attributed two conditions: to ensure
autonomy of action and to arrange confidence of all types. Thus, Islam undoubtedly
preserves the right of giving accountability.
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The feelings of accountability in the hereafter have played a great role in the success of
Muslim leaders throughout history, when Umar Ibnu Abdul Aziz become the Caliph of
the Muslim, he followed the prophet‘s guidance saying:

“It is a responsibility, and it is a source of ignominy and regret in the hereafter”.

This feelings of accountability was the major characteristics of Umar Ibn Abdul Aziz who
was considered to be the fifth righteous Muslim Caliph, Umar (R.A), the second exercise
self control:

“Judge yourselves before you will be Judged and weight your deeds before you will be weighed”.

The management of an organization does not necessitated depriving some stakeholders
for not being accountable to them in order to benefit another stakeholder. It is now being
seriously considered as one of the main goals of an organization in form of collective
behaviour of ―Social accountability.‖ The prophet says:
“Behold! Each of you is a guardian, and each of you will be asked about his subject”. (Bukhari
& Muslim)
CENTRALIZATION & DECENTRALIZATION
Centralization is said to be a process where the concentration of decision making is in a
few hands. All the important decisions and actions at the lower level, all subjects and
actions at the lower level are subject to the approval of top management. According to
Allen, ―Centralization is the systematic and consistent reservation of authority at central
point in the organization.‖
On the other hand, Decentralization is a systematic delegation of authority at all levels of
management and in all of the organization. In a centralization process, authority is
retained by the top management for taking major decisions and framing policies
concerning the whole issue . Rest of the authority may be delegated to the middle level
and lower level management. The degree of centralization and decentralization will
depend upon the amount of authority delegated to the lowest level. According to Allen,
―Decentralization refers to the systemetic effort to delegate to the lowest level of authority
except that which can be controlled and exercised at central points.
The hint of the centralization of power can be found in the following verses of the Holy
Quran- ―When there comes to them some matter touching (public) safety or fear, they divulge it. It
they had only refered it to the messenger or to those charged with authority among them, the proper
investigators would have known if from them (direct) . Al-Quran Sura Nisa(3:83). The issue of
centralisation can also be found in the following verses of the holy Quran, Anam verse 57,
Kasas 70, Muzzammil verse 9
However on the issue of decentralization there are also some suggested verses from the
holy Quran such as Nahl verse 36, Anam verse 19, Fatih verse 28, and Tawbah verse 128
Afrin (2012), asserted that Allah has given some duties and responsibilities with proper
authority and guidelines to some angels to serve this universe. For example, Gabrail is
authorized and responsible to bring revelation to the selected people by Allah (SWT),
Azrail is responsible to take the soul of living beings, Mikail is responsible for the
provision for the mankind in the universe, and Israfil is responsible for the blowing of
trumpet by the last day.
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From all of the above descriptions it is clear that though Allah (SWT) is solely capable to
do all the tasks, He has nominated some angels for performing some tasks and also
nominated some people in this earth to convey the messages for Allah to other people.
Again,Prophet (S.A.W) had handed over immense power to his provincial, governors and
he would emphasize most of the solution of local problem locally. Even, measures were
taken to spend fund of zakat collected locally for relevant locality. But there was
providence of state involvement in decision contrary to public welfare.
Afrin (2010) also mentioned that, it is clear that in an organization some power and
authority should be centralized and some authority must be delegated to the right people
and they must be accountable for their authority and responsibility to the higher authority.
CASE STUDY ON SOME ISLAMIC ORGANIZATIONS OF DEVELOPING MUSLIM
POPULATED COUNTRY-BANGLADESH
Islamic Foundation
There are so many Islamic Organizations in one of the largest populated Muslim Country
– Bangladesh . A Study has already been conducted on Islamic foundation and Islamic
NGOs working in Bangladesh. Among the government organizations, Islamic foundation
is working with different programs in Bangladesh. By personal interview with the
executives and staffs of Islamic foundations it is found that Islamic foundation has to face
the following problems:
(a) Lack of proper linkage and coordination among the staffs and officers;
(b) Lack of generating team spirit;
(c) Consultative management is not practiced in making decision;
(d) Officials and Religious Ministry do not show only problem solving attitude;
(e) Top level officials and staffs are sometimes found to participate in political activities.
It hampers in smooth running of the activities of Islamic foundation;
(f) Financial constraints is a great problem;
(g) Constrant change of high officials like Directors General of Islamic Foundation is a
great problem.

Islami Bank Bangladesh Limited (IBBL)
Islami Bank Bangladesh Limited is a Joint Venture Public Limited Company engaged in
commercial banking business based on Islamic Shari'ah with 58.03% foreign shareholding
having largest branch network (246 Branches & 30 SME/Krishi Branches i.e. total 276
Branches) among the private sector Banks in Bangladesh. It was established on the 13th
March 1983 as the first Islamic Bank in the South East Asia.
It is listed with Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd.
Authorized Capital of the Bank is Tk. 20,000.00 Million ($244.87 Million) and Paid-up
Capital is Tk. 10,007.71 Million ($122.53 Million) having 60,550 shareholders as on 31st
December 2011.

Muslim Aid UK
Muslim Aid is a UK based international relief and development organization working to
alleviate poverty worldwide. The charity says it believes in sustainable, local and practical
solutions to empower individuals and strengthen communities.
Muslim Aid is guided by the teachings of Islam and endeavors to tackle poverty and its
causes by developing innovative and sustainable solutions that enable individuals and
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their communities to live with dignity and by supporting initiatives that promote
economic and social justice. Muslim Aid works with all in need, regardless of their race,
religion, gender, nationality or political opinion.
Muslim Aid was founded in 1985 when leading British Muslim organizations joined
together to respond to endemic humanitarian crises in Africa. The following year, conflicts
in Afghanistan and Palestine and floods in Bangladesh saw Muslim Aid expand its
emergency relief operations. Over the past 25 years Muslim Aid has grown from a small
office in London to a leading UK NGO, providing relief and development programs in
over 70 countries across the globe.
Today, Muslim Aid is tackling the root causes of poverty through education and skills
training, economic empowerment, orphan care, women development, water, health care
and shelter and construction programs.
Muslim Aid believes that, in order to really help people, the causes, not just the symptoms
of poverty must be addressed. By 1994 long-term development projects accounted for
almost 50% of Muslim Aid‘s relief activity. As well as helping people overcome crises.
Muslim Aid provides skills and resources to assist people to move forward to a better life.
Muslim Aid works closely with the communities to deliver its programs and remains
committed to working in collaboration with all its beneficiaries to ensure that the solutions
are not imposed from the outside. All solutions are culturally sensitive, practical and
owned by the beneficiaries. They have field offices in 13 countries namely, Bangladesh,
Bosnia, Cambodia, The Gambia, Indonesia, Iraq, Jordan, Kenya, Lebanon, Pakistan,
Somalia, Sri Lanka.
Muslim Aid's Board of Trustees is comprised of 15 respected members of the Muslim
community, ensuring that their work is effective, fully accountable and true to the
humanitarian spirit of Islam. To evaluate Muslim Aid projects, their Trustees make
personal visits to field offices and partner organisations. Every two years the Board of
Trustees elects a Chairman, Vice-Chairman, Secretary, Treasurer and an Executive
Committee.
At the London headquarters of Muslim Aid a team of professional staff, headed by Chief
Executive Officer, is responsible for the management and the effective running of the
organisation.

Muslim Aid in Bangladesh
It has been working in Bangladesh since 1991 with the commitment of ―serving
humanity‖. By responding quickly to emergencies, Muslim Aid provides relief to the
victims of natural disasters, war and famine. Muslim Aid also deploys long-term
development projects on education, skills training, provision of clean water and healthcare
to tackle the root causes of poverty. Bangladesh Field Office of Muslim Aid is now
working with 24 international and more than 100 national organizations at 53 districts
with over 1200 staffs. It has served around 3 million people since its beginning in the
country.
Muslim Aid is a signatory of the International Federation of Red Cross and Red Crescent
Societies (IFRC), Code of Conduct of NGO in Disaster Relief, a member of British NGOs
for Overseas Development (BOND) and supports the UN Millennium Development Goals
(MDG). Livelihood, food security, emergency response and disaster risk reduction are the
key priority areas of Muslim Aid with ensuring robust community participation.


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Al Haramine Islamic Faoundation
This Islamic NGO in working for the religious and socio-economic development in
Bangladesh. Al Haramine Islamic Foundation has been working with the following
programmes since 1993:
(a) Mosque Construction Program;
(b) Tube-Well Program;
(c) Orphanage Construction Program;
(d) Yatim Support Program;
(e) Qurbane Program;
(f) Emergency Relief Program;
(g) Education Program.
The following managerial as well orgnaizational problems have been observed in this
Islamic NGO. These are as followos:
(a) The local officers are dissatisfied due to the presence of all foreigners in the Original
Organo Structure.
(b) There are some gaps between the foreigners and the local Bangladesh employees.
(c) Consultative management is absent in this organization.
(d) Directors are playing dictatorship role.
(e) There are some discriminations between the foreigners and Bangladesh executives of
some level with regard to salary and other benefits.
(f) It in also observed by personal interview with the local executives that their Job
Statisfaction is very low.
However, when talking about organizing in Islam, the task is not only restricted to the
Muslim NGO;s alone, the Muslim scholar (Ulema) contributions to the muslim
community, thruogh the act of organizing, could not be overlooked without mentioned.
Therefore, we shall cite the role of Muslim sclolars through Muslim society in spreading
Islam in Indian subcontinent as a case study.
ORGANIZING A MUSLIM YOUTH CAMP
It is fact that Islam spread and progressed by Muslim Youth. History proves the first Muslim
among the boys is Ali (RA), and then he was only eight years old. When Abu Bakr (RA)
embraced Islam he was 36 years old. The second successor of prophet- Hazrat Umar(RA) when
he embraced Islam was only 27 year old. One Ashara-e-Mobashira Abdur Rahman Bin Awof
(RA) only 17 years old when he was with Prophet Muhammad (SAW).
The most peculiar elements in the way the decision process during the rule of Hazrat
Umar(RA) were consultations with the Muslim juveniles and especially the consultation
with some of his enemies. Umar (RA) believed that juveniles had sharper with minds that
enabled them to give original ideas. The practicability of organizing issues are found at
present in some Muslim Youths Camps and some Human Resource Development
programs scattered in different areas of the world.
It is a part of every Western youngster's life to go camping either with school or with family
and friends over holidays and summer breaks. Unfortunately within the Muslim community,
children are often not permitted to attend school camps due to the usually very un-Islamic
activities which take place on camping trips. Even camps run by Islamic schools, sometimes
fail to maintain proper Islamic conduct and behaviour. What we are left with are a fresh batch
of disappointed twines and teens that just picked up one more reason to dislike their religion
and envy their not-so-God-conscious friends and classmates.
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Unfortunately, the most that Muslim parents do to make up for their children missing out on
such camps entailing "major life experiences", as the youth describe them, is sending the kids
off to a one-night sleepover at grandma's house or with the cousins who are still in diapers.
The Panjtan Society Youth Group in Melbourne, Australia, recently organized a very
successful camp for the younger members of the community.
CONCLUSION
Managing an organization is not an easy task. In certain respects it is like managing a
family where a multitude of factors have to be considered in ordered to maintain a stable
environment. An organization can do many things achieving higher productivity and
quality outputs. Islam insists on a proper organization of the society. If through
organizations the functions of the society can be carried out in a proper manner, the
intention to continuously improve the quality and welfare of society should give more
attention to the creation of good quality organizations. Our west intoxicated Muslim
organization should remember the following Traditions of the Holy Prophet to keep
Islamic culture, manner and distinctness so that we are not alleged as too much secular as
well materialistic which are creating different types devastating disasters in globally.
Prophet Said: ―Those working under you are your brothers. Those who serve you have been made
by God subservient to you’. So whoever has his brother under his control should feed him from what
he eats and give him clothes like of which he wears; and do not impose on them task which should be
too hard for them, and if you impose on them such task, then help them.” (Muslim)
RECOMMENDATIONS
- As Muslim world is lagging behind the technological advancement as well developing
large scale organization, they should apply concentration in small scale organization
and simple organo structure.
- To make cordial relationship among the members of Islamic organization, Islamic
brotherhood (Ukhuk) concepts must be included in different training and development
programs in the organization.
- Organizations may take on a life of their own, but they never exist independently of their
cultures. Indeed , the application of ihsan in organization is more likely to produce a
distinct form of Organization in line with the dynamics of the global marketplace.
- Developing sound and relevant management theory based on Islamic heritage and
remove the isolated patterns of development is mostly essential on distinct structure
for enterprises operating in Muslim environment.
- Islamic Organization must follow the tazkiah (Teaching and training) system to
develop its member which tightened interrelationships.
- Muslim should follow survey method which is least costly to development of
organizing activities, like –setting structure, developing monitoring systems, etc.
- For specific organizational structuring and development steps, case studies are in tune
with traditions in Islamic inquiry and through them scholars can build a foundation for
Conceptual and theoritical propositions relevant to Muslim culture and environment.
- In the above mention situation organization may minimize their shortcomings
through moderate Islamic Knowledge with strong leadership quality.
- For successful organizing, the member of the organization should be well informed
about the causes of success stories of secular organizations.
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REFERENCES
[1] Abbas. J. Ali, (2005). Islamic Perspective on Management and Organization.UK: Edward
Elgar Publishing Limited. P-187.
[2] Ahmad. S, (1984). How Islam Want Us to Organize Ourselves? Islamic Perspectives
Dorval Moque Lectures and Khutbahs -
http://www.islamicperspectives.com/Default.htm
[3] Al Habsi, (1998). Islamic Management for Excellence. Kualalumpur:Institute Peken Bagen
Minda. p-217.
[4] Islam, M.. N.(1985). Secretariate of great prophet. Dhaka: Nur publications. P.1.
[5] Jabnoun,N.(1994).Islam and management. Kualalampur:IKD publications.P-40.
[6] Khaliq Ahmad, (2010). Management form an Islamic perspective, Kuala Lumpur: Prentice
Hall.-114
[7] Khaliq Ahmad, (2010). Management form an Islamic perspective, Kuala Lumpur: Prentice
Hall.p – 121
[8] Khaliq Ahmad, (2010). Management form an Islamic perspective, Kuala Lumpur: Prentice
Hall.P-4
[9] Mohiuddin, M.G.(1997).Islam and scientific management . Dhaka: Islami Foundation,
Patrica. P-179
[10] Mohiuddin, M.G.(2005).Islamicc management . Dhaka: University Grants Commission of
Bangladesh.
[11] Robert, H. W., & Judy Z. K. (2002). Leadership and Management in the Hospitality
Industry, American Hotel &Lodgings Association, Educational Institute
[12] Weihrich, H. & Koontz, H.(1994).Management-A global perspective. Singapure:Mc Graw
Hill.p-114
[13] www.hppt.Olema in Organizing Islam.Com
[14] w.w.w.organizing and Islam.com
[15] w.w.w. organization Funcation.Net.
[16] www.ibbl.com





I mportant!!!
If the responses and the revised manuscript are not submitted by the
deadline, submission is deemed to have been abandoned. The
rejection of the manuscript will be conveyed to the Authors. AJ ASE
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 73


Assessment of CSR Performances in Some
Selected Commercial Banks in Bangladesh
Md. Abul Kalam Azad
1
, Mohammad Zahir Raihan
2
, & Mohammad Zahid
Hossain Bhuiyan
3


1
Assistant Professor of Finance, IIUC, Bangladesh
2
Associate Professor (Finance), School of Business, Bangladesh Open University, Bangladesh
3
Assistant Professor of Management, IIUC, Bangladesh


ABSTRACT
The study is on 10 locally private commercial banks operating in
Bangladesh. In this study, secondary data have been extensively used.
Some primary data have also been used in the study. These were collected
from a total number of 10 Executives in-charge of Corporate Social
Responsibility Department using structured closed end questionnaire.
While collecting primary data, direct interview method was mainly used.
The main objective of the study is to critically analyse the CRS
performances in the selected banks which covered the Heads of CSR
activities, the determinants of CSR activities, Investment in CSR activities
and Impact of CSR investment. The period of empirical study covered 4
financial years ranging from 2009 to 2012. The main findings of the study
are; (i) some 90% of the respondents have emphasized on the significance
of CSR activities in the selected banks, (ii) some 60% of the respondents
have emphasized on the significant impact of CSR investment on the
Market price of the Share (MPS), (iii) the major factors affecting CSR
activities have been Sustainable development, Business tool, Leadership
and ethics, (iv) empirical analysis of the study reveals that the CSR
investments as percentage of total investment of the respective banks have
been very negligible ranging from 0.01% to 2.87% only during the study
period. It is found that out of the seven heads of CSR expenditures Health
sector have occupied the highest position in majority banks followed by
Education sector. Therefore, it can be concluded that the selected banks
should increase their investment in CSR activities in order to create more
confidence among the existing clients as well as prospective customer in
one hand and increase MPS of the banks on the other.

Key Words: CSR, Sustainable Development, Corporate Governance,
Corporate ethics

JEL Classification Code: G21; G28

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INTRODUCTION
Corporate Social Responsibility (CSR) is also known by a number of other names. These
include corporate responsibility, corporate accountability, corporate ethics, corporate
citizenship or stewardship, responsible entrepreneurship, and ―triple bottom line,‖ to
name just a few. As CSR issues become increasingly integrated into modern business
practices, there is a trend towards referring to it as ―responsible competitiveness‖ or
―corporate sustainability‖ (Mackey &Tyson, 2007). Though CSR is an evolving concept,
but currently it does not have a universally accepted definition. Generally, CSR is
understood to be the way firms integrate social, environmental and economic concerns
into their values, culture, decision making, strategy and operations in a transparent and
accountable manner and thereby establish better practices within the firm, create wealth
and improve society. As issues of sustainable development become more important, the
question of how the business sector addresses them is also becoming an element of CSR.
Leonardo, Rocco and Hasan (2007) have found that businesses play a pivotal role both in
job and wealth creation in society and in the efficient use of natural capital, CSR is a
central management concern. It positions companies to both proactively manage risks and
take advantage of opportunities, especially with respect to their corporate reputation and
the broad engagement of stakeholders. The latter can include shareholders, employees,
customers, communities, suppliers, governments, non-governmental organizations,
international organizations and others affected by a company‘s activities.
RATIONALE OF THE STUDY
Successful executives know that their long-term success is based on continued good
relations with a wide range of individuals, groups and institutions. Smart firms know that
business can‘t succeed in societies that are failing—whether this is due to social or
environmental challenges, or governance problems. Moreover, the general public has high
expectations of the private sector in terms of responsible behaviour. Consumers expect
goods and services to reflect socially and environmentally responsible business behaviour
at competitive prices.
Shareholders, nowadays, are searching for enhanced financial performance that integrates
social and environmental considerations, both in terms of risk and opportunities.
Governments, too, are becoming aware of the national competitive advantages to be won
from a responsible business sector. At the same time, leading industry associations, such
as the World Business Council for Sustainable Development, have also suggested that
countries as well as companies might gain a competitive advantage from corporate social
responsibility. Even companies which may have a good reputation can risk losing their
hard-earned name when they fail to put systematic approaches in place to ensure
continued positive performance. These firms frequently expend considerable time and
money attempting to regain their reputation, with mixed results.
It is also important to acknowledge that while positive or neutral correlations between
social and environmental responsibility and superior financial performance have generally
been supported by the evidence, conclusive causal links have not. Many studies are being
undertaken, with varying conclusions.
The aforesaid discussions especially the benefits derived by the firms by practicing CSR
and the improvement in their financial performances from CSR expenditures have created
interest to make an in-depth study on assessment of CSR performances in some selected
commercial banks in Bangladesh.
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OBJECTIVES
The main objective of the study is to critically analyse the CSR performances in the
selected banks operating in Bangladesh. The specific objectives are listed below;
- To evaluate the extent of investments made in CSR activities in case of the selected
banks.
- To examine the impact of CSR investment on the financial performance of the sample
banks leading to the shareholders wealth.
HYPOTHESIS
Based on the above objectives, the two hypotheses we tested here are;
H
01
: There is no impact of CSR investment on the market price of share
H
a1
: There is impact of CSR investments on the market price of share
METHODOLOGY
The detailed methodology of the study is discussed as follows;
Sample selection: Out of total 47 banks currently operating in Bangladesh, only privately
commercial banks are in the population for this study numbering 30. Public commercial
banks, foreign banks and investment banks did not take into account due to their
difference in operation and government attitude. Out of 30 banks only 10 banks are
selected for the study which presents around 33% of the total population. The reason
behind such selection is only these 10 banks have been investing on CSR for last 4 years
continuously according to Bangladesh Bank Report on CSR on July, 2011. The names of
the selected banks are Eastern Bank Limited (EBL), Bank Asia Limited (BAL), Dutch
Bangla Bank Limited (DBBL), Jamuna Bank Limited (JBL), Pubali Bank Limited (PuBL),
Premier Bank Limited (PrBL), Uttara Bank Limited (UBL), Trust bank Limited (TBL) and
Mercantile Bank Limited (MBL).
Primary Data: An opinion survey was conducted as regards the factors affecting CSR
performances in the banks. Chief of CSR Department was selected as respondent. A
Questionnaire was developed using closed end questions. Five scales Likert scale was also
used in questionnaire to gather opinions of the respondents.
Secondary Data: In line with the research objectives, quantitative data were collected from
Bangladesh Bank Report July 2011 on CSR performances. In order to get the market value
of the selected banks, www.dscbd.org is used following the day price before record date
over four years. In order to develop the basic theory and background of the relevant topic
a list of indexed journal is used along with newspaper, Bangladesh Bank publications,
periodic and others.
Data Analysis: Basic frequency table is used as Statistical Package for the Social Sciences
(version 20). Moreover, multiple regressions model and Zero order correlation matrix
were mainly used to examine the impact of CSR investments. In order to test null
hypothesis, T-test, F-test and ANOVA were also used in the study.
LITERATURE REVIEW
The general signalling role of CSR was also studied by Goyal (2006). That study however
is considerably different from the relative authors as it did not consider the brand-value of
firms. Rather, Goyal (2006) investigated the signaling role of CSR when firms considering
FDI are interested in favorable terms. Our study is similar to Goyal (2006) in that we also
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use the well-established signaling theory (c.f. Spence 1974, Riley 2001, Vega-Redondo
2003, Gibbons 1992) to perform our analysis.
Theoretical studies linking CSR and financial performance are few both nationally and
internationally. Siegel and Vitaliano (2007) provide an excellent review, and here we
highlight some of their observations. In the seminal pieces (c.f. Baron 2001, McWilliams
and Siegel 2001), CSR was linked to profit-maximization by modeling firms‘ products to
contain ―social‖ attributes competing for socially responsible customers. In other words,
firms are responding to a demand for CSR. Other studies highlight the role of asymmetric
information. In particular, in exercising CSR, firms can signal to consumers that in being
‗good,‘ perhaps even reliable and honest, they will produce better products.
Barnea & Rubin (2005) depict that in recent years firms have greatly increased the amount of
resources allocated to activities classified as Corporate Social Responsibility (CSR). This
increase in CSR expenditure may be consistent with firm value maximization if it is solely a
response to changes in stakeholders‘ preferences. We find that insiders‘ ownership and
leverage are negatively related to the social rating of firms, while institutional ownership is
uncorrelated with it. These results support our hypothesis that affiliated shareholders induce
firms to over-invest in CSR when they don‘t bear much of the cost associated with it.
Leonardo, Rocco & Hasan (2007) found CSR is increasingly a core component of corporate
strategy in the global economy. In recent years its importance has become even greater,
primarily because of the financial scandals, investors‘ losses, and reputational damage to
listed companies. The paper highlights two main findings: a significant upward trend in
absolute value abnormal returns, irrespective of the type of event (for example, addition or
deletion from the index), and a significant negative effect on abnormal returns after exit
announcements from the Domini index. The latter effect persists even after controlling for
concurring financial distress shocks and stock market seasonality.
Mackey &Tyson (2007) addressed the debate about whether firms should engage in
socially responsible behavior by proposing a theoretical model in which the supply of and
demand for socially responsible investment opportunities determine whether these
activities will improve, reduce, or have no impact on a firm‘s market value. The theory
shows that managers in publicly traded firms might fund socially responsible activities
that do not maximize the present value of their firm‘s future cash flows yet still maximize
the market value of the firm. Using a sample of non-financial Brazilian companies from
2005 to 2007, they analyses whether corporate social responsibility (CSR) has an impact on
firm value. Using companies‘ Tobin‘s Q as a proxy for their market value, the paper finds
that firms that compose the Bovespa Corporate Sustainability Index (ISE) are traded at a
premium compared to the other publicly traded firms. They also indicate that the positive
impact of these policies is independent of the econometric method and period analyzed.
The results confirm that the benefits of corporate social responsibility policies surpass the
possible costs implied by the adoption of such policies, leading corporate social
responsibility to exert a positive impact on firm value.
Prior empirical research has reported mixed results. McWilliams and Siegel (2000) provide an
excellent review and we report their main observation. One stream has used event-study
methods to assess the short-run impact of CSR (c.f. Clinebell and Clinebell, 1994; Hannon and
Milkovich, 1996; Posnikoff, 1997; Teoh, Welch and Wazzan, 1999; Worrell, Davidson, and
Sharma, 1991; Wright and Ferris, 1997). Another stream highlighted the long-term effects of
CSR (c.f. Aupperle, Carroll and Hatfield, 1985; McGuire, Sundgren and Schneewies, 1988).
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McWilliams and Siegel (1997, 2000) have indicated how methodological issues can affect the
findings and may be used to resolve some of the differences.
ANALYSIS AND FINDINGS
Analyses of respondents’ Opinion Survey:
Table 01 (Appendix) represents the importance of CSR in the selected banks. It is revealed
that 40% respondents have opined in favour of very importance of CSR activities, 30%
respondents have opined in favour more than importance, 20% of respondents opined for
average importance and only 10% respondents responded for less than importance. Thus,
it can be said that the overwhelming majority of the respondents (90%) have emphasized
on the significance of CSR activities in the selected banks.
Table 02 (Appendix) represents the impact of CSR activities on the performance of the bank. It
is seen that 10% respondents have opined in favour of CSR activities having more than average
impact on bank performance, 40% respondents have opined in favour average impact on bank
performance, another 40% respondents have opined in favour less impact and only 10%
respondents have opined for not any impact of CSR activities on the performance of the
selected banks. Thus, it reveals that the fifty percent of the respondents have emphasized the
significance of CSR activities on the bank performance in the selected banks.
Table 03 represents the impact of CSR activities on the market price of the bank. It is seen
that, 30% respondents have opined in favour of CSR activities have more than impact on
MPS, 30% respondents have opined in favour average impact on MPS, and another 40%
respondents have opined in favour less than impact effect on MPS. Thus, it reveals that the
majority (60%) of the respondents have emphasized on the significant impact of CSR
investment on the MPS in the selected banks.
Table 04 (Appendix) reveals the importance of the given factors in terms of weighted average
score (WAS). Among the factors of CSR activities, Sustainable development occupies the first
with WAS of 7.00 followed by Business tool with WAS of 6.30, Leadership with WAS of 5.20,
Globalization with WAS of 4.70, Governance with WAS of 4.40, Corporate sector impact with
WAS of 3.10, Finance with WAS of 2.30 and lastly Communication WAS of 1.70. Thus, it
reveals that, Sustainable development, Business tool, leadership and ethics are the main
concern for taking CSR activities as important for the selected banks.
Table 05 (Appendix) presents the extent of the present CSR investments by the banks from
the range not at all adequate to highly adequate scale. Among the factors, Globalization
ranks first with WAS of 3.10, followed by Business tool, Ethics, Corporate sector impact,
Finance, Governance, Leadership, Communication and sustainable development with
WAS of 2.90, 2.80, 2.70, 2.60, 2.50, 2.40, 2.00 and 1.90 respectively. Compared to table 05,
this table reveals that even though the respondents have marked sustainable development
as first reason for CSR investment but in comparison to the importance the investment is
highly inadequate. Thus, it can be said that the present investments of the banks is
significantly inadequate by the banks for all the factors that considered as important for
the selected bank‘s CSR activities.
Analysis and findings from the empirical data:
It is seen from the table 06 (Appendix) that the percentage of investment in CSR activities
compared to total investment in all the banks have been highly negligible ranging from
0.01% to 2.87% only. However, throughout the study period, the CSR investments had
shown an increasing trend in MBL. A slightly negative trend was observed in case of
DBBL and the rest of the banks had no trend in terms of investment in CSR activities.
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The analysis of table 07 (Appendix) reveals that of the 10 selected banks, DBBL ranks first
regarding average CSR expenditures during 2009 to 2012, the yearly average CSR
expenditures being TK 134.57m. followed by MBL, the yearly average expenditure being
TK 32.15m, PuBL, the yearly average expenditure being TK 30.09m, TBL, the yearly
average expenditure being TK 26.34m, DBL, the yearly average expenditure being TK
22.67m, PrBL, the yearly average expenditure being TK 21.19m, UBL, the yearly average
expenditure being TK 20.50m, BAL, the yearly average expenditure being TK 15.57m, EBL,
the yearly average expenditure being TK 12.14m and lastly JBL with yearly average
expenditure being TK 9.31m only. These figures imply the importance of CSR
expenditures emphasized by the selected bankers during the selected period.
Again, it is found that of the seven heads of CSR expenditure Health sector occupies the
highest position in cases of EBL, DBBL, PrBL, PuBL,UBL and MBL followed by Education
sector. In case of DBL, BAL, TBL and JBL, Education sector occupies the highest position
followed by Health sector. All the statistics signify that Health and Education sector have
been given the priority by all the selected banks while incurring CSR expenditures.
Moreover, analysing the CV values, it is revealed that the CSR expenditures on the heads
Education, Sports, Art and Culture, Environment have been more consistent than the heads
Health, Disasters & Relief and Others across the study period in case of EBL. In case of BAL,
CSR expenditure on the heads Education, Sports have been more consistent than the rest
across the study period, In case of DBBL, DBL and PuBL, CSR expenditures on all the heads
remain inconsistent during the study periods. In case of JBL, CSR expenditures on Disaster &
Relied remain consistent only than other heads. In case of PrBL, CSR expenditure on the
heads Education, Art and Culture, Environment have been more consistent than the heads
Health, Sports, Disasters & Relief and Others across the study period. In case of UBL, CSR
expenditure remains consistent on all the head other than Education during the study
period. In case of TBL, CSR expenditure on all CSR Heads remain inconsistent during the
study period other than Disaster and relief. And lastly, in case of MBL, CSR expenditures on
the heads Health, Disasters & Relief, Art and Culture and Environment have been more
consistent than the heads Education, Sports, and Others across the study period. Before
examining the impact of investment in CSR activities on the market price of the share of the
selected banks, first of all, we are to examine the relationship between CSR activities and
Market price per share. Such relationship has been determined on the basis of coefficient of
correlation between market price per share (MPS) and investment in Education, MPS and
investment in Health, MPS and investment in Sports, MPS and investment in Disaster relief,
MPS and investment in Art and culture, MPS and investment in Environment and MPS and
investment in others. Table (08) (Appendix) shows the coefficient of correlation (r) between
these variables. It is seen from the table that r between (MPS) and Education, MPS and
investment in Health, MPS and investment in Sports, MPS and investment in Disaster relief,
MPS and investment in Art and culture, MPS and investment in Environment and MPS and
investment in others have been calculated 0.356, 0.348, 0.260, 0.233, 0.301, 0.354 and 0.357
respectively. Such values of (r) signify that there exists positive correlation between these
variables. All these values have been significant at 1-5% level of significance. Therefore, it
can be said that all the independent variables have positive correlation with the dependent
variable MPS. Therefore, it is seen that the null hypothesis; There is no relationship between
investment in CSR activities and market price of share has been rejected. This implies that
investment in CSR activities have relationship with MPS.
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CONCLUSION
The study concludes that investment in CSR activities in the selected banks have positive
impact on the MPS of the banks thereby leading to shareholders‘ wealth. But, it is found in
the study that CSR investments as percentage of total investment of the respective banks
have been very meagre during the study period. But, it is the demand of the age that more
and more investments need to be made in all the organizations especially in the banks, the
service rendering industry for the fulfilment of CSR of the organization. It is true that CSR
activities lead to sustainable growth and development of the organizations, fulfilling CSR
towards the nation also. Therefore, the respective banks authority as well the Bangladesh
Bank (BB) authority, as the supervisory bank has a great role to play in order to increase the
investment ceiling of the banks in CSR activities. Moreover, strict supervision of BB is a must
in order to see whether the Private commercial banks and National commercial banks are
implementing the guidelines of BB issues for time to time as regards CSR activities.
REFERENCES
[1] Aupperle, Carroll and Hatfield J 1985, ―An Empirical Examination of the Relationship
Between Corporate Social Responsibility and Profitability,‖ Academy of Management
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Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 80


Appendix:
Table 01: Response in Opinion survey for the Importance of CSR
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Less than important
1 10.0 10.0 10.0
Average important
2 20.0 20.0 30.0
More than important
3 30.0 30.0 60.0
very important
4 40.0 40.0 100.0
Total
10 100.0 100.0

Table 02: Response in Opinion survey for the Impact of CSR
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Not any impact
1 10.0 10.0 10.0

Less impact
4 40.0 40.0 50.0

Average impact
4 40.0 40.0 90.0

More than average impact
1 10.0 10.0 100.0

Total
10 100.0 100.0

Table 03: Response in Opinion survey for the influence to Market price of share for CSR
investment
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Less than important
4 40.0 40.0 40.0
Average important
3 30.0 30.0 70.0
More than important
3 30.0 30.0 100.0
Total
10 100.0 100.0

Table 04: Factors that affect CSR activities in the selected banks
Factors for CSR activities
1=Not at all
important 2 3 4 5 6 7 8
9=Highly
Important WAS Rank
Sustainable Development

3 5 1 1 7.00 1st
Globalization

2 3 1 4

4.70 5th
Governance

2 3 4 1

4.40 6th
Corporate sector impact

4 3 2

1

3.10 7th
Communications 4 5 1

1.70 9th
Finance 4 3 1

2

2.30 8th
Ethics

3 5 1 1

5.00 4th
Leadership

3 2 5

5.20 3rd
Business Tool

1 1 4 2 2

6.30 2nd
WAS= weighted Average Score


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Copyright © 2012, Asian Business Consortium | GDEB Page 81


Table 05: Present investment in CSR activities by the bank over 2009 to 2012
Factor Not at all
Adequate
Inade
quate
Less than
Adequate
Only
Adequate
Highly
Adequate
WAS Rank
Sustainable Development 5 2 2 1 1.90 9th
Globalization 4 2 3 1 3.10 1st
Governance 1 5 2 2 2.50 6th
Corporate sector impact 1 4 3 1 1 2.70 4th
Communications 3 5 1 1 2.00 8th
Finance 2 4 1 2 1 2.60 5th
Ethics 1 3 4 1 1 2.80 3rd
Leadership 5 2 2 1 2.40 7th
Business Tool 4 3 3 2.90 2nd
WAS= weighted Average Score
Source: Opinion survey

Table 06: Percentage of investment in CSR activities out of total investments in the selected
banks during 2009 to 2012 (amount in Million TK)

Bank
Invest
ment in
CSR ac
tivities
Total
invest
ment
of the
bank
% of
total
invest
ment
Invest
ment in
CSR ac
tivities
Total
invest
ment
of the
bank
% of
total
invest
ment
Invest
ment in
CSR ac
tivities
Total
Invest
ment
of the
bank
% of
total
invest
ment
Invest
ment in
CSR ac
tivities
Total
invest
ment
of the
bank
% of
Total
invest
ment
2009 2010 2011 2012
EBL 9.50 5,896 0.16 1.00 5,325 0.02 6.74 8,806 0.08 31.32 9,827 0.32
BAL 13.82 4,211 0.33 6.92 6,134 0.11 1.00 9,663 0.01 40.55 12076 0.34
DBBL 39.21 5,909 0.66 171.02 5,955 2.87 159.21 9,670 1.65 168.86 11002 1.53
JBL 14.22 4,390 0.32 1.45 5,390 0.03 4.58 8,503 0.05 17.00 10891 0.16
PuBL 27.49 5,557 0.49 24.49 8,376 0.29 18.88 12,168 0.16 49.51 16516 0.30
PrBL 8.40 3,461 0.24 7.51 4,107 0.18 11.57 6,513 0.18 57.30 10195 0.56
UBL 10.00 14456 0.07 8.90 11,188 0.08 3.08 22,502 0.01 60.00 18591 0.32
TBL 9.52 3,785 0.25 1.00 4,963 0.02 46.75 8,705 0.54% 48.10 8,529 0.56
DBL 14.62 5,972 0.24 12.17 7,239 0.17 9.28 8,660 0.11 92.53 8,443 1.10
MBL 9.40 7,100 0.13 22.40 7,690 0.29 22.93 9,673 0.24 36.04 10937 0.33
Source: Activity report of the Financial Institution 2009, and 2012.

Table07: Descriptive Table of the CSR activities by the selected bank over the study period
Name of the Bank Head Mean SD CV
Eastern Bank Limited
Education 2.19 2.77 0.791
Health 5.45 5.05 1.079
Sports 0.99 1.07 0.925
Disaster relief 0.50 0.30 1.653
Art & Culture 1.42 1.57 0.907
Environment 1.10 1.11 0.986
Others 0.49 0.48 1.011
total 12.14

Bank Asia Limited.
Education 5.35 6.82 0.785
Health 4.56 3.65 1.249
Sports 2.59 2.99 0.866
Disaster relief 0.54 0.34 1.586
Art & Culture 1.41 1.03 1.364
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Copyright © 2012, Asian Business Consortium | GDEB Page 82


Environment 0.56 0.48 1.174
Others 0.56 0.42 1.324
total 15.57

Dutch Bangla Bank Limited
Education 36.53 21.34 1.712
Health 43.84 23.92 1.833
Sports 20.36 11.67 1.744
Disaster relief 8.40 7.60 1.105
Art & Culture 14.43 8.56 1.685
Environment 5.17 3.30 1.566
Others 5.85 2.54 2.303
total 134.57

Jamuna Bank Limited
Education 3.62 3.07 1.178
Health 2.41 1.30 1.858
Sports 1.23 0.98 1.259
Disaster relief 0.72 0.91 0.784
Art & Culture 0.61 0.28 2.176
Environment 0.30 0.17 1.808
Others 0.42 0.35 1.201
total 9.31

Pubali Bank Limited
Education 7.74 1.76 4.395
Health 9.46 4.71 2.012
Sports 4.44 2.94 1.508
Disaster relief 2.73 2.56 1.065
Art & Culture 3.18 2.36 1.349
Environment 1.05 0.45 2.318
Others 1.49 0.85 1.744
total 30.09

Premier Bank Limited
Education 5.52 4.33 1.274
Health 8.04 9.91 0.811
Sports 2.31 1.66 1.395
Disaster relief 0.97 0.51 1.920
Art & Culture 2.38 2.93 0.812
Environment 1.05 1.38 0.763
Others 0.91 0.81 1.127
total 21.19

Uttara bank Limited
Education 4.13 2.53 1.633
Health 6.22 7.50 0.830
Sports 3.58 4.57 0.784
Disaster relief 2.42 3.32 0.730
Art & Culture 2.44 3.41 0.715
Environment 0.59 0.60 0.979
Others 1.11 1.38 0.808
total 20.50

Trust bank Limited
Education 10.44 9.72 1.074
Health 6.33 4.70 1.347
Sports 3.83 3.41 1.123
Disaster relief 2.14 2.45 0.875
Art & Culture 1.66 1.16 1.430
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Environment 0.76 0.60 1.250
Others 1.19 1.01 1.171
total 26.34

Mercantile Bank Limited
Education 8.23 7.24 1.137
Health 12.47 16.31 0.764
Sports 3.50 2.85 1.226
Disaster relief 1.26 0.60 2.105
Art & Culture 3.70 4.82 0.769
Environment 1.64 2.26 0.727
Others 1.35 1.36 0.987
total 32.15

Dhaka Bank Limited
Education 7.49 5.35 1.401
Health 6.25 1.77 3.532
Sports 3.51 2.28 1.539
Disaster relief 1.76 1.32 1.335
Art & Culture 1.94 0.91 2.125
Environment 0.72 0.21 3.398
Others 1.02 0.38 2.655
total 22.69
Source: BB Report on CSR in July2011

Table 08: Coefficient of Correlations

MPS
Educ
ation
Health Sports
Disaster
relief
Art and
culture
Enviro
nment
Other
s
Pearson Correlation MPS 1.000
Education .356 1.000
Health .348 .728 1.000
Sports .260 .829 .791 1.000
Disaster relief .233 .315 .533 .693 1.000
Art and culture .301 .648 .975 .838 .668 1.000
Environment .354 .717 .966 .676 .351 .895 1.000
Others .357 .696 .916 .886 .818 .953 .811 1.000
Sig. (1-tailed) MPS . .012 .014 .052 .074 .030 .013 .012
Education .012 .
Health .014 .000 .
Sports .052 .000 .000 .
Disaster relief .074 .024 .000 .000
Art and culture .030 .000 .000 .000 .000
Environment .013 .000 .000 .000 .013 .000
Others .012 .000 .000 .000 .000 .000 .000 .


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Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 84


Employees’ Motivation in Public and Private
Commercial Banks in Bangladesh: A Study on
Need-Based Approach
Md. Hasebur Rahman

Lecturer, Department of Business Administration, Pabna University of Science and Technology, Bangladesh


ABSTRACT
Motivation remains a key secrete of managing people at organizational
interfaces. Different people from differ background come together within
organization having different aims incompatible to organizational aims.
Motivation acts as key forces to drive diversified workforce to meet
organizational objectives. In Bangladesh Performance of public commercial
bank in comparison to the private commercial bank has long been a point
of dissuasion. This study has made a comparison between employees of
public and private commercial bank in Bangladesh regarding their
motivation on the basis of need theories of motivation. Their motivation
level was measured and compared on the basis of two major constructs
identified from the literature review. These construct are perception about
the benefits received from the job, and perception about the job nature and
job environment in the banking organization. It is found that employees of
private commercial bank scored slightly higher in both the construct
however there is no significant differences have been proved about benefit
received from the job and perception about job nature and environment.
Differences were found between the two groups on the relative perception
they placed on existing factors of motivation.

Key words: Motivation, Need Theories, Commercial, Bank, Employees

JEL Classification Code: G20; G29

1. INTRODUCTION
The success of any organization falls back upon its competent and motivated human resources
(Mohiuddin, 2008). Human resources regarded as the most valuable assets and sometimes
irreplaceable assets in the organization. It is human resources who set organization‘s objectives
and strategies, design and produce goods and services, quality control and market goods and
services. It is simply impossible on the part of an organization to get these activities performed
efficiently and effectively unless the people of the organization extend their sincere and
voluntary cooperation depending upon the level of motivation an individual has with his or
her job, to put forth his or her best to the organization. Employees and their behavior represent
strong forces that can enhance or diminish effectiveness of organization.
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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With the growing up of the economy of Bangladesh, a dramatic change has been take
place in service sector. Both public and private commercial banks are operating in the
country with a highly competitive pressure with customized services. Motivation agenda
become a driving force for employees of commercial bank to serve internal and external
customer with customer demand and satisfaction. Competition with in this industry has
made the service gap within and between the public and private commercial banks in
Bangladesh. Public sector commercial bank in Bangladesh is also subject to the criticism of
being inefficient and unproductive. There is consensus that the public sector organizations
are too big, overstaffed, inefficient, and less productive in comparison to private sector
organization (Marinakis, 1994; Rowly 1998). Other than a few exceptions, public sector
organizations have been characterized with low productivity and repeat loss .On the
contrary, the private sector organizations in the country are usually thin, agile, highly
productive, and profitable (Jahiruddin, Noor, Mahmudul, 2004). Doing business in
different sectors require different strategies and objectives. Global competition,
downsizing, reengineering, information technology, and total quality are posing
enormous challenges that with dealt managers and management working in banking
business. To the context of changing business environment there is hardly any study
undertaken to survey the motivation level of employees working in commercial banks
with respect to need theories of motivation. An attempt has been made in this study to
investigate employees‘ motivational perception of public and private commercial bank in
the country in reference to the need theories of motivation.
2. OBJECTIVES OF THE STUDY
Firstly, objective of the study was to investigate perception of employees on existing
motivational factors finally, study is an initiate to measure perceptions of employees of
public and commercial bank in Bangladesh about the benefits they receive from the job
and test how they difference in their perceptions about job nature and job environment.
3. LITERATURE REVIEW
3.1. Concept of Motivation: Motivation becomes an important agenda for managers and
management scholars now a days and it will remain in future. Motivation is a general term
applying to the entire class of drives, desires, needs, wishes, wants, aims, goals, motives, and
incentives. It is a basic psychological process that includes the need-drive-incentive sequence or
cycle. Motivation is a process that starts with a physiological or psychological deficiency or
need that activates a behavior or a drive that is aimed at a goal or incentive (Luthans, 1998). It
also refers to the processes that account for an individual‘s willingness to exert high level of
effort to reach organizational goals, conditioned by the effort‘s ability to satisfy need (Robbins
& Coulter 2006). Organizational endeavors success or fails depending on the people involved.
To keep the people working efficiently, they need to consistently motivate. Money is not only
motivating factor. Besides money, there are many other financial and non-financial factors that
can keep people happy, hardworking and ambitious. There is responsibility and achievement,
recognition, intrinsic interest in the work, the reward system, influence of others, congenial
working environment, appreciation, communication, participation in decision making etc.
(Kumar, January 2003) . Motivated employees in the work place can be termed as those who
willingly and voluntarily extend their best efforts in order to help the organization attaining its
goal. Motivated employees are sincere, dutiful, and laborious; therefore, need less supervision
to expert best performance out of them.
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3.2. Need Theories of Motivation: Needs-based motivation theories are based on the
understanding that motivation stems from an individual's desire to fulfill or achieve a
need. The essence of these theories is people come to work for satisfaction of different
types of needs. People will be motivated to work if their needs are adequately satisfied by
the job. The widely mentioned theories of this category are Abraham H. Maslow's
Hierarchy of Needs theory, Frederick Herzberg‘s two-factor theory, Clayton P. Alderfer's
Existence Related Growth (ERG) Theory, and David McClelland's Achievement
Motivation Theory. In 1943, one of the widely mentioned theories of motivation is the
hierarchy of needs theory put forth by psychologist Abraham Maslow, commonly referred
to as Maslow‘s Hierarchy of Needs. Maslow show human needs in the form of a hierarchy,
ascending from the lowest to the highest, and he concluded that when one set of needs is
satisfied it is no longest serves to motivate. The next higher level of need has to be
activated in order to motivate the individual. Maslow's hierarchy is commonly displayed
in a pyramid fashion, with the basic needs at the bottom and the higher needs at the top.
The essence of this theory is that as the employees climb, their concern for higher order
needs such as good job environment, recognition, responsibility, and power increases.
Frederick Herzberg of U.S.A. has developed (1959) a classical theory of work motivation
by differentiating between motivational & maintenance factors in job situation. Herzberg
called two sets of factors ―Hygiene factors‖ and ―motivational factor‖. The hygiene factors
support mental health and are potent dissatisfies. They are necessary to avoid
dissatisfaction just as hygiene prevents sickness. They are presence does not motivate
employees but when they are absent employees become dissatisfied. They are also
recognized as maintenance factors including company policy and administration, Salary,
Working conditions, Security of service, co-operation, and supervision. The motivational
factors or satisfies lead to high job satisfaction and strong motivation. These are related to
achievement, progress, recognition, reward, possibility of development, training,
advancement, and responsibility. Clayton P. Alderfer first presented the ERG Theory of
Motivation in 1969 in his article, "An Empirical Test of a New Theory of Human Need.‖
The ERG theory attempted to improve upon Maslow's needs hierarchy by allowing more
flexibility of movement between needs. Alderfer decreased the number of levels and
allowed the order of the needs to vary by the individual; he also allowed for different
needs to be pursued simultaneously. Alderfer‘s ERG needs theory has slightly more
research support than Maslow. ERG states that any or all needs can be activated
simultaneously. David McClelland in his book (1961), The Achieving Society, identified
three types of motivational needs, on which he based a model to describe one‘s style with
regard to being motivated and motivating others, depending on the different level of
needs within the individual. These are need for Achievement, need for Power and need for
Affiliation.
Motivation theories ranging from the classical one to the most temporary one were
explored to develop the construct to measure and compare level of motivation of public
and private commercial banks in Bangladesh. A Related survey has been conducted by
Jahiruddin, Noor, and Mahmudul in 2004 ― Study reveals that private sector managers are
more motivated than public sector managers both in terms of Hygiene factors and
Motivational factors‖. It also suggested that not only the level of motivation, but also the
motivating factors are different between these two groups according to the importance
they place on them. We know from the study that how banking sector Bangladesh follow
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 87


need based model in ranking their employees‘ needs. A different ranking of employees‘
needs is observed at both lower and upper levels in commercial bank in Bangladesh.
4. HYPOTHESES OF THE STUDY
From the literature review it is seen that benefit that employees receive from the jobs are
vital component for their motivation. Benefits include monetary and non-monetary at the
same time present and future benefits. Industrial psychologists describe the relationship
between an employee's motivation and his or her perception of equitable or inequitable
treatment. An individual‘s motivation level is correlated to his perception of equity,
fairness and justice practiced by the employee or employees outside the employee‘s
present organization. Higher is individual‘s perception of fairness, greater is the
motivation level and vice versa. Therefore first hypothesis of the study is:
H
1
: There is significant difference between employees of public and private commercial banks in
their perceptions about the benefits they receive from the job.
Previously discussed literature also shows that nature of job and the environment of the
workplace is a vital factor for motivation, especially for white-collar employees. Providing
a motivating work environment including challenging and interesting work, comfortable
physical environment, formal and informal communication, autonomy, job security,
employee involvement, good interpersonal communication, are positively correlated to
better performance. From these evidence found from the literature, researcher developed
the following hypotheses:
H
2
: There is significant difference between the employees of public and private commercial banks
in their perceptions about job nature and job environment.
Based on the literature review and exploratory research carried out, 10 variables (Table-1)
were identified perception of employees on existing motivational factors of employees of
commercial bank. These factors can be categories into two groups firstly, ―Lower order
need‖ by Maslow and ―Hygiene Factor‖ by Herzberg and secondly ―Higher Order Need‖
by Maslow and ―Motivation Factors‖ by Herzberg.
Motivations of employee of commercial bank were compared with respect to these
constructs. In order to measure the constructs, 10 questions were presented.
5. METHODOLOGY
5.1. Instrument for data collection: This study mainly based on primary data originating from
a survey. For this purpose a constructed questionnaire was developed. Excepting the
questions regarding demographic characteristics of the respondents the issues relating to
employees‘ motivation on need-based approach were investigated through 5 point
Brayfield-Rothe Scale (1951) based questions.
A pilot study on 10 respondents was conducted using the draft questionnaire. As the outcome
of this phase few initially selected variables were dropped to avoid multicoliniarity problem.
As well some rephrasing was done to arrive at final version of questionnaire for this study.
Final questionnaire was put into operation by the way of mail and personal survey.
5.2. Sample: Because of the lack of sampling frame, convenient method of sampling was
used. There was no source available for the address of the employees of commercial bank.
Therefore, friends, relatives, and other informal reference group were used to locate the
potential respondents from commercial bank in Bangladesh. Questionnaires were sent by
email and postage mail to 120 employees working in commercial bank in sample
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 88


organization. Number of initial replies received was 60. After a screening first round
replies a second round personal contract conducted by researcher and finally 80
respondents were taken for this study.
5.3. Analysis of data: A sample consists of 80 employees working at the executive position in
the sample organization. The data for the present study are obtained by the administration
of a questionnaire comprising two parts. The first part contains columns for personal
information and the second one includes perceptions of employees of public and
commercial bank in Bangladesh about the benefits they receive from the job and how they
difference in their perceptions about job nature and job environment. Measuring scale as
constructed and standardized by Brayfield-Rothe Scale (1951). The scale consists of 10
statements concerning perceptions of employees of public and commercial bank in
Bangladesh about the benefits they receive from the job and how they difference in their
perceptions about job nature and job environment. For each statement has five options/
points such as strongly agree/ 5, agree/ 4, undecided/ 3, disagree/ 2, and strongly
disagree/ 1.
SPSS Statistics software package was used for statistical analysis. Reliability of data was
measured by using the Chronbach‘s Alpha (Cornbach, 1951). Chronbach Alpha was 0.799
and 0.587 for public and private commercial banks respectively. Alpha in both cases were
higher than that is suggested by Nunnally (1978) and therefore data collected can be
considered reliable. Descriptive statistical technique such as mean and standard deviation
were used to measure the mean scores and their variability. One way ANOVA was used
to compare the difference between the scores of each statement.
6. RESULTS AND DISCUSSION
Perception of employees on existing motivational factors: Table 1 represents a relative
picture of employees the public and private commercial banks in Bangladesh on existing
motivational factors on organizational interfaces.

Table 1: Perception of employees on existing motivational factors

Factor
Public Commercial Bank Private Commercial Bank
Ranking
X

o

Ranking
X

o

Lower order needs/ Hygiene Factors
Salary 8 3.20 1.324 8 3.57 1.083
Job security 4 3.52 1.240 9 3.53 1.132
Fringe benefits 10 2.83 .874 10 2.97 1.230
Security for future 5 3.50 1.240 5 3.70 1.067
Good interpersonal relations 2 3.65 1.145 1 4.20 .723
Higher order needs/ Motivational Factors
Training and development 6 3.30 1.344 3 4.05 .749
Prestige and social dignity 1 4.05 .876 2 4.13 .516
Reward and recognition 7 3.25 1.316 7 3.60 .778
Growth/Promotion 9 2.88 1.285 6 3.68 .997
Open communication 3 3.53 1.086 4 3.80 .758
Source: Field Survey, 2013.
It is found in the table 1 that, employees of commercial bank perceived that their present
jobs have prestige and social dignity and there is a good interpersonal relationship among
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 89


the employees of commercial banks in Bangladesh. Therefore social dignity and status is
perceived as first preference and good interpersonal relationship as second preference for
public commercial and vice versa for private commercial bank in Bangladesh. Salary as a
basic need remain 8
th
position because of employees of both commercial banks; their
employees perceive that their remuneration is inconsistent to workload and job
responsibility. Job security perceived as 4
th
and 9
th
for public and private commercial
banks respectively, it indicates that public commercial bank has more autonomy at work
than private commercial bank and interestingly high variability observed in public sector
counterparts. However table 1 represents overall perception of employees on existing
motivational factors.

Perception about Lower Order Needs/Hygiene Factors: This section represents and
discusses result of the test of hypotheses and comparison of the overall motivation of the
study group. Table 2 shows the perception scores of two groups of respondents on the
statements related to five lower order needs/ hygiene factors.

Table 2: Difference in the perception about benefit received from the job

Statements
Public Private Comparison
X

o

X

o

F p
1. ―I receive adequate salary from
my job‖
2.58 1.13 3.15 1.145 5.113 .027
2. ―My job ensures a secured future
for me and my family‖
3.48 1.396 3.88 .853 2.392 .126
3. ―My job gives me dignity and
social status‖
4.30 .608 4.20 .464 .684 .411
4. ―I can materialize my career
ambition in my jobs‖
3.50 .987 3.45 .876 .057 .811
5. ―There are adequate training
and development program
in my jobs to fulfill my personal
growth potentials‖
3.15 1.406 4.03 .862 11.260 .001
Average Score: 3.4 1.10 3.75 0.84 3.9012 0.2752
Table 2 is a summary of findings related to employees perception on benefits received
from the organizations. From the above table it can be observed that salary received from
the organization is higher of private commercial bank compare to public commercial bank
counterpart is statistically significant. Also as the standard deviations suggest, there exist
higher variability in the perception of employees of private commercial bank.
Perception of employees of private commercial bank about the future security, social
dignity and status, materialize career ambition in present jobs are slightly higher than
public commercial. Here ANNOVA results represent statistically insignificant in
perceptions in this case. Adequacy of training and development programs for enhancing
personal growth and potentiality are higher than that of public commercial bank
counterparts is statistically significant.
Perception about the overall benefits received from the organization is slightly higher than
that of public commercial bank.it is also interesting that there is a high variability of each
statement of public commercial bank counterparts. The average p value of the above table
is higher than 0.05 in every case, indicates that all the differences are statistically
significant and therefore we conclude that the 1
st
hypothesis ―There is significant difference
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Copyright © 2012, Asian Business Consortium | GDEB Page 90


between employees of public and private commercial banks in their perceptions about the benefits
they receive from the job‖ is rejected (p>.05)

The perception about job nature and job environment: The second construct measures
and compare the perception of employees of public and private commercial bank about
job nature and environment that is so called higher order needs/ motivational factors.

Table 3: Difference in the perception about job nature and job environment

Statements
Public Private Comparison
X
o
X
o F p
1. ―My job is interesting‖ 2.78 1.330 3.35 .921 5.053 .027
2. ―I work in a comfortable
physical environment‖
3.10 1.033 4.23 .920 26.475 .000
3. ―I work in an environment of mutual
cooperation among the employees‖
4.00 .751 4.20 .823 1.289 .260
4. ―There is a good interpersonal
relationship among all levels of
employees in my organization‖
3.83 .844 3.95 .815 .454 .502
5. ―There is good employees
management relationship in
my organization‖
3.43 1.152 3.65 .921 .930 .338
Average Score: 3.428 1.022 3.876 0.88 6.8402 0.2254
As shown above table, employees of private commercial bank score higher in all the
statements, which obviously make their overall score higher in this construct. It also
reveals that respondents of private commercial bank have low variability of all case. As
indicated by the average values of p as a whole are statistically insignificant, which is
higher than 0.05 in three cases. so we can conclude that 2
nd
hypothesis‖ There is significant
difference between the employees of public and private commercial banks in their perceptions about
job nature and job environment‖ is rejected (p>.05).
7. CONCLUSION AND RECOMMENDATION
The study reveals that the employee of private commercial bank is slightly more motivate
that of public commercial bank. It also suggested that there is a difference observed between
perception of employees on existing motivational factors on public and private commercial
bank. Perception of employees on benefits received from the jobs and perception about job
nature and job environment are statistically proved same in this study. Although above
mentioned measures theoretically confirm there is a difference in perceptions on benefits
received from the job and job nature and environment, this study contradicts with some
previous researchers found in literature survey.
However his study can be useful for academicians and decision makers of both types of
organizations. It provides massage to top management of both organizations that motivation
is key secret of organizational effectiveness. To keep the people working efficiently, they
need to consistently motivate. Money is not sole motivating factor. Besides money, there are
many other financial and non-financial factors that can keep people happy, hardworking
and ambitious for organizational success. Good interpersonal relations, prestige and social
dignity, open communication, training and development, job security, reward and
recognition, security for future, growth/promotion are perceived as key motivating factors
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 91


in commercial banks in Bangladesh. Management should recognize that employees and their
behavior represent strong forces that can diminish or enhance effectiveness of every
organization. Motivated employees are most distinctive resource in competitive business
environment. So it is regular program of management to keep motivation as an integral
diver for managing diverse employees in banking organization.
REFERENCE
[1] Khan Mohiuddin, ―Job Satisfaction of the Public Sector Industrial Managers in
Bangladesh: A Case Study of Rajshahi Jute Mills‖, Rajshahi University Journal of Social
Science and Business Studies, Vol. 16, pp. 165.
[2] Marinakis A E (1994). ―Private Sector Employment In Developing Countries: An
Overview of Past and Present Trends”. International Journal of Public Sector Management.
Vol. 7, No.2, pp. 50-68.
[3] Rowly, J (1998) ―Quality Management in Public Sector: Some Perspective from Service‖.
Total Quality Management. Vol. 9, No. 2-3, pp. 321-333.
[4] Uddin, Nobi and Hasan ―Employees’ Motivation in Public and Commercial Banks in
Bangladesh: A study on Need-based Approach‖ The Business Review, Vol. 4, Number 1 & 2,
July to December, 2004.
[5] Luthans F., Organizational Behavior, Eighth Edition, Irwin -McGraw Hill, India, 1998, pp.161.
[6] Robbins, Stephen P. & Coulter, Mary, Management, Prentice-Hall of India, New Delhi, 2006.
[7] Maslow, A.H., ‗A Theory of Human Motivation‘, Psychological Review, July 1943, pp. 370-396.
[8] Herzberg, F.I., 'One more time: How do you motivate employees?', Harvard Business Review,
Sep/Oct 1987, Vol. 65 Issue 5, pp.109-120.
[9] Alderfer, C.P., ‗Existence, Relatedness and Growth: Human Need in Organizational Settings‘.
The Free Press, N.Y., 1972.
[10] McClelland, David C. ―The Achieving Society‖, Princeton, NJ, 1961.
[11] Kumar, op.cit.,pp.34-36.
[12] Cronbach L.J (1951) ―Coefficient Alpha and Internal Structure of Test‖. Psychometrika. Vol.
16, pp.297-334.



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Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 92


Goodness of Cloud Computing: does
Bangladesh ready for it
Md. Ahsan ul Hasan

Lecturer, MIS, ASA University Bangladesh


ABSTRACT
Technology is playing a vital role in all aspect of our lives. Last decade has
seen information and communication technologies dramatically
transforming the world, enabling innovation and productivity increases,
connecting people and communities, and improving standards of living
and opportunities across the world. Even though global economy has been
turbulent during last several years, governments and organizations trying
to keep the momentum going and last couple of years ―Cloud Computing‖
becoming fast-growing technology phenomenon. Cloud Computing can
provide fundamental contribution to efficiency in public and private
sectors as well as it can also promote growth, competition and business
creation. The purpose of this study is to portrait whether developing
countries like Bangladesh can be benefited from cloud computing, and also
finds out Bangladesh‘s readiness to take full advantage of it.

Key Words: Cloud Computing, Clouds, Internet, Virtual desktop.

JEL Classification Code: L86; C89

INTRODUCTION
The IT services, which are known as cloud computing these days, have been around for
decades. But they never grew beyond a small fraction of total industry revenue. But the
scenario changes last couple of years; a dizzying array of hardware and software available
for services over the Internet has emerged. Consumers and businesses have embraced a
multitude of cloud services, from large sales force management services to email and
photo editing to the latest smart phone applications and the entire social networking
phenomenon. Research firm International Data Corporation (IDC) calls cloud computing
the foundation for the technology industry‘s next 20 years of growth, saying ―it is nothing
less than the complete transformation of the industry‘s core offering and business models.
According to IDC, cloud computing will grow at a compound annual rate of about 26% for
the next couple of year which is roughly five times the growth rate of the technology
industry as a whole. In addition, 80% of all new software offerings in the upcoming years
will be available as cloud services (Global Technology Industry, 2011). Giant technology
companies like Google, Microsoft, Amazon, HP, IBM are investing heavily for this
technology.
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Even though cloud computing around us for years, In Bangladesh it is still a new concept.
At the moment there is pretty little awareness about cloud computing. However, this
situation is changing bit by bit. Bangladesh‘s software and IT service industry has crossed
long road over the last decade and started to contribute to the country‘s economy. One of
the distinctive features of Bangladesh‘s IT industry is the presence of young
entrepreneurs. Despite various local and global challenges, these young entrepreneurs
have done remarkably well in building sustainable business organization through their
dedication and passion for this field. These passionate IT professionals and clouds
promises to lower cost and faster deployment than traditional IT makes Bangladesh a
potential country to compete in cloud computing services with developed countries.
OBJECTIVES OF THE STUDY
Cloud computing and virtualization promises lower cost and faster deployment than
traditional IT, and developing countries like Bangladesh can be benefited from it. The
main focuses of this study are as follows:
- To understand cloud computing
- To identify the benefits that Bangladesh will get by implementing Cloud Computing
- To examine Bangladesh‘s current IT industry and find out its readiness to get full
advantage of cloud computing.
METHODOLOGY OF THE STUDY
This study is mainly based on secondary data. These data have been collected from
different published materials like the publication of World Economic Forum, Bangladesh
Association of Software and Information Services (BASIS), Bangladesh Bureau of Statistics,
Bangladesh Computer Council and relevant writings from different scholars.
LIMITATIONS OF THE STUDY
Although this research was carefully prepared, there are some limitations and
shortcomings. The major limitation of this study is resource constrains as cloud computing
is still a new concept Even though all data has been taken from reliable sources yet lack of
up-to-date data on Information Technology in Bangladesh was a great drawback of this
study.
OVERVIEW OF CLOUD COMPUTING
The term cloud has been used as a metaphor for the Internet. Cloud computing is the use
of computing resources that are delivered as a service over a network. This technology
provides service to the customer to access large scale of data. Cloud computing entrusts
remote services with user‘s data, software and computation. According to the US National
Institute of standards and Technology (NIST)(Mell & Grance, 2011) ―cloud computing is a
model for enabling convenient, on-demand network access to shared pool of configurable
computing resources (e.g., networks, web servers, storage, applications and services) that
can be rapidly provisioned and released with minimal management effort or service
provider interaction‖. A cloud computing platform dynamically provisions, configures,
reconfigures, and depravations servers as needed. Servers in the cloud can be physically
machines or virtual machines. Advanced clouds can also include other computing
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resources such as Storage Area Network
4
(SANs), Network Equipment, Firewall and other
security devices. Anyone with a suitable internet connection and standard browser can
access a cloud application. Depending on services cloud computing can be divided into
four types (Amies et al., 2012), and they are:
- Infrastructure as a service (IaaS) also referred to as Resource Clouds, provide
resources as services to the user. This type of cloud provides enhanced virtualization
capabilities. To deploy this application, cloud users install operating-system images
and their application software on the cloud infrastructure. In this model, the cloud
user patches and maintains the operating systems and the application software.
- Platform as a Service (PaaS) provide computational resources via a platform upon which
applications and services can be developed and hosted. PaaS typically makes use of
dedicated Application Programming Interface (API) to control the behavior of a server-
hosting engine, which executes and replicates the execution according to user requests.
- Software as a Service (SaaS) also known as Service Cloud or Application Cloud,
offers specific business functions and business processes with specific cloud
capabilities. It provides applications/services using a cloud infrastructure or platform,
rather than providing cloud features themselves.
Clouds may be hosted and employed in different fashions, depending on the use case or
business model of the provider. There has been a tendency of clouds to evolve from
internal solutions to manage the local infrastructure and the amount of requests.
Depending on usages there are several types of cloud available and each bringing its own
specific implications for its users (The European Union, 2010). The main variants are:
- Private Clouds is cloud infrastructure operated solely for a single organization,
whether managed internally or by a third-party and internally or externally. Private
clouds functionalities may not directly exposed to the customer, but sometimes
services with cloud enhanced features may be offered.
- Public Clouds provides applications, storage, and other resources available to the general
public by a service provider. These services are mostly free or offered on a pay-per-use
model. Generally public cloud providers offer access to their user via internet.
- Community Cloud shares infrastructure between several organizations with common
concerns like security, compliance, jurisdiction, etc from specific community.
Community cloud can be managed internally or by a third-party. It can also be hosted
internally or externally.
- Hybrid Cloud is a composition of two or more clouds that remain unique entities but
are bound together and offering the benefits of multiple deployment models. Hybrid
clouds are able to obtain degrees of fault tolerance combined with locally immediate
usability without dependency on connectivity.
BENEFITS THAT CLOUD COMPUTING CAN OFFER TO A COUNTRY LIKE BANGLADESH
Despite an unfavorable global economy, Bangladesh is rapidly developing market-based
economy. Bangladesh manages to grown its economy at the rate of 6-7% per annum over the
past few years and is expected to reach 6 percent in fiscal 2013(The World Bank, 2012).

4
Storage Area Network (SAN) is a dedicated network that provides access to consolidated, block level data
storage. SANs are primarily used to make storage devices, such as disk arrays, tape libraries, and optical
jukeboxes, accessible to servers so that the devices appear like locally attached devices to the operating system.

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According to the International Monetary Fund (IMF), Bangladesh ranked 44
th
largest economy
in the world in PPP terms and 57
th
largest in normal terms. More than half of the GDP is
generated by the service sector (Wikipedia, 2013). According to the GDP data of Bangladesh
Bureau of Statistics (BBS) in FY 2010-11, the contribution of the manufacturing sector to GDP at
the constant price is 18.41 percent (Economic Adviser's Wing, 2012). Bangladesh government
wants to be consistent with the imperative and they are creating favorable policy for the
promotion of cottage, small and medium industries (SMEs) along with large-scale industries.
To this end, Cloud Computing can help government in this cause as cloud computing
promises lower cost and faster deployment than traditional IT. Moreover, developing countries
like Bangladesh, where labor-intensive industries are more suited than capital-intensive
industries, have little money to spend on and no time to lose. To grow SME as well as large-
scale industry in Bangladesh, cloud computing can provide following benefits:
- Cost Savings: as most businesses in Bangladesh are fall short of providing proper
resources to meet growing business needs and in this current economic situation
companies are forced to shrink their IT budgets. Therefore, businesses are forced to focus
on optimizing every resource within their infrastructure. The beauty of cloud services is
that they inspire businesses to not to spend out on hardware, software and even license fee
as all the heavy lifting is done by the cloud application developer. Moreover, businesses
do not need to employ additional IT staff to deal with any problems which might arise as
services are completely managed by the service providers.
- Greater Business Agility: revolution in communication technology means that
business now can be done anywhere where there is Internet. Cloud computing allows
businesses to take full advantage of this opportunity. Cloud based mobility solutions
enable its customer to take their business into the audience effectively and also permit
to access their files and applications regardless where they are.
- Subscription-based pricing: one of the key feature of cloud computing is its services are
customize able and they offer the option to pay monthly. Subscription-based pricing helps
businesses to access incredibly sophisticated software with no upfront fees with no lock-in
periods. As a result, businesses in Bangladesh mainly SMEs can access powerful software
and services for a fraction of the cost of buying or developing it in-house.
- Keeping Up-To-Date: to survive cloud business, cloud services constantly upgrade its
services. There are hardly any interruptions to service and businesses don‘t have to
search for new versions of the software every few years.
- Speedy Implementation: with cloud computing services there is no need to purchase
hardware or software, which means systems can be up and running in the time it
takes to enter the business information and payment details.
- Safe and Security: A reputable cloud provider always try to make sure that its customers
data is encrypted and backed up, which takes the pressure and costs associated with data
back-up away from businesses. It also takes away the worry of the businesses having to
consider in-house data security as this is passed to the cloud provider.
- Increasing Efficiency: Cloud services can enable businesses to significantly streamline
the way in which they work, from sharing resources in one place to having the ability
to collaborate in ways previously not possible.
- Environmentally friendly: Recent studies show cloud technology could reduce
company carbon emissions by up to 50%, which is great news and as it reduces the
reliance on outmoded On-premise systems as everything is done via the
cloud.(Accenture, 2011)

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Businesses, especially in countries like Bangladesh face a tough challenge of meeting
growing demands with very limited resources. And it is evident that Cloud Computing
has something to offer every business from cottage to heavy industries. Right from
application delivery to mobility solutions, cloud computing offers an intuitive
methodology to leverage resources and improve business performance. Therefore, there is
no doubt that implementing cloud computing will help Bangladesh‘s cause to create
―Digital Bangladesh‖ sooner than later.
BANGLADESH’S READINESS TO ADOPT CLOUD
As it is proven that implementing cloud will help grow developing economy, question
arises when a developing country like Bangladesh tries to implement a new technology is
whether they have enough resources or skills to develop or maintain. Generally there are
two ways, a) developing own cloud, b) subscribing from others. Almost all the
powerhouses of IT companies are heavily investing on cloud computing. Government
agencies in developing economies like India, china are also focusing on cloud computing
regarding the potential and impact. Either way it requires skilled IT personnel and a good
ICT infrastructure. To determine Bangladesh‘s readiness following factors are considered:
- IT Industries of Bangladesh: IT industries in Bangladesh started to grow around 2000
and it has matured over the past few years. According to the survey of Bangladesh
Association of Software And Information Services (BASIS), there are over 800-
registered software (BASIS, 2012) and IT Enabled Service (ITES) companies in
Bangladesh. There are another few hundred of unregistered small and home-based
software and IT ventures doing business for both local and international markets and
about 70% of the companies involved in development and maintenance of software
for their clients. Bangladesh Association of Software and Information Services (BASIS)
survey also show that almost half of the companies are involved in providing range of
IT enabled services. Another survey (Shinkai & Hossain, 2011) says that more than 20
per cent are exporting their products and services to over 30 countries. Among these,
over 20 per cent companies have obtained ISO certification and a number of
companies are in the process of acquiring CMMI (Capability Maturity Model
Integration)
5
certification and at least six companies have achieved CMMI level 3.
As cloud computing depend on Internet, one of the most encouraging recent trends in
the Bangladeshi IT industry is that, around 45% are focusing or diversifying on
different web based services that include specialized portals, listing services, e-
Commerce etc. Moreover, in today‘s challenging economic conditions, Bangladesh has
positioned itself as a key location for consideration by enhancing delivery capability
and skill availability, lower costs of operations.

5
Capability Maturity Model Integration (CMMI) is a process improvement training and certification
program and service administered and marketed by Carnegie Mellon University. There are five maturity
levels, and Level 5 being the height.


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Chart: Business Specialization of BASIS Member Companies

Source: Bangladesh Association of Software and Information Services (BASIS) survey

- Skilled professionals: Bangladesh has a huge source of skilled human resources with its
cultural adoption capability, English language skills, and a large number of educated and
energetic youths with bright aptitude, and natural ability in software development. It also
offers relatively low cost. Study shows that the costs are almost 40% lower than
established destinations like India or Philippines (KPMG Bangladesh, 2012). Moreover,
depending on theoretical and experimental evidence, skill level is closely associated with
the performance of firms. An important prerequisite for the development of IT sector
depends on the availability of skilled workforce with cheaper wage rate.

Table: Skill level for Particular Activity

Source: Bangladesh Association of Software and Information Services Survey 2012
76.30%
49.80%
45.40%
18.30%
16.70%
11.40%
6.60%
3.20%
2.80%
Customized application development &
maintenance
IT Enable Services
E-commerce/Web Services
Product Development
Mobile Application/Content Provider
System Integration
R&D Services
IT Infrastructure Management
Reseller/Value Added reseller
0
10
20
30
40
50
60
70
80
90
MySQL .NET PHP MS
SQL
ASP Flash VB Ajax Oracle Java C/C++
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According to BASIS survey approximately 30,000 professionals are employed in the
industry. Even though the contribution for overall employment creation is not
significantly high, it is creating high quality employment with average monthly
compensation over Tk. 15,000 per month, which making software and IT service industry
one of the top graduate employment sectors in the country. Almost all top institutes offer
Computer Science or IT related program and it has been one of the favorite programs
among students. These tech savvy, spirited young graduates are continuously
participating international programming contest and performing relatively well. As a
result many global players like Samsung, AMD, VizRT, WorldBridge Global and most
recently Google – setting up operations in Bangladesh. All this evidence proves that
Bangladesh have the skilled personnel to tackle IT challenges.
- Infrastructure readiness: Cloud Computing is 100 percent relay on Internet. The
cloud model for computing storage and network resource management require
distributed computing architecture and also require strong and fast network to handle
increasing volume of data traffic. Bangladesh straggles in this area. The Networked
Readiness Index published in Global Information Technology report 2012 by World
Economic Forum, Bangladesh placed 113 out of 142 countries scoring 3.20 suggest
Bangladesh‘s weakness. However, ICT has been declared as the thrust sector by the
Government and situation is changing. The table shows the slow but increasing
tendency of the development of ICT in Bangladesh over past few years.

Table: ICT Development Indicators In Bangladesh
2009 2010 2011 2012
Internet users (per 100 people) 0.32 0.35 0.4 3.7
Secure Internet Servers (per 1 million people) 0.4 0.9 0.2 0.3
Mobile phone subscriptions (per 100 people) 21.66 27.90 32.3 46.2
Broadband internet subscriptions (per 100 people) 0.0 0.03 0.04 0.06
Int’l Internet bandwidth (mbps per user) 0.09 0.4 1.2 2.8
Electricity production (kWh per capita) 147.72 156.03 154.5 240.3
Broadband internet tariffs (PPP$/min) 1028.74 155.06 128.8 36.28
Mobile cellular Tariffs (PPP$/min) 0.31 0.08 0.07 0.03
Mobile network coverage, (per 100 people) -- -- 90 90
Source: Global Information Technology Report, 2009 to 2012

All these evidence proves that, even though Bangladesh‘s software and IT services came
long way from where it was a decade ago, yet it still have long way to go. The IT
industries in Bangladesh are more than capable to develop and provide cloud services as it
has skilled, energetic and relatively inexpensive IT professional. However, it is evident
(from above table) that current IT infrastructure is not ideal for deploying cloud
computing in Bangladesh as the internet service in Bangladesh is expensive and also it is
not adequate enough to take the heavy load that cloud requires.
CONCLUDING REMARK
The rapid changes that the ICT industry has experienced in the last decade have brought
about deep transformations in the way our economic activity and society are organized.
There is a sense of immediateness and constant accessibility is redefining the relationships
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between and across individuals, business, and governments. It has been predicted that the
IT and telecommunications industries will converge for cloud services. In addition to
providing bandwidths for cloud services, telecommunications carriers will gradually
move their IT systems, value-added services, and internet data centers into the cloud to
provide services to a variety of industries. This study proves that cloud computing will
make sizable contribution to countries economy, even small developing economies like
Bangladesh. However, this study also point out that Bangladesh lacks financial power as
well as proper infrastructure for a wide and deep adoption of cloud. Another problem that
has been point out is Bangladesh‘s approach towards Internet use. According to the Global
Information Technology report, 2012 only 3.7% of its population use Internet services. Yet,
the situation in Bangladesh is improving, slowly but surely. Few IT Pioneers of
Bangladesh joined the Oracle CloudWorld to look for new solutions to serve their clients
more efficiently and sustain in the competitive business. Bangladesh government also
have identified the prospect of cloud computing. Bangladesh Computer Council (BCC), an
agency dedicated to improving the state of the Information Technology in the country
taking initiatives to move toward cloud computing.
It would be unreasonable to expect that the cloud would help small economy like Bangladesh
to catch up with the advanced economy. However, if the Bangladesh government properly
undertakes policies to create a ―Digital Bangladesh‖ as laid down in its perspective plan, the
Cloud Computing certainly holds a promise to minimize the divide.
REFERENCES
[1] Accenture, 2011. Cloud Computing and Sustainability: The Environmental Benefits of
Moving to the cloud. [Online] Available at:
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_Sustainabili
ty_Cloud_Computing_TheEnvironmentalBenefitsofMovingtotheCloud.pdf
[Accessed 05 April 2013].
[2] Amies, A., Sluiman, H., Tong, Q.G. & Liu, G.N., 2012. Developing and Hosting
Applications on the Cloud. Indiana: IBM Press.
[3] BASIS, 2012. Bangladesh Association of Software & Information Services. [Online]
Available at: http://www.basis.org.bd/index.php/resource [Accessed 05 May 2013].
[4] Dutta, S. & Bilbao-Osorio, B., 2012. Global Information Technology Report 2012. Insight
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[5] Dutta, S. & Mia, I., 2009. Global Information Technology Report 2008-2009. Insight
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Report. Geneva: World Economic Forum World Economic Forum and INSEAD.
[7] Dutta, S. & Mia, I., 2011. Global Information Technology Report 2010-2011. Insight
Report. Geneva: World Economic Forum World Economic Forum and INSEAD.
[8] Economic Adviser's Wing, 2012. Bangladesh Economic Review - Finance Division.
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&Itemid=1 [Accessed 05 April 2013].
[9] Edwards, J., 2012. Cloud computing for SMEs. [Online] Available at:
http://www.bmmagazine.co.uk/in-business/advice/13552/cloud-computing-for-
smes/ [Accessed 02 April 2013].
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[10] Evans, P., 2012. Bangladesh - Internet Market and Forecasts. [Online] Available at:
http://www.internetworldstats.com/asia/bd.htm [Accessed 03 April 2013].
[11] Global Technology Industry, 2011. Cloud Computing Issues and Impacts. UK: Ernst &
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[12] Hossain , M. & Shinkai, N., 2011. Integration of ICT Industries and Its Impact on
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[13] KPMG Bangladesh, 2012. Bangladesh Beckons, An emerging destination for IT/ITeS
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[14] Mell, P. & Grance, T., 2011. The NIST Definition of Cloud. Gaithersburg: National
Institute of Standards and Technology.
[15] Richards, J., 2013. Benefits of Cloud Computing for SMEs. [Online] Available at:
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[Accessed 02 April 2013].
[16] Shinkai, N. & Hossain, M., 2011. Productivity and Performance of IT Sector in
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[17] The European Union, 2010. The Future of Cloud Computing- Opportunities for Europeran
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[18] The World Bank, 2012. Bangladesh Economic Update. [Online] Available at:
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[19] Wikipedia, 2013. Economy of Bangladesh. [Online] Available at:
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Consumers’ Perception and Performance
Appraisal of Mobile Phone Companies in
Bangladesh
Tajul Islam
1
; Rajidul Hoque
2
; & Md.Ashraful Alam
3


1
Assistant Professor, Department of Business Administration, Metropolitan University, Bangladesh
2&3
Lecturer, Department of Business Administration, Metropolitan University, Bangladesh


ABSTRACT
In recent times telecommunication industry like mobile phone, radio link
device have made revolution in the world. For the last few years mobile
phone has become part and parcel of our daily life. It has become an
essential part of business, commerce and society. Mobile phone provide
great assistance to users by giving the opportunity to access to the
anywhere of the world. Moreover, with the continuous diversification, the
use of mobile is not only limited to talking but its use ranges from using
internet, sending messages, listening to music, to organizing various works
are comfortably completed in time. The use of mobile phone was
introduced in Bangladesh at the middle of 1989 by the CityCell Company.
Now with the change of time another five operators have introduced in the
market. The function of mobile in Bangladesh with its communicative use
also spread with value added service like mobile banking, railway ticket
purchasing, health services, news update, and examination results and so
on. But there are a lot of complain about these operators services.
Descriptive analysis, Z-test, Chi-square test and Multiple Regression
Analysis were used to test the collected data and hypotheses of the
research study. Through this research we have tried to find out consumers
perception which impact may be very bad in near future on those
operators. Most of the respondents think that mobile operators are
charging higher terrify in which customers are deprived from pulse
system. Slow internet service, and lack of coverage hamper to the access of
information. By conducting this research we have found that except those
complain, the overall services of mobile phone are moderately well.

Key Words: Mobile Phone, Consumers‘ Perception, Mobile Operators,
Telecommunication Industry, Value Added Services.

JEL Classification Code: D18; D91

INTRODUCTION
Mobile phone is playing vital role in our daily life. It has changed people‘s life style. For
mobile phone we can now connect with each other within few seconds. It has been
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possible only for Bell Labs from 1947 to 1967, who is the inventor of cell phone.
Bangladesh ranks among the most densely populated countries in the globe, but it‘s fixed;
line tele density remains the lowest in South Asia. Mobile penetration rates in Bangladesh
have reached 56% at the end of 2011, a study conducted by Business Monitor International
(BMI). Bangladesh Telecommunication Company Limited (BTCL) which is a Government
owns company is providing the fixed line services while six operators provide mobile
phone services. Among them except TeleTalk, GrameenPhone holding 44%, Banglalink
holding 34%, Robi holding 18%, Airtel holding 7% and CityCell holding 4% of market
share. Now in Bangladesh mobile phone operators are more mature and people are well
known about their services. Customers‘ expect value added services from the mobile
operators. Customers perceived value can be defined from the perspective of money,
quality, benefit, etc. The monetary perspective indicates that value is generated when less
is paid (such as by using coupons or promotions) for goods (Bishop, 1984). In other words,
it is the concept of consumer‘s surplus in economics; perceived value is the difference
between the highest price that consumers are willing to pay for a product or a service and
the amount practically paid. According to the quality perspective, value is the difference
between the money paid for a certain product and the quality of the product (Bishop,
1984). The benefit perspective indicates that perceived value is customers‘ overall
evaluation of the utility of perceived benefits and perceived sacrifices (Zeithaml, 1988). To
survive in the competitive market mobile operators should provide value added services
to meet customer‘s satisfaction. Johnson et al. (1991) have pointed out that service quality
positively influences customer satisfaction.
OBJECTIVES OF THE STUDY
The main objective of the study is to identify consumers‘ perception and performance
appraisal of mobile phone companies in Bangladesh. To emerge the objective some other
supporting objectives are:
(i) To investigate the customer service management procedures of mobile phone
operators in Bangladesh.
(ii) To appraise the performance of operators‘ services such as overall network facilities,
railway ticket booking system, tariff charged by operators, high speed internet
services.
(iii) To depict the relationship between pulse system and consumers‘ perception.
(iv) To draw the relationship among the customers‘ and employees of the mobile phone
operators in Bangladesh.
LITERATURE REVIEW
Parasuraman et al. (1988) defined service quality as the degree and direction of
discrepancy between the consumer‘s perceptions and expectations, or the extent to which
a service meets or exceeds customer expectations. The definitions of service quality vary
only in wording but typically involve determining whither perceived service delivery
meets, exceed or fail to meet customer expectations (Cronin & Taylor, 1992; Oliver, 1993;
Zeithaml, Berry & Parasuraman, 1994). Among the studies of customer‘s satisfaction in the
information industry, Lin & Wang (2006) revealed that customer satisfaction of mobile
commerce is consumer‘s total response to the purchase experiences in a mobile commerce
environment. Therefore, in this study, customer satisfaction is defined as the total
consumption perception of consumers when using mobile value-added services. As to the
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quality of mobile communication services, Chae et al. (2002) used connection quality,
content quality, interaction quality, and contextual quality to measure the information
quality of mobile networking services. There are a number of benefits for a long term
relationships between a company and the customers, such benefits include fellowship,
personal recognition, reduction in anxiety and credit, discount and time saving and
customer management (Berry, 1995; Peterson, 1995). Customer satisfaction is defined as an
―evaluation of the perceived discrepancy between prior expectations and the actual
performance of the product‖ (Tse and Wilton, 1988, Oliver, 1999). Satisfaction of customers
with products and services of a company is considered as most important factor leading
toward competitiveness and success (Hennig-Thurau & Klee, 1997).
METHODOLOGY OF THE STUDY
Semi structured method has been taken in preparing the outline of the study. Necessary
information based on personal discussion and conversation is made with undergraduate
students of different Universities and professional bodies of different mobile phone
operators in Bangladesh through a structured questionnaire has been highlighted with
emphasize. Both primary and secondary data were used to conduct the study.
RESEARCH DESIGN FORMULATION
This was a two stage research. In the first stage, an expiatory research has been conducted to
identify factors affecting the consumer‘s perception. Then a descriptive research has been
conducted for the purpose of understanding consumer‘s perception about the mobile phone
operators. The questionnaire was developed in a way that reveals the respondents responses
related to each of the independent variables. A single statement is prepared for a single
independent variable as well as researchers considered consumers perception as dependent
variable and 10 (ten) independent variables, such as people‘s life style, all kinds of services,
overall network facilities, introduction of mobile banking, tariff charged by mobile operators,
high speed internet services, introduction of railway ticket booking system, social
responsibilities, pulse system and negative impact of mobile phone. A structured questionnaire
has been used to collect data in the Sylhet City in Bangladesh. The questionnaire was formed as
five point Likert scale and 110 questionnaires were distributed among the mobile phone users
(both male and female) selected on random sample basis. Multiple choice questions (MCQ),
dichotomous questions and open ended questions have been used to develop structured
questionnaire. Data required for this study to identify the present situation of the mobile phone
operators in different segment of the companies which has been conducted by the researchers.
Then survey has been conducted on factors affecting to determine consumers‘ perception
about the mobile phone operators. Here the respondents were asked some questions from a
preplanned questionnaire.
APPROACHES TO THE PROBLEM: THEORETICAL FRAMEWORK
The research study in concerned with the degree of selecting factors related to determine
the consumers‘ perception regarding the mobile operators in Bangladesh. The study has
completed with selecting the most influencing factors to understand the condition of the
mobile operators in Bangladesh.
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Copyright © 2012, Asian Business Consortium | GDEB Page 104


MULTIPLE REGRESSION ANALYSIS
To determine the relationship between factors and the consumer‘s perception of mobile
phone operators in Bangladesh has been analyzed by using the following Multiple
Regression Analysis:
Y= α+β1X1+β2X2+β3X3+β4X4+β5X5+µi
Here,
Y = Consumer‘s perception
α = Intercept
X1 = Overall network facilities of operators
X2 = Tariff charged by mobile phone operators
X3 = High speed internet service
X4 = Railway ticket booking system reduces harassment
X5 = Start pulse system again
β1, β2, β3, β4, β5 = regression coefficient
HYPOTHESES OF THE STUDY
Hypothesis 1: There is no difference among factors affecting consumer‘s perception
regarding mobile phone operators. (ANOVA)
Hypothesis 2: There is no relationship between Operator‘s SIM and Railway Ticket
Booking system. (Chi-Square Test)
Hypothesis 3: There is no relationship between performance of mobile phone operators
and all kinds of services. (Chi-Square Test)
Hypothesis 4: There is no relationship between overall network facilities of operators and
consumer‘s perception.
Hypothesis 5: There is no relationship between tariff charged by operators and consumer‘s
perception.
Hypothesis 6: There is no relationship between high speed internet service and consumer‘s
perception.
Hypothesis 7: There is no relationship between railway ticket booking system reduces
harassment and consumer‘s perception.
Hypothesis 8: There is no relationship between start pulse system again and consumer‘s
perception.
PRESENT STATUS OF MOBILE PHONE OPERATORS IN BANGLADESH
Bangladesh ranks among the most densely populated countries in the world but its fixed line
tele density remains the lowest in the South Asia. A mobile penetration rate in Bangladesh has
to reach 56% at the end of 2011. A study conducted by Business Monitor International (BMI)
recently. Bangladesh has some of the most underdeveloped telecommunication infrastructure
in the world. For its 150 million populations, the country has limited capacity to support
telecom services on any scale. But the scenario is changing day by day. In June 2011 BTCL have
693 exchanges in Bangladesh with telephone capacity of 3.065 million and connection of 0.99
million. At present BTCL has exchanged in 456 Upazillas and 25 growth centers. Activities are
going on to bring 27 Upazillas including 22 Hill-tracts Upazillas under digital system. There
are six mobile operators are providing services in Bangladesh. Bangladesh telecom market
constitutes approximately 86.45 million phone lines (fixed plus mobile) of this about 85.45
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61%
11%
23%
3%
2%
0%
0
10
20
30
40
50
60
70
80
N
o
.

o
f

U
s
e
r
'
s
million are mobiles. The number of mobile subscribers grew 65 million in December 2010 to
85.45 million in 2011. Table 1 shows the list of telecom operators in Bangladesh.
Table 1: List of authorized Telecom Operators in Bangladesh
SL No. Name of the Telecom Operators
1. Pacific Bangladesh Telecom Limited (CityCell)
2. Grameen Phone Limited
3. Robi Axiata Limited
4. Orascom Telecom Bangladesh Limited
5. Tele Talk Bangladesh Limited
6. Airtel Bangladesh Limited

DATA ANALYSIS AND SURVEY FINDINGS
Graph 1: Usage of Operator’s SIM


















Graph 1 shows usage of operators SIM by the users. It reveals that 61% users usage
Grameen Phone, 11% users usage Banglalink, 23% users usage Airtel and only 3%, 2% and
0% users usage Robi, Citycell and Teletalk respectively. It has found that most of the users
prefer Grameen Phone as their operators.

Table 1: Longibity of Using Mobile Phone
Year Frequency Percent Valid Percent Cumulative Percent
Valid Less than 1 Year 1 .9 .9 .9
1 Year 1 .9 .9 1.8
2 Years 4 3.6 3.6 5.5
3 Years 10 9.1 9.1 14.5
4 Years 16 14.5 14.5 29.1
5 Years 31 28.2 28.2 57.3
More than 6 Years 47 42.7 42.7 100.0
Total 110 100.0 100.0
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(a) More
than 300
Minutes
39%
(b) 300
Minutes
19%
(c) 250
Minutes
13%
(d) 200
Minutes
16%
(e) 150
Minutes
10%
(f) 100
Minutes
1%
(g) Less
than 50
Minutes
2%
(a) Strongly agree
(b) Moderately agree
(c) Agree
(d) Neither agree nor disagree
(e) Disagree
(f) Moderately disagree
(g) Strongly disagree
38%
31%
27%
3%
0%
0%
1%
Rate of changed in people's life style

Table 1 reveals when users has started to use mobile phone. It also represents that 42.7%,
28.2%, 14.5% started to usage of mobile before more than 6 years, 5 years and 4 years
respectively. On the other hand, only 9.1%, 3.6%, 9% and 9% has started to usage of mobile
phone before 3 years, 2 years, 1 year and less than 1 year respectively. It has found that
almost 85.4% users have started to usage of mobile phone more than 4 years ago.

Graph 2: Monthly Total Time Spend















Graph 2 express monthly total time spend on the phone by the correspondence. It shows
that 39%, 19%, 13%, 16% users monthly total time spent on the mobile phone more than
300 minutes, 300 minutes, 250 minutes and 200 minutes respectively. The remaining 10%,
1% and 2% users spent 150 minutes, 100 minutes and less than 50 minutes respectively on
mobile phone each month. It has found that almost 71% users spent more than 250
minutes on mobile phone each month.

Graph 3: Impact of Mobile Phone to Change the People‘s Life Style









Graph 3 shows that mobile phone has changed the people‘s life in Bangladesh. It shows
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0 20 40 60
(a) Strongly agree
(b) Moderately agree
(c) Agree
(d) Neither agree nor disagree
(e) Disagree
(f) Moderately disagree
(g) Strongly disagree
3
17
51
16
20
1
2
No. of Respondent's
21 21
55
8
5
0 0
19%
19%
50%
7%
5%
0% 0%
0
10
20
30
40
50
60
N
o
.

o
f

R
e
s
p
o
n
d
e
n
t
'
s
that 38%, 31% and 27% correspondences are strongly agree, moderately agree and agree
respectively that mobile phone has changed the people‘s life style.

Graph 4: Services of Customer Care Center
















Graph 4 represents services of customer care center of mobile phone operators. It also
shows that 3, 17, 51 respondent‘s believes that customer care center provides all kinds of
services smoothly. In contrary, 20,1 and 2 respondent‘s are disagree, moderately disagree
and strongly disagree respectively and 16 respondent‘s are neither disagree nor disagree.

Graph 5: Overall Network Facilities








Graph 5 shows overall network facilities of mobile phone opearators. It also shows 21 or 19%,
21 or 19%, and 55 or 50% respondent‘s are strongly agree, moderately agree and agree
respectively that overall network facilities of mobile phone operators are better than past.
Almost 88% respondent‘s believes that overall network facilities has improved than before.
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(a) Strongly
agree
24%
(b)
Moderately
agree
20%
(c) Agree
30%
(d) Neither
agree nor
disagree
22%
(e) Disagree
3%
(f)
Moderately
disagree
0%
(g) Strongly
disagree
1%
(a) Strongly
agree
6%
(b)
Moderately
agree
13%
(c) Agree
29%
(d) Neither
agree nor
disagree
12%
(e) Disagree
24%
(f)
Moderately
disagree
11%
(g) Strongly
disagree
5%
Graph 6: Impact of Mobile Banking in Saving Time







Graph 6 reveals the recent introduction of, mobile banking has saved time. About 24%, 20%,
30%, respondent‘s are strongly agree, moderately agree and agree respectively that mobile
banking has saved time. On the other hand, only 3%, 0% 1% respondent‘s are disagree,
moderately disagree and strongly disagree respectively. The above analysis revealed almost
74% respondent‘s believes that introduction of mobile banking saves time.

Graph 7: Tarrif Charged by Mobile Operators





Graph 7 represents tariff charged by mobile operators. It shows 6%, 13% and 29%
respondent‘s are strongly agree, moderately agree and agree respectively that tariff
charged by mobile operators is fair. On the other hand, 24%,11% and 5% respondent‘s are
disagree, moderately disagree and strongly disagree respectively regarding tariff charged
by mobile operators. It is mentioned that 12% respondent‘s are neither agree nor disagree
regarding tariff charged by operators . It has found that around 48% respondent‘s believes
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Copyright © 2012, Asian Business Consortium | GDEB Page 109


0 20 40
(a) Strongly agree
(b) Moderately agree
(c) Agree
(d) Neither agree nor …
(e) Disagree
(f) Moderately disagree
(g) Strongly disagree
5%
15%
30%
17%
28%
0%
6%
Responses (%)
0
5
10
15
20
25
30
35
40
9
14
39
25
19
3
1
8% 13% 35% 23% 17% 3% 1%
N
o
.

o
f

R
e
s
p
o
n
d
e
n
t
'
s

&

%
that tariff charged by mobile operators is fair. On the other hand, almost 52% respondent‘s
thinks that tariff chagred is not fair.

Graph 8: High Speed Internet Services

















Graph 8 shows relevance of high speed internet services of mobile phone operators. It
represents 5%, 15% and 30% respondent‘s are strongly agree, moderately agree and agree
respectively that mobile operators are providing high speed internet service and about
34% respondent‘s are disagree on high speed internet service.

Graph 9: Mobile Phone Provides Railway Ticket Booking Service









Graph 9 represents recent introduction of, Railway ticket booking system in mobile phone
has reduced harassment to their customer‘s. It reveals about 9 or 8%, 14 or 18%, and 39 or
35% respondent‘s are strongly agree, moderately agree and agree respectively that mobile
phone has reduced users harassment regarding Railway ticket booking. In contrast, 19 or
17%, 3 or 3% and 1 or 1% respondent‘s believes that Railway ticket booking service didn‘t
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24 24
35
13
14
0 0
N
o
.

o
f

R
e
s
p
o
n
d
e
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t
'
s
reduce harassment of consumer‘s and 25 or 28% respondent‘s are neither agree nor
disagree regarding reduced harassment of consumer‘s.

Graph 10: Social Responsibilities

Graph 10 shows the involvement of social responsibilities done by mobile phone
companies in Bangladesh. It represent‘s 11%, 28% and 50% respondent‘s are strongly
agree, moderately agree and agree respectively believes that mobile operators involved in
social responsibilities (i.e. boat race, passer hunts and sponsorship in various
development project). Almost 89% consumer‘s thinks that mobile operators performs
various types of social activities in Bangladesh.

Graph 11: Pules Rate

















Graph 11 represents pulse system of mobile phone operators. Almost 83 respondent‘s out
of 110 thinks that mobile operators should start pulse system again.

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(a) Strongly
agree
52%
(b)
Moderately
agree
16%
(c) Agree
23%
(d) Neither
agree nor
disagree
3%
(e) Disagree
3%
(f)
Moderately
disagree
2%
(g) Strongly
disagree
1%
Graph 12: Negative Impcat of Mobile Phone



















Graph 12 elucidate the negative impact of usage of mobile phone. It also represent‘s 52%,
16% and 23% respondent‘s are strongly agree, moderately agree and agree respectively
with the negative impact of mobile phone usage. Almost 91% of total respondent‘s thinks
that usages of mobile phone has massive negative impact such as misuse, increase
smuggling and harmful of sound health.
TEST OF HYPOTHESES
Hypothesis 1
Ho: There is no difference among factors affecting consumer‘s perception regarding
mobile phone operators.
Ha: There is difference among factors affecting consumer‘s perception regarding mobile
phone operators.

Table 5: ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 1569.814 13 120.7549 82.32341 1.6E-165 1.726566
Within Groups 2238.391 1526 1.466835

Table 5 shows that calculated F value is 82.3234 which are much greater than the F-critical
value of 1.7265 as well as the p-value of 1.6E-165 at 5% level of significance. So therefore,
based on the above ANOVA Null Hypothesis (Ho) must be rejected and Alternative
Hypothesis (Ha) is accepted. In conclude it can be said that, there is difference among
factors affecting consumer‘s perception regarding mobile phone operators.

Hypothesis 2
Ho: There is no relationship between operator‘s SIM and railway ticket booking system.
Ha: There is relationship between operator‘s SIM and railway ticket booking system.
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Table 6: Chi-Square Tests
Value df Asymp. Sig.(2-sided)
Pearson Chi-Square 29.560(a) 24 .200
Likelihood Ratio 32.237 24 .121
Linear-by-Linear Association 1.304 1
N of Valid Cases 110
a 28 cells (80.0%) have expected count less than 5. The minimum expected count is .02.

Table 6 represents Pearson chi-square test value is 29.560 (a) at 24 degrees of freedom.
Critical value is 36.415 at 24 df of 5% level of significance, which is greater than calculated
value. Therefore, based on the above Chi-Square Test Null Hypothesis (Ho) must be
accepted and Alternative Hypothesis (Ha) is rejected. Consequently, it can be said that,
there is no relationship between operator‘s SIM and railway ticket booking system.

Hypothesis 3
Ho: There is no relationship between performance of mobile phone operators and all kinds
of services.
Ha: There is relationship between performance of mobile phone operators and all kinds of
services.

Table 7: Chi-Square Tests
Value df Asymp. Sig.(2-sided)
Pearson Chi-Square 16.757(a) 24 .859
Likelihood Ratio 20.029 24 .695
Linear-by-Linear Association .008 1 .929
N of Valid Cases 110
a 29 cells (82.9%) have expected count less than 5. The minimum expected count is .02.

The null hypothesis (H
0
) of no association between two variables will be rejected only
when the calculated value of test statistic is greater than the critical value.
Table 7 shows Pearson chi-square test value is 16.757(a) at 24 degrees of freedom. Critical
value is 36.415 at 24 df of 5% level of significance, which is greater than calculated value.
So there is no relation exist between two variables. That‘s why, accepted the Null
Hypothesis (Ho) and must be rejected Alternative Hypothesis (Ha).

Table 8: Results of Regression Analysis
Item
Proposed
Effect
Path
Coefficient
Standard
Error
t-value
Significance
level
Constant=4.3393
H4 = Overall network
facilities of operators
+ 0.0514

0.1261

0.4074

0.6846

H5= Tariff charged by
mobile phone operators
- 0.0637

0.0801

0.7955

0.4282

H6 = High speed internet
service
+ -0.0967 0.0922 -1.0494

0.2966
H7= Railway ticket booking
system reduces harassment
- -0.1813

0.0999

-1.8148

0.0726*

X8 = Start pulse system again + 0.1008 0.1003 1.0045 0.3176
R√ = 0.2845, F = 3.5420
Significance = 3.5420
N = 110

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ANALYSIS OF RESULTS OF REGRESSION
The results of multiple regression as shown in the table 8 shows that there is no
relationship between overall network facilities of operators and consumer‘s perception is
not significant at 0.05 significance level (Beta = 0.0514, t-value = 0.4074, p = 0.6846). So
therefore, H4 must be rejected that means there is positive and significant relationship
between overall network facilities of operators and consumer‘s perception. According to
the H5 which states that there is no relationship between tariff charged by operators and
consumer‘s perception is not supported at the 0.05 significance level (Beta = 0.0637, t-value
= 0.7955, p = 0.4282). Henceforth, H5 is rejected and alternative hypothesis is accepted that
means there is a positive and significant relationship between tariff charged by operators
and consumer‘s perception. In respect to H6, that states there is no relationship between
high speed internet service and consumer‘s perception also rejected at the 0.05 significance
level (Beta = -0.0967, t-value = 0.0922, p = 0.2966). This result indicates that positive and
significant relationship between high speed internet service and consumer‘s perception.
Accordingly, H7 is significant at the 0.10 level of significance (Beta = -0.1813, t-value = -
1.8148, p = 0.0726*). This states that railway ticket booking systems by mobile operators
reduces harassment of consumer‘s. In respect to H8 which states there is no relationship
between start pulse system again and consumer‘s perception is not significant at the 0.05
significant level (Beta = 0.1008, t-value = 1.0045, p = 0.3176). So therefore, H8 is rejected
and it indicates that mobile operators should start pulse systems again.
LIMITATIONS OF THE STUDY
The current research study has some limitations. One of the limitations of the study is that
primary data has collected only in the Sylhet City in Bangladesh. All kinds of services,
overall network facilities, tariff charged by mobile operators, high speed internet services,
introduction of railway ticket booking system, pulse system are not the only determining
factor of consumers perception and performance of mobile phone operators. The other
factors, for instances, introduction of mobile banking, social responsibilities, people‘s life
style and negative impact of mobile phone are disregarded in this study which may have
important effect on the consumers‘ perception and performance of mobile phone. This is
clear from the value of R

(28.45%).
FUTURE RESEARCH
This study focused on consumers‘ perception and performance of mobile phone operators by
considering some important factors. Thus, the study unlocks many opportunities for future
studies to study consumers‘ perception and to make out the factors that may affect
performance of mobile phone operators in Bangladesh and other developing countries in the
world. The sample of current study covered only the Sylhet City in Bangladesh. Therefore,
future study may have an opportunity to cover the whole regions of Bangladesh.
FINDINGS & RECOMMENDATIONS
Based on the previous analysis following explanation can be drawn :
(i) Almost 61% users usage Grameen Phone and only 39% users usage Banglalink,
Airtel, Robi, Citycell and Teletalk. It has found that most of the users prefer
Grameen Phone as their operator. To survive in the competitive market other
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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mobile operators (i.e. Banglalink, Airtel, Robi, Citycell and Teletalk) should provide
better services to their consumers.
(ii) It has found about 96% correspondences are agreed that mobile phone has changed
people‘s life style. With the advancement of telecommunication sector people‘s
perceived that mobile phone has great users style.
(iii) About 71 respondent‘s believes that customer care center provides all kinds of
services smoothly. In contrary, 29 respondent‘s believes that customer care center
are not providing all kinds of services smoothly. So therefore, customer care center
services should be improved.
(iv) The Analysis has shown that almost 88% respondent‘s believes overall network
facilities has improved than past. Therefore, mobile phone operators should enforce
on upgradation consistency of network facilities.
(v) Only 48% respondent‘s are agree that tariff charged by mobile operators is fair. On
the other hand, almost 52% respondent‘s believes that tariff charged by mobile
operators is not fair. So it can be identified that tariff charged by mobile phone
operators is not rationale. Therefore, mobile operators should implement different
types of fair tariff strategy to fulfill the consumer‘s perception.
(vi) It has shown that about 50% respondent‘s are satisfied with high speed internet
service provided by mobile phone operators and about 34% respondent‘s are
dissatisfied on high speed internet service. So it can be said that, mobile phone
operators providing moderate speed internet services. That‘s why, mobile phone
companies should facilitate the technology regardingspeedy internet services.
(vii) About 61% respondent‘s are agree that mobile phone has reduced users harassment
regarding Railway ticket booking. In contrast, 39% respondent‘s believes that
Railway ticket booking service didn‘t reduce harassment of consumer‘s.
(viii) Almost 89% respondent‘s believes that mobile phone operators involved in social
responsibilities (i.e. boat race, passer hunts and sponsorship in various
development project).
(ix) Most of the respondent‘s (i.e. 83 out of 110) thinks that mobile operators should start
pulse system again.
(x) Almost 91% of total respondent‘s recommend that usages of mobile phone has massive
negative impact such as misuse, increase smuggling and harmful of sound health.
CONCLUSION
For connecting people mobile phone is one of the greatest inventions of the science. It
conquered time, it conquered place. People from any part of the world at any time can
communicate with each other through mobile phone. With the advance of time mobile
operators could introduce different services to make people‘s life easier. The operators
should also focus on the smooth flow of network coverage, customer care services, speed
of internet services as well as corporate social responsibilities. They should aware about
the abuses of mobile phone. The operators themselves may generate new ideas, initiatives
by which they can delight the customers.
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Emerging Perspectives, Journal of the Academic of Marketing Service, 23(4), 236-245.
[2] Bishop, W., R., Jr. (1984). Competitive Intelligence. Progressive Grocer, 63(3), 19-20.
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[3] Chae, M., Kim, J., Kim, H., & Ryu, H. (2002). Information Quality for Mobile Internet
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Loyalty in Mobile Commerce Contexts, Information and Management, 43(3), 271-282.
[8] Parasuraman, A., Zeithaml, V., A. & Berry, L., L. (1988). SERVQUAL: A Multi-Item Scale
for Measuring Consumer Perceptions of SQ, Journal of Retailing, 64(1), 12-40.
[9] Parasuraman, A., Zeithaml, V., A. & Berry, L., L. (1994). Reassessment of Expectations as
Compassion in Service Quality: Implications for further research, Journal of
Marketing, 58(1), 111-124.
[10] Peterson, R., A. (1995). Relationship Marketing and Consumer, Journal of the Academy
of Marketing Science, 23(fall), 278-281.
[11] Oliver, R., L. (1993). Cognitive, Affective, and Attribute Bases of the Satisfaction Response,
Journal of Consumer Research, 20, 418-430.
[12] Zeithaml, V., A. (1988). Consumer Perceptions of Price, Quality and Value: A means-end
model synthesis of evidence, Journal of Marketing, 52(3), 2-22.




















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Employee-Organization Congruence and Job
Performance: Development of a Conceptual Model
Perera, G.D.N.
1
; Prof. Dr. Khatibi, A.
2
; & Dr. Navaratna, N.N.J.
3


1
PhD Researcher, Management & Science University, Malaysia; and Lecturer, Department of Human
Resource Management, University of Sri Jayewardenepura, Sri Lanka
2
Prof and Dean, Faculty of Business Management and Professional Studies, Management & Science
University, Malaysia,
3
Senior lecturer, Department of Human Resource Management, Faculty of Management and Finance,
University of Colombo


ABSTRACT
Research on Employee-Organization Congruence (EOC) has focused on the
effect of EOC on individual performances. However EOC and job
performance relationship and its contextual validity have not been explored
in Sri Lankan apparel sector. This paper has explored the specific factors
specially related to the Sri Lankan apparel sector work environment. Among
these variables EOC considered as independent variable, job performance as
a dependent variable. The conceptual model of this study investigates job
related attitudes, namely job satisfaction and organizational commitment as
two potential mediating factors for the EOC and job performance
relationship. Further organizational climate has been cited as possible
moderating factor on EOC and job performance relationship. This paper
makes a significant contribution to the body of knowledge with the
proposed conceptual framework so that it can be used as a basis for the
future research in this context.

Key words: Employee-organization congruence, Job performance, Job
satisfaction, Organizational commitment, Organizational climate

JEL Classification Code: J53; J58

INTRODUCTION
With hot winds of competition blowing across the apparel industry, developing a close
symbiotic relationship with employees has become highly important than ever before.
When, achieving organizational ultimate objectives, organizations need to understand
how people interact with organizational settings and how organizational and individual
performance can be improved. Therefore, Person-Environment (P-E) congruence is a
general framework that was developed to promote an understanding of how people‘s
characteristics and psychological characteristics interact with the organizational contexts.
EOC is one of the major concepts in P-E congruence area (Edwards and Cable, 2009).
EOC is the compatibility of employees skills, attitudes and work values with an
organizational entity (Edwards and Cable, 2009; Kristof-Brown et al. 2005). Muchinsky
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(2003) explained job performance is the set of worker's behaviors that can be monitored,
measured, and assessed achievement in individual level.
Few researchers (Mackinnon et al.2007; Meglino and Ravlin, 1998 and Meglino et al.1989)
revealed the relationship between EOC and job performance, which include the potential
mediators and moderators. As a result this study mediates the relationship between EOC
and job performance through job related attitudes, namely job satisfaction and
organizational commitment. Organizational climate act as a moderator role between EOC
and job performance relationship as well as attitudes.
Therefore the purpose of this paper is to propose a theoretical framework so that a future
study can explore how job satisfaction, organizational commitment and organizational
climate affect to the relationship between EOC and job performance.
SUMMARY OF THE LITERATURE REVIEW
Person – environment congruence
The concept Person–Environment (P-E) congruence is grounded in the interactions‘ theory
of behavior (Ambrose et al.2008; Edward and Cable, 2009), beginning with Lewin‘s (1951)
propositions that the human behavior is a function of the person and environment.
Chatman, (1989) and Kristoff (1996) have shown that the P-E congruence will have a
greater interaction with the individual characteristics (psychological needs, personality
traits, person factors) and the organizational or situational characteristics (nature of
rewards, cultural value and environmental condition).
P-E congruence can be conceptualized with various congruence dimensions including an
individual‘s congruence with a job (person-job), congruence with a group (person-group),
congruence with a vocation (person-vocation) and congruence with an organization
(person-organization)(Caldwell et al. 2004; Cooper et al. 2004; Jansen and Kristof,2006).
Employee–organization congruence
Employee–organization congruence is embedded in the broader concept of person-
environment congruence. Therefore, the present study provides more attention to the
employee -organization congruence.EOC is the compatibility of employees skills, attitudes
and work values with an organizational entity (Edwards and Cable, 2009; Kristof-Brown et
al. 2005). EOC is generally defined as the ―compatibility between individuals and the
organizations where they work‖ (Sekiguchi,2003).
There are three approaches to measuring of the EOC; subjective congruence, perceived
congruence and objective congruence (Cable and Judge, 1996; O‘Reilly et al.1991). This
paper mainly focuses on perceived congruence. Reason is many researchers (Bowen et
al.1991; Chatman, 1989; Edward et al.2008; Hamdan, 2011) pay more attention on values
between organization and individual. Perceived congruence is an indirect measure where
employees are asked to describe both their own personal values and their organizational
values (Hamdan, 2011; Meyer et al.2010; O‘ Reilly et al.1991; Shar et al.2009).
JOB PERFORMANCE
Muchinsky (2003) explained job performance (JP) is the set of worker's behaviors that can
be monitored, measured, and assessed achievement in individual level. Employee‘s job
performance is important factor to push forward to be excellent organization. Job
performance refers to the effectiveness of individual behaviors that contribute to
organizational objectives (McCloy et al.1994; Motowidlo,2003).

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Employee–organization congruence and job performance
Few studies have examined the relationship between the EOC and job performance
(Becker et al.1996; Meglino et al.1989; Poon, 2004; Rod, 2008).All these studies conclude
negative relationships between EOC and job performance. However, one researcher
identified the positive relationship between EOC and JP (Shin and Holland,
2004).According to Kristof‘s (1996) summary of empirical results, support the positive
effects of EOC on employee extra–role behaviors (citizenship performance) and work
performance (task performance) (Ambrose et al.2008; Liu et al.2010).In addition, EOC
confirms that culture and ideological congruence can affect performance of the
organization (Tridball,1988).
EOC has an important implication not only for the employee‘s affective reactions to
organizational life, but also their performance (Kotter and Haskett, 1992).According to
Kristof-Brown (2002), perceived EOC is a better predictor of job performance and
investigated how employee integrates their perceptions of EOC when forming work
attitudes. Further he explained EOC has a unique impact on job performance.EOC related
research emphasizes the antecedents and consequences of congruence between employee
and entire organization. This congruence is vital in maintaining a flexible and committed
workforce that is necessary in today‘s competitive business environment to achieve goals
(Westerman and Cyr, 2004).
Arthur, et al. (2006) have used meta-analysis procedure to estimate the criterion related
validity of EOC as a predictor of job performance and turnover. Also compared the
relationship with EOC and work attitudes. Analysis data explained the relations of EOC
with job performance and turnover were partially mediated by work attitudes including
job satisfaction, organizational commitment, and turnover intentions.
Nevertheless, Meta-analyses resulted in estimated true criterion related for EOC as a
predictor of job performance. Hoffman and Woehr (2006) extend the meta-analyses of
Verquer,et al. (2003) providing a meta-analyses review of the relationship between EOC and
behavioral criteria of job performance. They identified 24 studies (conducted between 1967-
2003) between EOC and JP .The results indicated that EOC is weakly related to JP. However,
better EOC will result in higher JP in Taiwanese organizations (Silverthorne, 2004).Some
empirical studies explained, EOC have a stronger relationship with behavioral outcome of
job performance (Ambrose et al. 2008;Cooper et al.2004;Greguras and Diefendorff,2009;Liu et
al.2010;Van et al.2007). EOC affects employee performance (Li, 2006).
This study concerned job satisfaction and organizational commitment as mediator variables
and organizational climate as a moderator variable. According to Sekaran and Bougie,
(2010,p77) a mediator ―is one that surfaces between the time, the independent variables start
operating to influence the dependent variable and the time their impact is felt on it‖
Moderating variable is a―presence of third variable modifies the original relationship
between the independent and dependent variable‖(Sekaran and Bougie, 2010, p73).
JOB SATISFACTION
Job satisfaction refers to ―an evaluative judgment about the degree of pleasure an
employee derives from his or her job that consists of both the affective and cognitive
components‖ (Edwards et al.2008.p442). Aamodt, (2009) defines job satisfaction as ―the
attitude an employee has toward his job.‖ Most studies focus on the direct relationship
between EOC and JP (Chatman, 1989; Lauver et al. 2001; O‘Reilly et al, 1991),

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Organizational commitment
Organizational commitment is the employee‘s willingness to extend effort in order to
achieve the organizational goals and the degree of alignment between the organization
goals and values of the employee (Mowday et al.1982). Organizational commitment
consists of different types and each type influences on the job behavior differently (Meyer
and Allen, 1991).They identified 3 types of commitment, namely affective, normative and
continuous commitment. But this study mainly focused on affective and continuous
commitment.
Organizational climate
Organizational climate refers to how the organization‘s culture – its values, beliefs, and
assumptions–are translated into organizational practices, policies, and procedures (Ostroff
et al., 2003; Schneider et al., 2000). Bowen and Ostroff (2004) stated that an organization‘s
climate ―can act as a strong situation when employees develop a shared interpretation of
the organization‘s policies, practices, procedures, and goals and develop shared
perceptions about what behaviors are expected and rewarded in the organization‖ (p.
207). Litwin and Stringer (1968), who conceptualized the organizational climate in relation
to its influence on motivation and behavior. They stated that organizational climate is: ―a
set of measurable properties of the work environment, perceived directly or indirectly by
people who live and work in this environment and assumed to influence their motivation
and behavior‖ (Litwin and Stringer, 1968: p 81).
Mediator and moderator effects on employee–organization congruence and job
performance
Few researchers (Mackinnon et al.2007; Meglino et al.1989) revealed the relationship
between EOC and job performance, which include the role conflict and the cognitive style
as the potential mediators. They described the several theoretical explanations how or why
EOC affect for JP and mediators role.In literature, psychological need fulfillment variable
has been used as a mediator of EOC (Edwards and Cable, 2009).According to their view,
effect of congruence is indirect, and organizational values affect the supplies. As a result,
employees were to accept and retain their jobs. Results of the study explained that the
indirect effects of value congruence on the outcome were less and further emphasized, the
future research will investigate the value congruence effects.
Edwards and Cable (2009) explained the effects of EOC on job satisfaction with mediating
variables He founded the relationship with four mediators (communication, predictability,
attraction, and trust) and job satisfaction. Further he shown there is no any importance of
mediators except of predictability.
Hamdan (2011) investigates role conflict, cognitive style, and industrial justice as three
potential mediating mechanisms in the relationship between EOC and individual
outcomes. A survey of 558 mid level managers from seven Brunei public sector
organizations provided the data. Based on his result, P-O fit and outcome was partially
mediated by organizational justice and cognitive style and role conflict has not any
mediating effect. According to Morewitz (2009), job satisfaction did not mediate the
relationships with EOC and JP. Further he explained, organizational commitment was
significantly mediate and organizational climate is not moderate the EOC and JP
relationship.
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METHODOLOGY
This study involves a development of conceptual model for empirical exploration of a
phenomenon. Therefore it reviews the existing literature for identifying concepts and
relationships relating to the phenomenon. Basically 300 abstracts of articles were scrutinized
to check their relevance to the phenomena under consideration. Finally, 200 articles were
selected and reviewed for identifying the concepts and relationships involved.
GAPS IN EMPLOYEE-ORGANIZATION CONGRUENCE AND JOB PERFORMANCE
After reviewing the existing literature, there are three gaps in employee-organization
congruence and job performance research as follows.
Gap one
EOC related researches are very significant and diverse in organizational context.
Different studies have been carried out in different organizational setting, different
methodology and with different cultural settings. According to the literature review, EOC
and JP relationship is not generalized (see relationship of EOC and JP section).Many
researchers have found, that there is a relationship between EOC and job performance
(Ambrose et al. 2008; Liu et al. 2010; Hamdan, 2011; Rod, 2008), but have not identified as
to why better EOC results in better JP, or why better EOC results in lower JP and how low
EOC results in lower JP(see figure 1).
Gap two
As earlier mentioned few studies investigated the mediating effect of EOC and JP. The research
question of job related attitudes mediate the relationship between EOC and JP is very vital,
because it opens new insight in to the understand of the mediating affect of EOC to the JP in Sri
Lankan Apparel Industry. According to the previous sections seems that there is a gap in the
empirical knowledge available about the mediating variables role of job satisfaction and
organizational commitment to the EOC and JP from the perspective of factory workers in the
Sri Lankan apparel sector. The purpose of this study is to find how mediating variables affect
to the perceived EOC and JP relationship in the Sri Lankan context (refer figure 3).
Gap three
As above explained, few studies investigate the moderating effect of EOC and JP. But not
finalized how organizational climate moderates the relationship between EOC and JP.
Moreover, as there are no previous studies carried out in this area in apparel sector, there is a
knowledge gap that could be attempted to address. The literature available to the researcher
reveals that there is a wide gap between theoretical as well as empirical explanations of the
previous studies. The findings of this study may help to fill this gap to a considerable extent.
DEVELOPMENT OF THE CONCEPTUAL FRAMEWORK
The proposed conceptual framework was developed based on the identified variables and
relations through the literature review pertaining to the research problem of the study.
The following contains a brief description of reviewed literature so that it may provide a
threshold for the theoretical framework.
Central focuses of the EOC studies are examine the individual outcome, especially job
performance (Ambrose et al.2008; Liu et al.2010). Among the EOC studies perceived
congruence is the mostly used researched areas (Bowen et al.1991; Edward et al.2008;
Hamdan,2011;Meyer et al.2010;O‘Reilly et al.1991;Shar et al.2009;Van et al.2007,
p.1737).Therefore, relationship between EOC and job performance explained in figure 1.

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Figure 1
Relationship between EOC and job performance



(Source: Adapted by researchers)

Some specific EOC and job performance relationships provide factors which may
operate as mediators. This study considers job related attitudes, such as job satisfaction
(JS), and organizational commitment (OC) as mediators (refer figure 2).

Figure 2
Relationship between EOC and job performance mediated by attitudes



(Source: Adapted by researchers)

Job satisfaction acts as a significant mediator between EOC and JP, because values fit
create the strongest situation for the people to satisfy their personal and organizational
values. This leads to higher level of satisfaction of the worker to enhance JP.EO
incongruence leads to development of the lower satisfaction of a worker that represents
the tradeoff between the individual and the organization (Ambrose et al. 2008; Cools et al.
2009; Erdogan and Bauer, 2005). According to the Morewitz (2009) organizational
commitment acts as a mediator between the EOC and job performance. EOC meets
employees‘ personal and organizational values to achieve the organizational commitment.
This leads to higher level of organizational commitment to the worker with more positive
values (individual and organizational) to enhance JP. Figure 3 described job satisfaction
and organizational commitment mediate the EOC and job performance relationship.

Figure 3
JS and OC mediate the EOC and job performance relationship










(Source: Adapted by researchers)

One study (Morewitz, 2009) has been conducted to test the moderating effect between the
EOC and job performance by organizational climate. The results indicate that EOC and job
performance relationship did not have any significant relationships with the study
Job performance Perceived
Congruence

EOC Job performance
Attitudes
EOC
Job performance
Job satisfaction
Organizational
commitment
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Employee-
Organiza
tion
Congruence
Job Perfor
mance
Job satisfaction
Organizational
Commitment

Organizatio
nal Climate
variables (Morewitz, 2009).However, this study wants to identify results are similar or not
in Sri Lankan apparel sector.
Figure 4 explained the conceptual framework of this study
Figure 4
Conceptual framework









(Source: Developed by researchers)
CONCLUSION AND IMPLICATIONS
This paper proposes a conceptual framework for exploring the effect of job satisfaction,
organizational commitment and organizational climate in the EOC and job performance
relationship of the factory workers in large apparel sector. Even though the proposed
framework is yet to be tested empirically, the description of the interactions between
variables will add significant value to the body of knowledge on both human resource
management and organizational behavior literature. First, this paper has offered an
extension of the body of knowledge on attitudes by identification of the mediating effect of
the job satisfaction and organizational commitment. This paper addresses the knowledge
gap of mediating variable effect with EOC and job performance relationship. Next identify
how moderator variable effect for the EOC, job related attitudes and job performance
relationship. This has not been explored previously. This paper points out this knowledge
gap and stress the importance of addressing it empirically. Also identify moderator variable
effect for the EOC and job performance relationship. Therefore, proposed conceptual
framework of this paper will set a new direction for future research to understand the
mediator and moderator effects on EOC and job performance relationship.
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theories. International Journal of Selection and Assessment, 12 (3), 252-261.



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HRM Practices and its Impact on Employee
Performance: A Study of the Cement Industry
in Bangladesh
Mst. Momena Akhter
1
; Md. Nur-E-Alam Siddique
2
; Md. Asraful Alam
3


1
Lecturer, Faculty of Business, ASA University Bangladesh
2
Senior Lecturer, Faculty of Business, ASA University Bangladesh
3
Senior Administrative Officer, ASA University Bangladesh


ABSTRACT
In present situation, companies can gain strong competitive advantage
through applying effective and efficient human resource practices. If the
human resources are managed properly, they can contribute to the success
for the company. The effective management of human resource is possible
through the implementation of sound HRM practices. . The main objective of
this research is studying the impact of HRM practices on employee
performance in the context of cement industry in Bangladesh. For this
purpose the researchers have tried to investigate impact of the various
components of HRM practices on employee performance of a sample of 160
employees from seven cement companies listed in the Dhaka Stock
Exchange. The data were analyzed by a regression analysis to determine the
impact of HRM practices on employee performance. The result shows that
training & development and opportunity for career development have a
significant positive impact on employee performances. On the other hand,
Performance appraisal, Compensation & Benefits, and Leadership Practices
have a positive impact on employee performance but the impact is not
significant in the context of cement industry in Bangladesh. Moreover, work
life balance has a negative impact on employee‘s performance. Furthermore,
efficient management of human resources can increase the performance of
the employees of the cement companies in Bangladesh.

Key-Words: Employees performance, HRM Practices, Performance
Appraisal, work life balance, Training and Development, leadership
practices, career development etc.

JEL Classification Code: M12; J53

1. INTRODUCTION
Human resource of the organization is the source of achieving competitive advantage
because of its competency to convert the other resources (money, machine, methods &
material) into output (product/service). They are one of the most important factors
providing flexibility and adaptability to organization (Khatri, 1999). Further, Rundle (1997)
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said that one needs to bear in mind that people (managers), not the firm, is the adaptive
mechanism in determining how the firm will respond to the competitive environment. The
competitors can imitate other resources like technology, capital, raw material but it is quite
impossible to imitate the human resources. All these factors made them a unique resource
and necessitate their effective management.
Impact of human resource management practices on employee performance has been a
widely researched area for years. Several Scholars have noted that managing people is
more difficult than managing technology or capital (Barney, 1991; Lado and Wilson, 1994).
However those firms that have learnt how to manage their human resources well would
have an edge over others for a long time to come because acquiring and deploying human
resources effectively is cumbersome and takes much longer time (Wright et al.,2003).
Cement industry of Bangladesh is closely associated with the building and construction
activities wherein it is used as bonding agent to unite particles. In Bangladesh out of the
total cement supply to the market around 20% is consumed by the public sector and the
rest is consumed by the private sector. In a recent statistics of demand and supply position
of cement in our country, it was reported that during the year 2010 the demand of cement
was around 12.5 million MT per annum whereas the supply of cement was almost 1.5
times higher than its demand. However it is predicted that the demand of cement will
likely to be increased within the next few years as some big national projects are under
active consideration of the government. This would create a good demand for cement in
the coming years creating more opportunities for consumption of products of this sector
and human resource would be the corner stone for the sustainable growth of the
companies through satisfying their goals and objectives. Therefore, the management of the
companies should view their employees as assets for their steady and sustained
development and maintaining of the competitive advantage in business. The companies
should maintained a uniform and effective human resource management policies and
practices in order to motivate and develop their employees and executives and ensure
their optimum utilization in achieving the corporate goals.
Results of studies, from developed to developing countries have been time and again
showing that HR practices have significant impact on organizational performance.
(Delaney & Huselid, 1996; Katou & Budhwar, 2007; Sing, 2004; Tzafrir, 2006). But
unfortunately, very insufficient numbers of studies have been conducted in this area in the
context of Bangladesh and other developing countries. There is no research on the human
resource practice in the cement industry of Bangladesh.
Hence, it becomes pertinent to measure the impact of HR practices on employee
performance of the cement industry in Bangladesh and to augment the contemporary
knowledge base of HR practices of the cement industry, this study has been undertaken.
The remainder of the paper is organized as follows. Section two reviews the literature on
impact of human resource management practices and policies on employee and
organizational performance followed by the objectives and conceptual framework of the
study. The next section discusses the methodology used in the study and section six
discusses the empirical findings and section five concludes.
2. REVIEW OF RELATED LITERATURE
In a rapidly changing market worldwide, regulators, managers, and investors are
concerned about how efficiently transform their expensive inputs into various products
and services. This transformation of input into output depends on the efficient & effective
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use of human resources. As the study focuses on the impact of HRM practices on
employee‘s performance, the researchers have reviewed the important studies available on
the impact of HRM practices on organizational performance as well as on employee‘s
performance. The review of these studies is as follows:
Birdi et al, (2008) examined the impact of human resource and operational management
practices on company productivity and concluded that performance benefits from
employee empowerment and extensive training. In contrast, none of the operational
practices were directly related to productivity nor did they interact with other practices in
ways fully consistent with the notions of integrated manufacturing or lean production.
Khan, (2010) evaluated the effects of human resource management practices on
organizational performance in Oil and Gas Industry in Pakistan and found a significant
association of HRM practices with organizational performance.
In another study, Shahzad et al., (2008) conducted a study among university teachers in
Pakistan. The results of the study indicate a positive relationship between compensation
and, promotion practices and employee perceived performance while performance
evaluations practices are not significantly correlated with perceived employee
performance.
Collins et al., (2005) investigated the small businesses and found that effective HR
practices impact employee outcomes significantly. Guest, (2002) has argued that the
Impact of HRM on performance depends upon worker‘s response to HRM practices, so
the impact will move in direction of the perception of HRM practices by the employee. If
the perception is positive the impact will be positive and if the perception is negative the
impact will be negative. Wright et al., (2003) were of the view that an employee will exert
discretionary effort if proper Performance management system is in place and is
supported by compensation system linked with the performance management system.
Marwat et al., (2009) explored contribution of human resource management practices in
telecom sector on perceived employee performance in telecom sector in Pakistan. Results
highlighted that all the tested variables are positively correlated but correlation of
compensation and training are highest respectively.
In a recent study, Baloch et al., (2010) measured the impact of three HR practices which are
compensation practices, promotion practices and performance evaluation practices on
perceived employee performance. The results of correlation indicated a significant
relationship between compensation practices and perceived employee performance,
promotion practice and perceived employee performance and performance evaluation
practices and perceived employee performance.
As far as the topic of the study is concerned, many studies have been conducted on
particular topic in different sectors but no such study has been conducted in cement
industry in Bangladesh. Now-a-days, the environment has become very competitive and
they compete for quality of human resources. So this study will help the companies to
know the perception of employees about HRM practices.
3. OBJECTIVES OF THE STUDY
- To find out the perception of employees about HRM practices.
- To find out the impact of HRM Practices (performance appraisal, training and
development, career development, work life balance, compensation & benefits and
leadership practices) on employees performance of the cement industry in Bangladesh.

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4. CONCEPTUAL FRAMEWORK
On the basis of the literature reviewed, it is clear that HRM practices affect the
performance of the organization as well as performance of the employees. Now onwards
the researcher has only talked about the impact of HRM practices on Employees
performance which is the main theme of the study. A theoretical framework has been
developed to understand the impact of HRM practices on Employees performance.
















Figure 1: Schematic Diagram of the Conceptual Framework

The framework demonstrates that the employee‘s performance is influenced by HRM
practices (Training & Development, Performance appraisal, Career development,
Compensation & benefits, Work life balance and Leadership practices).
5. RESEARCH METHODOLOGY
The present paper is an empirical study based on exploratory research design followed by
causal study to find out the impact of HRM practices on employees performance in
cement industry of Bangladesh. So, the population of the study includes employees of the
cement industry of Bangladesh. However, the sample was consisting of 160 employees of
different cement companies located in Bangladesh. The researchers have used the
convenience sampling technique for the selection of the respondents.
A self-administered questionnaire was applied to measure the impact of HRM practices on
employee performance. At first, the questionnaires have been distributed to 200
employees of cement companies, out of that employees have returned 170 questionnaires.
10 questionnaires were rejected due to incompleteness. Finally, 160 questionnaires have
been used for the study. The data were tabulated and analyzed with the help of regression
analysis using SPSS software.
For measuring the impact of HRM practices on employee performance the independent
variable includes various HRM practices like Training and development practices,
H
R
M

P
R
A
C
T
I
C
E
S
Independent Variable
Dependent Variable
Employee Performance
Career Development
Performance Appraisal
Compensation & Benefits
Work Life balance
Leadership practice
Training & Development
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Performance appraisal practices, Career development practices, Work life Balance
Practices, Compensation and Benefits practices, Leadership Practices, and dependent
variable includes Employees Performance.
The secondary data were collected from various documents, reports, articles, case studies,
books, and internet and so on. The collected data were analyzed keeping in mind the
objective of the study. The period of study is July 2012 to December 2012.
6. FINDINGS
6.1 Reliability of the Data
Before applying statistical tools, testing of the reliability of the scale is very much important as
it shows the extent to which a scale produces consistent result if measurements were made
repeatedly. This is done by determining the association in between scores obtained from
different administrations of the scales. If the association is high, the scale yields consistent
results, thus it is reliable. Cronbach‘s alpha is the most widely used method. It may be
mentioned that its value varies from 0 to 1 but the satisfactory value is required to be more
than 0.6 for the scale to be reliable (Malhotra, 2002; Cronbach, 1951). In the present study, we,
therefore, used Cronbach‘s alpha scale as a measure of reliability.

Table 1: Reliability Statistics
Questionnaire Items Cronbach’s Alpha
Performance Appraisal 04 .891
Training & Development 05 .774
Career Development 06 .827
Compensation & Benefits 05 .736
Work Life balance 06 .799
Leadership Practices 04 .825
Employee performance 05 .901
Source: Primary

Table 1 shows the Cronbach‘s Alpha for HRM practices and EP questionnaire. The scores
suggest that internal consistency of the questionnaire is satisfactory.

6.2 Regression Analysis
To find out the impact of HRM practices on Employees performance (EP) a regression
analysis has been used and the results have been presented in table 2 & 3.

Table 2: Model summary
R R2 Adjusted R2 Std. error of the estimate F- Value Significance
.701 .487 .453 .519 13.22 .000
Source: Primary

The table 2 shows that the value of adjusted R2 is 0.453 which means that 45.30% of variance in
employee performance is explained by the six independent variables and 55.70% of the fraction
of the variation in the dependent variable is unexplained. This is probably due to the fact that
the number of variables used in the analysis was not sufficient enough to deliver a better value
of R-Square. There are many other factors such as internal conflict, personality, work
environment, internal communication etc. that influence employee performance. The f value is
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13.22 and the level of significance is 0.000 which means that there is a significant impact of
HRM practices on employee performance it is supported by the findings of the study
conducted by Ichniowski et al., (1995). In their study they found that complementary HR
practice system effects workers performance.
The strengths of impact that each of the independent variable had on the dependent variable.
i.e. employee performance was determined by the use of multiple regression coefficients of the
independent variables. The impact of each independent variable is shown in Table 3.

Table3: Impact of the Individual Variables of HRM Practices on employee performance
Variable Std. error Standard beta t Significance
Performance Appraisal
Training & Development
Career Development
Compensation & Benefits
Work Life balance
Leadership Practices
.117
.130
.088
.119
.078
.166
0.102
.297
.373
.112
-.037
.202
0.896
2.891
3.493
.952
-.388
1.492
0.378
0.005
0.001
0.346
0.700
0.135
Source: Primary

From the analytical table 3 it is exposed that all the measures of HRM practices have a
positive impact on employee performance excepting work life balance. Training and
development and career development have a significant positive impact on employee
performance. On the other hand performance appraisal, leadership practices, and
compensation & benefits do not have significant impact on employee performance.
Training and development facilitates the employees to learn the new skills and
competencies so that they can perform well on their job. The results of the study have
shown the significant impact of T & D on employee‘s performance with standard beta
(0.297) and it is in line with the results of the study conducted by Marwat et al., (2009) in
which they have found the highest correlation between Training and employee‘s
performance. In present situation employees give proper importance to their career and
they want to work for such institution which provides better career development policy
and the result of the study has shown that the career development has a significant impact
on employee‘s performance with highest standard beta (0.373).
As shown in table 3, the performance appraisal practices do not have significant impact on
employee‘s performance and it is also confirmed by the findings of the study conducted
by Shahzad et al., (2008) in which they have found that performance evaluations practices
are not significantly correlated with perceived employee performance. The result also
shows that compensation and benefits have a positive impact on employee‘s performance
of the cement industry in Bangladesh.
Finally, the findings indicate that work life balance do not have any impact on employee‘s
performance. The reason may be that in cement companies the work is carried out in shifts and
employees keep moving from one shift to another so they think differently from employers
about work life balance and this is the dim where there is a need to conduct further research.
Furthermore, supportive and participative leadership style can increase the performance of the
employees but on the other hand autocratic style of leadership can decrease the performance of
the employees but the results of the study have shown that the leadership practices do not
have significant impact on the performance of the employees.
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7. CONCLUSION
The regression model suggests that 45.30 percent of the total variance in employee‘s
performance is explained by these HRM practices which mean that these aggregate HRM
practices affects the performance of the employees of the cement companies to a greater
extent. Hence it is very clear that HRM practices play a very important role in improving
the performance of the employees As far as the individual HRM practices are concerned
the researchers have found that the HRM practices like career development & training and
development have a significant impact on employees performance but the other practices
like performance appraisal, work life balance, leadership practices and compensation &
benefits practices do not have a significant impact on employees performance.
Now this is very important for the cement companies to update the existing HRM practice
and implement new innovative HRM practices. The survey should be conducted among
the employees from time to time to know their satisfaction with the current practices and
line managers should be involved in the process of designing or modifying the HRM
practices. The new performance appraisal techniques like 360O should be implemented
which will help the organization to collect the information about the employee‘s
performance from variety of sources. Training and development should be strongly
enforced in the culture of the organization. Organization should organize training
programs for employees so that they can increase their skills and expertise. Training may
be technical and behavioral. Such training programs should be conducted by experts.
Organizations should encourage the culture of innovations. The techniques like
mentoring, coaching should be used. Competency mapping should be done on regular
basis. Career Development practices should be more strengthened in the organization
because in present scenario the employees are more educated and are career conscious.
Existing opportunities should be clearly communicated to the employees. The succession
planning should be done on regular basis which will result in the availability of right
talent for future vacancies at higher posts.
Compensation should be updated from time to time and it should be at par with the
industry. Organization should have clear compensation policies and employees should be
aware of the compensation policies. Competitive benefits such as medical, transportation,
ESI (Employees State Insurance), PF (Provident Fund), LTC (Leave Travel Concession),
rewards should be provided to the employees.
As far as the leadership is concerned it should be supportive and participative. Leaders
should be available to the employees as and when required. Leaders should take initiative
to motivate the employees and encourage them to come up with new ideas. Besides these
the companies should provide additional facilities like vegetable shops, provision stores
medical stores, transport facilities to the nearest city on regular basis so that family
members should not depend on the employees for small things. They can purchase the
routine items from these shops. Recreational centers, yoga facilities should also be
provided so that they can refresh themselves after the work.
REFERENCES
[1] Baloch, B.Q, Ali, N., Kiani, S.T, & Ahsan, A. (2010). Relationship between HR Practices
and Perceived Employees‘ Performance of Bankers in NWFP, Pakistan: An Empirical
Evidence. European Journal of Social Sciences – Vol. 18, No. 2.
[2] Barney, Jay. (1991). Firm Resources and Sustained Competitive Advantage. Journal of
Management, Vol.17, pp.99-120.
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[3] Birdi, K., Clegg, C., Patterson, M., Robinson, A., Stride, B.C.,Wall, D.T., & Wood,
J.S.(2008). The Impact of Human Resource and Operational Management Practices on
Company Productivity: A Longitudinal Study. Personnel Psychology, Vol. 61, pp. 467–501.
[4] Collins, C., Ericksen, J., Allen, M. (2005). Human Resource Management Practices and
firm performance in small business. Cornell University/ Gevity Institute pp. 10.
[5] C r o n b a c h , L.J. (1951). Coefficient alpha and the internal structure of tests, Psychometrika,
Vol.6, No.3, pp.297-334.
[6] Delaney, J.T., and Huselid, M.A. (1996). The impact of Human Resource management on Perceptions of
Organizational Performance. The Academy of Management Journal, Vol. 39, No.4, 44. 949-969.
[7] Guest, D. (2002). Human Resource Management, Corporate Performance and Employee
wellbeing: Building the worker into HRM. The Journal of Industrial Relations 44:3 335-358.
[8] Katou, A. A., and Budwar, P. S. (2007). The Effects of Human Resource Management
Policies On Organizational Performance In Greek Manufacturing Firms. Thunderbird
International Business Review, Vol.49, No.1, pp.1-35.
[9] Khan, A.M. (2010). Effects of Human Resource Management Practices on Organizational
Performance – An Empirical Study of Oil and Gas Industry in Pakistan. European Journal
of Economics, Finance and Administrative Sciences, Issue 24.
[10] Khatri, N. (1999). Emerging issues in Strategic HRM IN Singapore. International Journal of
Manpower, Vol.20,No.8,pp.516-529.
[11] Khurram, S., Sajid, B., & Ramay, M. I. (2008). Impact of HRM Practices on Perceived
performance of University Teachers in Pakistan. International Review of Business Research
Papers,Vol.4,No.2, pp.302-315.
[12] Lado .Augustine, A., and Mary, C.W. (1994). Human Resource Systems and Sustained
Competitive Advantages: A Competency Based Perspective. Academy of Management
Review, Vol.19, pp 699-727.
[13] Ma l h o t r a , N.K. (2002). Marketing research: an applied orientation (3
rd
ed.). New Delhi,
India: Pearson Education Asia.
[14] Marwat, A.Z., Qureshi, M.T., & Ramay, M.I. (2009). Impact of Human Resource Management (HRM)
Practices on Employees Performance: A Case of Pakistani Telecom Sector. Unpublished Paper.
[15] Practices on Productivity. National Bureau of Economic Research Working Paper no 5333.
[16] Rundle, S.J.(1997). Flexibility , adaptiveness and responsiveness (FAR-ness) as the key success
factors in market entry in the south east Asian growth wedge. PhD thesis, Department of
Management, Monash University,Victoria.
[17] Shahzad, K., Bashir, S., & Ramay, M. (2008). Impact of HR Practices on Perceived
Performance of University Teachers in Pakistan. International Review of Business Research
Papers, Vol. 4 No.2 March 2008 Pp.302-315.
[18] Singh, K. (2004). Impact of HR Practices on Perceived Firm Performance in India. Asia
Pacific Journal of Human Resources, Vol. 42, No.3, pp.301-317.
[19] Tzafrir, S. S. (2006). A Universalistic Perspective for Explaining the Relationship between
HRM Practices and Firm Performance At Different Points In Time. Journal of Managerial
Psychology, Vol. 21, No.2, pp. 109-130.
[20] Wright, P. M., Garden, T. M., and Moynihan, L. M. (2003). The impact of HR practices on
the performance of business units. Human Resource Management Journal, 13(3), 21-36.



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A Study on SWOT Analysis of Pharmaceutical
Industry: The Bangladesh Context
Meem Rafiul Hoq
1
; Md. Ali Ahsan
2
; & Tanim – A – Tabassum
3


1
Lecturer, School of Business, UITS, Bangladesh
2
Lecturer, School of Liberal Arts & Science, UITS, Bangladesh
3
BBA, Asian University of Bangladesh, Dhaka, Bangladesh


ABSTRACT
Pharmaceutical industry is one of the most important sector in Bangladesh. It
is the only industry, which has its own strong manufacturing capabilities to
produce the pharmaceuticals product. In this study it is tried to find out
what types of strengths, weaknesses, opportunities and threats the
pharmaceuticals companies face in Bangladesh. There are about 250
pharmaceuticals firms in Bangladesh. Among them some companies are the
large size and more sophisticated. Some companies are small sizes and
traditional qualities. A few companies dominate the whole medicine market.
So they have to face severe competition in pharmaceuticals market.
SOWT (Strength, Opportunity, Weakness, and Threat) analysis of any
industry sector investigates the important factors that are possibility of the
industry and influencing the companies operating in that sector. The
purpose of this study is to analyze the pharmaceutical sector of Bangladesh
using the framework of SWOT. This paper brings to light on the SWOT
analysis of pharmaceuticals industry in Bangladesh and provided some
valuables suggestions to overcome the weaknesses and threats, there are
some suggestions to utilize the strengths and opportunities properly.
Through this study the researchers try to discuss the affect of various macro-
economic factors of strength, opportunity, weakness, and threat aspect on
the industry and its related problems and prospects for the future.

Key Words: Pharmaceutical Industry, SWOT, Economic Factor

JEL Classification Code: O25; O25

INTRODUCTION
Pharmaceutical is the core of Bangladesh‘s healthcare sector and serves as one of the most
important manufacturing industry. With a history since 1950s, the industry has now
turned one of the most successful pharmaceuticals manufacturing industry among the
developing countries. Presently, the industry meets 97% of local demand and exports to
more than 80 countries. The industry has been experiencing robust growth over the last
few years. A local industry supporting drug policy and effective regulatory framework,
along with TRIPS (Trade Related Intellectual Property Rights) relaxations are the key
reasons for success of the industry. While the industry is achieving self sufficiency, it yet
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procures 70% of raw materials from abroad. But developments are already taking place,
with a number of firms now manufacturing raw materials locally. In addition, an API
(Active Pharmaceutical Ingredient) project has already been undertaken to accelerate the
vertical integration within the industry. The industry has been expanding locally and
internationally. Local market grew at 23% in 2010, while import reached USD 50 Million
landmark. A number of firms got accreditations from USA, UK, and Australia etc.
1

OBJECTIVES OF THE STUDY
The study is aimed to fulfill the following specific objectives-
- To key out the major achievements of the Pharmaceutical Industry of Bangladesh.
- To critically analyze the SWOT analysis of the Pharmaceutical Industry of Bangladesh.
METHODOLOGY OF THE STUDY
This article is mainly based on secondary data collected from several reliable sources. For
secondary data collection, Pharmaceutical Industries‘ annual reports, exiting files and
documents, statements, brochures, manuals and publications were collected and analyzed.
An intensive study on the relevant field was conducted through browsing internet and
searching in library.
JUSTIFICATION OF THE STUDY
In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors
within the country's economy. After the promulgation of Drug Control Ordinance - 1982,
the development of this sector was accelerated. The professional knowledge, thoughts and
innovative ideas of the pharmaceutical professionals working in this sector are the key
factors for these developments. Due to recent development of this sector it is exporting
medicines to global market including European market. This sector is also providing 97%
of the total medicine requirement of the local market. Leading pharmaceutical companies
are expanding their business with the aim to expand export market. Recently few new
industries have been established with high tech equipments and professionals which will
enhance the strength of this sector
2
. As a promising sector for a developing country like
Bangladesh, pharmaceutical industry is one of the key issues of the country. This field
really needs some empirical study like this for the future development.
LIMITATIONS OF THE STUDY
- It was not possible to study all the relevant literatures.
- Limited time frame was the major constraint to carry out the research smoothly.
- Insufficient previous research works in this field is one of the major limitations of the
study.
REVIEW OF LITERATURE
Habib et al. (2011) reported through their paper that the aim of the study is to present the
current scenario of the pharmaceutical industry in Bangladesh. Since inception, there was
little consensus on the development of pharmaceutical policies best suited in a developing
country such as Bangladesh. Here, the pharmaceutical industry developed rapidly from
the 1980s after the introduction of Drug (Control) Ordinance-1982. Adequate
infrastructure and use of trained manpower were two essential requisites for
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implementation of national pharmaceutical policies in Bangladesh. The country was
importing significant amount of medicine and also raw materials for the industry from
abroad. But the industry has started to export its products in foreign market, especially in
the Middle East and Europe with great success. This study tries to identify the major
problems of marketing, exporting, production and operations, quality control in the
pharmaceutical sector and proposes strategies to overcome these problems; it also
identifies the prospects of pharmaceutical industry in Bangladesh.
3

Bhuiyan et al. (2011) in an article named ―Analysis of Pharmaceuticals Industry of
Bangladesh: It‘s Challenges and Critical Success Factors‖ stated that the pharmaceutical
industry is globally known as the fastest growing industry in the world. With revenues of
USD 518 billion and 9% of global GDP in the year 2007, pharmaceuticals have a reputation
for having the highest profit margin in the world. Bangladesh processes a sizeable
pharmaceutical industry that has the potential to live up the global standards. The country
can expand it‘s economic growth by investing in their fast growing pharmaceutical
industry which has an annual average growth rate of 16% and a market size of BDT 30
billion 2007 according to Industrial Management System (IMS). It employees around
75,000 skilled and unskilled employees and is considered to be the second largest
contributor to country‘s national revenue (Bangladesh Gazette). This sector is the second
largest contributor to the Government exchequer, employing around 75,000 skilled and
unskilled employees. With huge demand-supply gap, major players see basic chemicals as
the greatest opportunity for expansion and better control over formulation industry force.
4

RESULTS AND DISCUSSION
There are great opportunities for pharmaceutical industry in Bangladesh. Among the LDCs,
Bangladesh is the only country that has its manufacturing capabilities to manufacture the
pharmaceuticals products. It is found that some manufacturing companies export medicines
and earn enough foreign currency. Some companies have world-class pharmaceuticals
productions units. Some companies produce world-renowned products in Bangladesh.
Some company introduces mattered dose inhalation aerosols by commissioning of its state of
the art MDI plant. The MDI plant has been designed in a way to ensure highest possible
quality at every stage of manufacturing and quality control. It is found that there are great
demands for the pharmaceuticals products in Bangladesh. Increased market complexity now
a day‘s places great demand on the sales and marketing operations of pharmaceutical
companies, making it even more difficult to manage.

Some of the major achievements of Bangladesh Pharmaceutical Industry so far are:
1. Affordability of medicines to the majority of the population: Major epidemics of
Bangladesh are Malaria including Dengue, Cholera and Typhoid. Morbidity and mortality
from these scourges also reduced substantially over the years in Bangladesh. Increased
affordability and availability of medicines has contributed towards this achievement.
Bangladesh now has an average life expectancy of 61 years, which is at the top end in the
Indian sub-continent.
2. Near Self Sufficiency in Pharmaceuticals manufacturing: Among the LDC's, Bangladesh
is the only country which can boast a local pharmaceutical industry which caters to 97% of
the countries need. Over the years role of import has diminished substantially and now is
not more than 3% covering mainly Insulin, Vaccines and anti-cancer drugs.
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3. Strong footing of the local Industry: In 1982 there were about 10 multinational companies
availing about 80% of the domestic market. The situation is reverse now. Local companies
cater to about 80% of the market now and the rest by the multinational. Local companies
continued their expansions and up gradation of their facilities conforming to cGMP
prescribed by WHO and by some leading companies to US FDA and UK MHRA standards.
4. Export of Pharmaceuticals: After catering to the country's need pharmaceutical products
from Bangladesh are now being exported to over 62 countries in Asia, Africa and Europe.
5. Quality Assurance: A few of the top-level pharmaceutical companies are going beyond
WHO and cGMP. With an aim to get into the regulated markets like US, EU countries etc,
they are putting up Government of Bangladesh is very supportive to the industry and is in
the process of implementing a new law to face the present and future challenges of the
industry.
Pharmaceuticals export has a bright future for Bangladesh and local companies are already
competing with the pharmaceuticals from developing countries in Africa and South East
Asia. Government is very supportive to these efforts and is planning to set up an Industrial
park for Active Pharmaceutical Ingredients (API) to strengthen its position in this area.
Bangladesh pharmaceutical industry's progress so far is praise worthy. It has made the country
near self sufficient in pharmaceuticals, became the 2
nd
largest contributor to government
exchequer and is now a major employer of the knowledge based workers. Made
pharmaceuticals accessible & affordable to the majority of the population and forayed into
export markets with successful manufacturing facilities of US FDA and UK MHRA standards.
Pharmaceutical Industry of Bangladesh is a unique example of private sector success in the
country. After the laudable role it played in domestic market, it is now poised to play its role
in the international arena. With its continued development and experience in manufacturing
and marketing, it is sure to repeat its success in the international market as well.
5

MAJOR FINDINGS
The SWOT analysis of the industry reveals the position of the Bangladesh pharmaceutical
industry in respect to its internal and external environment.

Strengths
1. The growth of middle class in the country has resulted in fast changing lifestyles in
urban and to some extent rural centers. This opens a huge market for lifestyle drugs,
which has a very low contribution in the Bangladesh market.
2. Bangladesh pharmaceutical manufacturers are one of the lowest cost producers of
drugs in the world. With a scalable labor force, Bangladesh manufacturers can
produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this
cost is as low as 90%.
3. Most of the companies have own premises, so most companies can save their
expenses; most pharmaceutical companies have a large size of factory.
4. Excellent transport-link the ease of access to / from the company.
5. Some companies have a good reputation in the market. Some companies have strong
brand reputation in the market, these industries have well known brand in the market.
6. Bangladeshi pharmaceutical industry posses‘ excellent chemistry, skilled workforce
and process reengineering skills. This adds to the competitive advantage of the
Bangladeshi companies. The strength in chemistry skill helps Bangladeshi companies
to develop processes, which are cost effective.
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7. The pharmaceuticals industry has MIS system. These companies have knowledge
about diseases, which are available in our country. Most of the companies are more
sophisticated. They are more concern or aware about each other.
8. The pharmaceutical companies follow the relationship selling method. The company
representatives try to motivate the doctors to prescribe their medicine for the patients.
The medical representatives of the pharmaceutical companies maintain the
relationship with the doctors.
9. The pharmaceutical industry has the loyalty of the customers and vendors. Drug is
essential for life. So these companies have certain markets to sell the medicines in
Bangladesh.
10. These industries have some competitive advantages over the other industries. The
pharmaceutical industries have strong manufacturing capacities.
11. Most of the companies have the quality control system. They are committed to
formulate and supply drugs and formulations in a qualified manner.
12. The growth rate of the pharmaceutical industry is increasing day by day. It is good
news for the pharmaceutical industry in Bangladesh.
13. Some companies of the pharmaceuticals industry have got the license of the global
brand. Such as Healthcare Pharmaceuticals Company limited manufacture the brands
of the F. Hoffmann-La Roche limited.
14. Latest technologies are installed in the pharmaceuticals sector in Bangladesh. Some
companies in our country got the technical guidance from the globally reputed
pharmaceuticals company. For example, the Healthcare pharmaceuticals company
manufactures the drugs with the active support and technical guidance of the globally
reputed pharmaceuticals company F. Hoffmann-La Roche Limited, Basel, Switzerland.
6

15. As pharmaceutical industry is a separate industry from other industries. So
pharmaceutical industry in Bangladesh have little or non-threatening competition.
16. Beximco Pharmaceuticals Company introduced the Metered Dose Inhalation Aerosols
for the first time in Bangladesh by commissioning of its state of the art Metered Dose
Inhalers (MDI) plant. The MDI plant has been designed in such a way to ensure
highest possible quality at every stage of manufacturing and quality control.
7

17. Some companies export medicines in many countries of the world. For example
Beximco Pharmaceuticals Company limited has obtained the National Export Trophy
(gold) for two consecutive years (1998-1999, 1999-2000).
8
It is a good opportunity for
the pharmaceuticals company in Bangladesh. The export markets for the
pharmaceuticals products are Bhutan, Cambodia, Czech Republic, Germany, Iran,
Iraq, Kenya, Malaysia, Mozambique, Myanmar, Nepal, Pakistan, Philippines, Russia,
Singapore, South Korea, Sri Lanka, Thailand, Ukraine, Vietnam, and Yemen.
18. To ensure all the qualities, a highly dedicated academically sound and professionally
competent team consisting of pharmacist, chemist, biochemists, microbiologists and
engineers are using most modern and sophisticated equipment like high performance
liquid chromatography, Gas chromatography, infrared spectrophotometer, Ultraviolet
spectrophotometer, Homogenizer, in vitro bioavailability tester, Lung simulator,
Disintegrator, Dissolution tester and many other latest computer aided quality control
instruments and diseases.
19. Most of the companies in the pharmaceutical industry have the strong reputation in
the market. These company such as are Square Pharmaceuticals Company limited,
ACI Pharmaceuticals Company limited. Beximco Pharmaceuticals Company limited.
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20. Some of the company dominates the pharmaceuticals market in Bangladesh. 65% of
the drugs used in Bangladesh are produced in Bangladesh. 35% drugs are imported
from the foreign countries.
21. The distribution systems of the pharmaceuticals company are strong in Bangladesh.
Some medicines require quick transportation services. Otherwise it will damage. The
companies have depots through which the company distributes their products all over
the 64 districts in Bangladesh.
22. Bangladeshi pharmaceutical industry has strong sales force. The sales force has to deal
with doctors. They have to motivate the doctors to prescribe the particular medicines.
Otherwise a company cannot get success in these industries.
23. Some companies have strong research and development (R&D) department. For
example Beximco Pharmaceuticals employs a significant part of its resources in R & D
that makes BPL a forerunner in the Bangladesh pharmaceuticals industry.

Weaknesses
1. The Bangladesh pharmaceutical industries are marred by the price regulation. Over a
period of time, this regulation has reduced the pricing ability of companies. The DGDA
(Directorate General of Drug Administration), which is the authority to decide the various
pricing parameters, sets prices of different drugs, which leads to lower profitability for the
companies. The companies, which are lowest cost producers, are at advantage while those
who cannot produce have either to stop production or bear losses.
2. Bangladesh pharmaceutical sector has been marred by lack of product patent, which
prevents global pharmaceutical companies to introduce new drugs in the country and
discourages innovation and drug discovery. But this has provided an upper hand to
the Bangladesh pharmaceutical industry.
3. Bangladesh pharmaceutical market is one of the least penetrated in the world.
However, growth has been slow to come by. As a result, most of the pharmaceutical
companies are relying on exports for growth.
4. Most of the pharmaceutical companies are in low financial positions, Due to the low
financial position; it is not possible for some companies to install the latest technology
in their premises.
5. Some of the pharmaceutical companies are in unskilled workforce. As a result these
companies cannot minimize the cost of the production.
6. Due to very low barriers to entry, Indian pharmaceutical industry is highly
fragmented with about 250 large manufacturing units and about 18,000 small units
spread across the country. This makes Bangladesh pharmaceutical market
increasingly competitive. The industry witnesses price competition, which reduces the
growth of the industry in value term. To put things in perspective, in the year 2004 the
industry actually grew by 8.6%.
7. Most of the companies do not up to date their machineries, they perform their
activities with the traditional machineries, and so it is difficult to maintain the quality
of the medicines.
8. Some of the companies in this industry have the rented premises, as a result it add
costs to the production. So the selling prices are increasing day by day.
9. Innovative effectiveness is low in our country due to the lack of the sophisticated
equipment, lack of the capital, lack of the skilled manpower, and the lack of the
professional in our country.
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10. Sometimes per unit cost of the medicines are higher than the imported medicines. The
selling prices of the medicines become higher. So the domestics company has to fight
with the multi-national companies.
11. The pharmaceutical sector attained a lower growth rate of 8.6% only during the 2004
as against 5.90% during the previous year. The lower growth rate of national
pharmaceuticals market may be attributed to various factors such as lower public
expenditure on health care. Natural calamities including floods, cyclones, epidemical
diseases and lower agro crop harvest. The national pharmaceutical market growth
and that of the company during the past few years.
12. Sometimes the selling price of the medicines are high in our country, it is beyond
general customer‘s purchasing power.
13. Some pharmaceutical companies do not have any reputation in national or regional
level; their products are not standard level.
14. The industries have to depend on foreign experts, technology, and raw materials. Due
to the lack of the proper guidelines and the lack of the proper infrastructure facilities.
The industry faces problems in marketing the products.

Opportunities
The SAARC region, Bangladesh stands out as a nation with a vast potential to become a
leading pharmaceutical producer. Currently the country is producing mostly the drug
formulations and nearly 250 units are engaged in this activity. The production by these
units is adequate to meet almost 95 percent of the national requirements. With many large
pharmaceutical units, the international manufacturing standards are largely absent
amongst most of the small units. Regulatory procedures are yet to fully evolve. However
companies like Beximco Pharmaceuticals, Square Pharmaceuticals, etc are now trying to
adopt international manufacturing standards in their facilities.
New drug policy will help to expand pharmaceuticals industry
Lifesaving international-standard drugs are now being produced in Bangladesh and the
country is about to achieve self-sufficiency in production of pharmaceuticals. Unveiling
the plaque of an essential medicine-producing project here, The Essential Drugs Company
Limited (EDCL) is already supplying drugs to different international organizations and
also exporting abroad.
After implementation of the new policy, the industry would further expand and generate
new job opportunities in the country. As a least developed country Bangladesh would get
opportunity to produce patent medicines till 2016.
BAPI Eyes to expand Pharmaceutical Markets
Bangladesh is now exporting pharmaceuticals to about 30 countries and also eyeing
expansion of more markets next year. Bangladesh had started exporting pharmaceuticals
to some neighboring countries like Myanmar, Sri Lanka and Nepal in the 1980s and since
then the export market expanding gradually.
Bangladesh Association of Pharmaceutical Industry (BAPI) said that the country would
get the opportunity for exporting pharmaceuticals and other related items to India and
China and other countries next year. Bangladesh is, among the 49 least developed
countries (LDCs), which has the strongest base of manufacturing pharmaceuticals and so
the country would get share of exporting the items after the global market will open up for
all in the year 2005. Besides, the regular brands, Bangladesh are also exporting high-tech
specialized products like inhalers, suppositories, Nasal Sprays, injectables and infusions.
9


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Threats
1. There are certain concerns over the patent regime regarding its current structure. It
might be possible that the new government may change certain provisions of the
patent act formulated by the preceding government.
2. The competition is increasing day by day in the pharmaceuticals sector. So the
pharmaceutical companies have to face competition in the market.
3. Rising the cost of the wages; the basic wages, so it effect on total cost of the production
and it will increase the selling prices of the medicines.
4. Increasing the interest rate, the interest rate of the bank is increasing day by day. So
the investors do not agree to borrow from the bank
5. Threats from other low cost countries like China and Israel exist, so, differentiation in
the contract manufacturing side may wane.
6. The short-term threat for the pharmaceutical industry is the uncertainty regarding the
implementation of VAT. Though this is likely to have a negative impact in the short-
term, the implications over the long-term are positive for the industry.
7. There is a worrying development in the industry. Some companies appear to be focused
on the maximization of short-run sales as opposed to long-run profits. This shift in focus is
never good for the industry. Prices crash and marketing expenditure to finance gimmicks
shoots up resulting in lower profits per unit of sale. Many companies panic at this stage
and join the bandwagon of bad selling and marketing practices.
8. Bad selling practices in the pharmaceuticals industry by some companies are likely to
dampen the market growth. In addition depreciation of the taka will raise the cost of
imported raw materials.
9. The pharmaceuticals sector attained a lower growth rate of 8.6 % only during the year
2004 as against 5.90% during the previous year. The lower growth rate of national
pharmaceutical market may be attributed to various factors such as lower public
expenditures on health care, natural calamities, including the floods, cyclones,
epidemical diseases and lower agro-crop harvest.
10. Existing product become unpopular or unfashionable, the quality or the ingredients of
the medicines are changing day by day. So the company has to face the losses.
10

SUGGESTION
- The pharmaceuticals industry has to make commitment to the quality of the medicine,
because medicines are directly related to life. The companies have to concern about this fact.
- So the pharmaceuticals industry should clearly identify the strengths, weaknesses,
opportunities and threats. They have to point out of the strengths and take steps to
utilize these strengths properly. The pharmaceutical industries have to challenge with
the threats of the external environments. So they have to differentiate their product
from other industry.
CONCLUSION
There still remains a lot of work in the field of SWOT analysis of the pharmaceuticals
industry in Bangladesh. Several questions remain unanswered with regards to this
emerging construct, some of which have been addressed within this paper, and some of
which still remain to be explored. This research within the SWOT analysis has helped to
shed some light in establishing what the characteristics of the SWOT analysis are. The
SWOT analysis also provides the information about the pharmaceuticals industry in
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
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Bangladesh. There is some strength in the pharmaceuticals industry in Bangladesh.
Government should take step to utilize this strength properly. Further researches will be
pursued in this area by us in the hope of gaining a better understanding of SWOT analysis
and its constituents, with the ultimate goal of providing a practical and functional
measurement tool.
REFERENCES
[1] Shawon, S.A. 2011. Research Report: Pharmaceutical Industry of Bangladesh. IDLC Finance Limited.
[2] The Daily Star. 2011. Current scenario of Bangladesh pharma market.
http://bddrugs.com/detail.php?nid=13. 20 May 2013.
[3] Habib, M.A., Alam, M.Z. 2011. Business analysis of pharmaceutical farms in bangladesh:
problems and prospects. Journal of Business and Technology. 4(1): 61-77.
[4] Bhuiyan, M.A.R., Moniruzzaman, and Sultana, S. 2011. Analysis of pharmaceutical
industry of bangladesh: (it‘s challenges and critical success factors). Bangladesh Research
Publications Journal. 5(2): 142-156.
[5] Saad, K.S. 2012. Research Report: An Overview of Pharmaceutical Sector in Bangladesh. BRAC
EPL Limited.
[6] Healthcare Pharmaceuticals Limited (HLP). 2012. Partnering.
http://www.hplbd.com/cakehplbd/pages/partnering. 22 May 2013.
[7] The News Today. 2011. News Report.
http://www.newstoday.com.bd/index.php?option=details&news_id=56395&date=2012-
03-17. 24 May 2013.
[8] Beximco Pharmaceuticals Limited (BPL). 2012. News Release. http://beximco-
pharma.com/latest-news/5335-beximco-pharma-enters-eu-market.html. 22 May 2013.
[9] Shafiuzzaman. S.M. 2004. Bangladesh Pharmaceutical Sector: A Vision of Success. BAPI.
[10] Rahman. W. 2012. Pharmaceutical Industry: Progress and Challenges. The Daily Star. 19 May 2013.


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Micro Credit and Women Empowerment: A Study
on Grameen Bank’s Strategy of Poverty Alleviation
Mohammed Thanvir Ahmed Chowdhury
1
; Musa. Halima Begum
2
;
Md. Ridwan Reza
3
; & Tahrima Chowdhury Jannath
4


1&2
Senior Lecturer (Sociology), Department of Business Administration, Leading University, Bangladesh
3
Senior Lecturer, Department of Business Administration, Leading University, Bangladesh
4
MBA, Department of Business Administration, Leading University, Sylhet, Bangladesh


ABSTRACT
Generally, it is held that, Women economic participation is positively related
to their status. It is assumed that participation changes woman‘s power
relationship and hence her status in the family, and thus a woman having no
such access will have relatively low power and status. Relatively argued,
women experience hunger and poverty in much more intensive ways than
men. If one of the family members has to starve, it is an unwritten law that it
has to be the mother. That is why women were targeted in the center point of
micro credit program. However, the stagnation in the impact of micro credit
on income may have serious implication for the success of micro finance
institution and their long term sustainability and therefore the question
deserves serious attention from researchers. The above concerns are related
mostly to the long term impact of micro credit. Thereby we were intended to
see the structures which dictate dependence press on these women. And if
the gains they have made in income and assets are to be sustained, the
control they have negotiated over their lives is to be maintained. In this
regard, we want to see how women can build their empowerment and what
Grameen Bank can do to strengthen them for poverty alleviation.

Key Words: Micro Credit, Women Empowerment, Poverty Alleviation

JEL Classification Code: I32; E51

1. INTRODUCTION
In rural Bangladesh, women have little or no access to the formal employment market nor
do they have the necessary credit to engage in income generating activities. The attractive
feature of micro credit is its ability to address the credit needs of the poor. This credit
generates work for women in the informal sector. Thus micro credit institutions in
Bangladesh (like Grameen Bank) have developed strategies for providing collateral free
loans to the poor and asset less households. Although poverty alleviation has featured as a
priority development goal of successive governments, nearly half of the population of the
country continues to live below the poverty threshold. Therefore, there is hardly any
controversy about the great urgency of pursuing the objective of poverty reduction in the
shortest possible time. Provision of micro credit has been widely recognized as an
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important instrument for achieving thus objectives. Our study focused the debate on the
strategy of poverty alleviation as well as the impact of micro credit program on the
women of rural areas. And we hope our study may contribute to investigate the socio-
economic condition of rural women in future.
Bangladesh achieved independence in 1971. The situation worsened further when a
devastating famine hits Bangladesh in 1974. Against this backdrop a number of
humanitarian organizations set up relief and rehabilitation camps throughout Bangladesh.
These organizations came to be known as non-Governmental organization or NGOs. Their
programs of rehabilitation in a devastated economy gained popularity and the NGOs are
present in every remote corner of the country performing vivid of functions ranging from
relief for the disaster stricken and destitute population to provide training for
empowerment of women and entrepreneurship to alleviate poverty. The BRAC,
PROSHIKA, ASA, GRAMEEN BANK are the leading NGOs of present Bangladesh and
GRAMEEN BANK is mostly renowned among them due to the winning of novel peace
prize in 2006 by Dr. Yunus and Grameen bank together. Traditional banks in Bangladesh
are gender biased and do not want to lend money to women. In Bangladesh, if woman
even rich women want to borrow money from a bank, the manager will ask; did you
discuss this with your husband? And if she answers yes, the manager will say, is he
supportive of your proposal? If the answer is still yes, he will say, would you please bring
your husband along so that we can discuss it with him?
But no manager would ever dream of asking a prospective male borrower whether he has
discussed the idea of a loan with his wife and whether he would like to bring his wife
along to discuss the proposal. Even suggesting this would be an insult! So it is not by
chance that prior to Grameen, women constituted less than 1 percent of all the borrowers
in Bangladesh put together. To Dr. Yunus it was clear that the banking system itself was
gender biased. Thus no longer question of avoiding gender bias, there was now a
development reason to favor women. The more Yunus got involved, the more he realized
that credit given to women brought about changes faster than when given to men (Dr.
Yunus, Banker to the poor, 1998). The Grameen Bank‘s extension of credit to the rural poor
has lead to the creation of opportunities for self employment (Yunus, 1982).The female
participants in the Grameen Bank program earn cash incomes and contribute to the total
family budget on a regular basis. A Bangladesh institute of bank management study
documented that women borrowers increased their family income by about 72% due to
availability of Grameen bank credits (Quasim et al, 1985)
The land, scale of poverty, powerlessness and gender subordination in rural Bangladesh
forms the contextual basis for Grameen bank and indeed the micro credit model in
Bangladesh. The famine of 1974 provided the urgency for professor Md. Yunus to look for
alternatives. He discovered that while the credit market was the scene of the most brutal
exploitation of the poor (with high interest rates leading to persistent indebtedness,
leading to forced sale of assets and destitution). It was also the arena where interventions
were easiest for allowing the poor to break out of their cycle of poverty. The conventional
banking structure however does not provide access to the poor because the poor can
provide no collateral and because the overheads required for servicing loan become too
high for the small size of loans that people required. Government loan programs for rural
areas in turn get monopolized by the rich and powerful. Amongst the poor, women are
even more discriminated against; because patriarchal norms ensures their exclusion from
the facto ownership of assets and because the work that women generally engage in (home
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based) are not classified as economically productive. Hence the need for targeted collateral
free credit for the poor and specifically poor women; hence the need for micro credit.
1.1 Micro Credit: A small amount of money used as a means of boosting income of the
poor recipients.
1.1.2 Poverty: Poverty means number of people do not have the purchasing capacity to
buy their survival basic needs such as a minimum level of food consumption, level of
schooling, clothing and shelter.
1.1.3 Women Empowerment: Empowerment of women means recognizing women‘s
contribution, enhancing their self respect and self dignity, controlling their own bodies &
resources like land and other property and freedom of speech & choice.
2. OBJECTIVES OF THE STUDY
The broad objective of this study is to see the relationship between micro credit and
women empowerment. More specific objectives of this research are as follows-
(a) To study the role of Grameen Bank on women empowerment;
(b) To evaluate Grameen Bank‘s strategy of poverty alleviation.
3. SOME NOTEWORTHY LITERATURE
Studies on Micro credit have been mostly evaluative in nature. Researchers have tried to
examine the kind of impact Grameen Bank programs have had, especially on women
borrowers. Generally, these studies provide descriptive data on gradual changes in the
number of Grameen Bank memberships, amount of loans taken, income earned from loan
money, household income, areas of investment, acceptance of dowry, outside
participation, and women‘s status in the family.
One such study was conducted by Ghai (1984) who evaluated Grameen Bank‘s program at
a very early stage of its establishment. He notes that
1. ―Remarkable feature and strength of the project is the attention paid to women among
the landless‖ (1984:17).
2. At the time of his writing female clients rose from 31% in 1980 to 46% in 1983.
3. Ghai points out that, prior to becoming banks member, most of these women were
beggars, agricultural laborers, maid servants or housewives. They had no access to
resources which could improve their economic condition.
4. With loans from Grameen bank, they began investing in two major sectors, livestock
and fisheries, and processing and manufacturing.
5. The earning opportunity for women has a clear impact on the division of labor
between the spouses. While women borrowers can engage in making bamboo and
cane products, husking rice or looking after a cow, husbands can complement the
family income by selling processed rice, milk, meat, handicrafts and buying raw
materials (Ghai, 1984).
6. Ghai also notes that, contrary to the popular belief that a women‘s participation in the
process of earning incomes potentially creates tension in the family, it actually
improves the relationship among the spouses and mothers-in-law. It also improves a
wife‘s overall status in the household and in the local community‖ (Ghai, 1984:41).
In another study, Hossain (1984) specially focused on the extent of Grameen Bank‘s impact
on poor women‘s employment and income as well as productivity. His primary source of
data came from a sample survey among 612 randomly selected Grameen Bank borrowers
conducted by the Bangladesh Institute for Development Studies (BIDS).
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1. Commenting on the socioeconomic background of the female borrowers, he mentions
that majority (61%) of the respondents belonged to an extremely impoverished group.
At the time of applying for loans 65% of those women were unemployed and rest
were domestic workers.
2. Hossain‘s study (1984) shows that the loan money enables female borrowers to add to
the family budget. Their net yearly household income is estimated to be 6000 taka and
their productive labor yields only 1.31 taka per hour which is 42% lower than the
wage of male borrowers.
3. Hossain concludes: ―considering that women have very few job opportunities,
whatever little they earn contributes to the increasing household and per capita
income (1984:21).‖
Looking at socioeconomic status (SES) and mobility of the Grameen bank‘s female clients,
measured by indicators such as increase in land ownership, income and gainful
employment, Ahmed (1985) noted considerable changes in all these areas.
1. Thirty seven percent of the females (N=120) said that they owned some land, and fifty
eight percent who had no income before earned some money after taking loans from
the bank.
2. Furthermore, his study showed that while ―entrepreneurial activities‖ increased by
twenty-eight percent for these women, their housework decreased by forty percent.
These are the result of investing Grameen Bank‘s loan money into income generating
activities.
The review of studies done so far shows that research on Grameen Bank has focused on its
performance, its success in accessing the landless rural poor, the recovery of credit,
problems with rural village power structure and so forth. A very few have exclusively
studied the impact credit has had on women‘s lives.
Ahmed (1985), among others, investigated whether borrowing from Grameen Bank has
had any effects on woman‘s actual as well as perceived status.
1. He assumed that Grameen Bank woman participants would be more conscious than
non-participants about the evil of dowry, repression, divorce, desertion, and violence
against them, and consequently may more often support equal rights for men and
women.
2. Ahmed‘s study reveals that, even though awareness about such issues is very high (81
to 100 percent) among the female borrowers, only 48 percent of them support equal
rights.
3. However, he shows only 19 percent of the women in Ahmed‘s sample actually justify
wife beating on the ground that it is a controlling mechanism for ―disobedience,
slowness in household chores and an attempted self-assertion as well as for feeding
the ‗sadistic‘ male ego‖ (Ahmed, 1985:14).
4. Apart from this minor exception, Ahmed found that overall there has been an
improvement in the perceived status of the wives (measured by husband‘s attitude
towards wife before and after she took a loan).
In a later study, Hossain (1986) also found that,
1. Grameen Bank credit has produced new employment among one-third of the female
respondents (out of 534 females). Loans taken by females are mostly invested in such
activities as cow, goat and poultry raising, paddy and pulse husking and trading,
cattle fattening, peddling, grocery and stationary shops, and in traditional cottage
industries such as handlooms weaving, mat and fish-net making.
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2. Even though the maximum of an individual loan is 5000 taka, Hossain‘s (1986) study shows
that forty percent of the female members loans range between 1400-2500 taka. In comparison
to men, women received 15% less money. He further mentions that a female member‘s loan
amount as compared to that of a male was always less for most of the activities.
Islam-Rahman (1986), on the other hand, systematically documented the impact of
Grameen Bank by comparing four groups of women: Grameen Bank female members who
took loans over different periods of time, women from the same (project) village who had
no access to Bank‘s credit, non-borrowers from two control villages (Tangail and Rangpur)
where Grameen Bank did not operate, and non-borrowers from the project as well as from
the control villages.
1. His expectation was that earnings gained through involvement in the Bank‘s program
would bring about changes in the consumption pattern of food and clothing, family
decision-making, and reproductive behavior of women. Grameen bank participants
were expected to have an increased consciousness about the education of children and
their job opportunities, and to oppose early marriage of their daughters.
2. The majority of the female clients in Islam-Rahman‘s (1986) study are from nuclear
families. Only 25% have primary or little education. Their average landownership is
only 2.5 acres.
3. Eleven percent of her sample are widowed or divorced and only four and one-half
percent are unmarried, while the majorities (84%) are married. Islam-Rahman reports
that on all accounts Grameen bank borrowers are better off compared to other groups.
Most of the females are found to be inexperienced in conducting their own
entrepreneurial activities.
4. Islam-Rahman (1986) notes that 77.4% of the women themselves utilize almost 75% of the
credit. In almost all cases there has been an increase in the incomes of Bank‘s borrowers.
On the average, women contribute 38% to the total household income and this happened
because very few of these women were previously generating an income.
5. On decisions about the purchase of food items, clothing, medical expenses, visiting
relatives, and marriage of children, Islam-Rahman notes that even those who let their
husbands manage their loan ―are in a better situation than housewives in the male
loaner group though they are less important than the active loaner women‖ (1986:68).
6. Female borrowers take a more active part in decision making compared to any other group.
To find out extent to which the Bank‘s efforts raise awareness among women, Atiur
Rahman (1986) gathered data through a sample survey of female and male members from
Rangpur, Tangail and Dhaka regions.
1. His findings show that 54% of the male and 81% of the female respondents learned to
sign their names and in the process become aware of the necessity of education. A
majority said they would provide higher education for their sons, while they agreed
that girls should have some education.
2. Citing case studies from Rangpur and Patuakhali areas, Rahman mentions that
women discovered strength in collective solidarity and not only challenged the
traditional norms and values, but also fought against social injustices. Overall,
members are aware of the disadvantages of purdha, dowry, superstition, as well as
the benefits of sanitation, small family, late age at marriage, and group cooperation-
conditions that provide an opportunity to enhance their quality of life.
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3. However, as Grameen Bank‘s social development programs are at a formative stage,
Rahman cautions about its impact: They have at least economic staying power, a
precondition which normally does not exist among the other poor (1986:47).
The findings of Qazi Kholikuzzaman Ahmed (2007) from the study of socio economic
impact of micro credit in Bangladesh is given below.
1. Only about 10% of all female respondents (numbering 2482) have said that they are in
full control of running the economic activities undertaken using micro credit they
received. The other 90% run them either in consultation with their husbands and other
members of their respective families or they do not participate at all.
2. About 72% of the female respondents are now always or occasionally give more
importance in family decision making compared to the situation before enrollment.
3. About 28% of the female respondents still face physical or mental torture from one or
another member of the family, usually the husband. The intensity of torture has
increased in the case of 60% of these respondents, while in the case of 40% it‘s about
the same or somewhat less than before.
Dixon (1978: 15) argued that, ―a woman earning half of the household income will likely
have more bargaining power than the woman who earns none, even when total household
earnings are the same.‖ In developing countries survival of low income families may
compel all members to engage in productive activities. In spite of little improvement in
total household earnings a woman‘s status is likely to be affected by the increase in
bargaining power as a result of her crucial contribution to family subsistence. Lee and
Peterson (1983) have noted that when the wife‘s contribution becomes a valued resource
for the welfare of the family, the wife will have more influence in decision making.

3.1 The process of poverty alleviation through micro credit:
Success of micro credit in poverty alleviation will depend on how far it can address the
constraints faced by the poor households. The economic environment characterizing the
poor consists of lack of ownership of productive assets and lack of adequate remunerative
employment. Human capital endowment is a requisite for ensuring remunerative non-
agricultural employment; but the literacy rate among the rural poor is low. Members from
extreme poor households face disadvantages in the labor market in the form of gender
segmentation and adverse terms of attached labour (Sen 1993). Manifestation of extreme
poverty may take the form of malnutrition (Chowdhury 1992) and ill health which has a
second round effect in perpetuating poverty.
Expansion of micro credit in Bangladesh and other South-East Asian countries has been
rooted in the expectation that MC can help in the generation of self employment which can
solve the problems of both unemployment and poverty in these densely populated
developing countries. Poor households access to institutional finance is limited because of
their inability to provide collateral. Poor households can improve their income through an
increase in the labour force participation ratio, which is possible through women‘s
involvement in income generating activities. The access to micro credit is expected to ease
the constraints in the credit market and thereby create self employment and increase the
productivity and earnings from self employment. The global commitment to micro credit
as a vehicle for poverty reduction is evident from the aims of the forthcoming micro credit
summit. In Bangladesh, there will be further expansion of these programs in response to
their success in effectively targeting poor people and reducing their poverty. It is believe
that programme expansion will strengthen the likelihood that structural constraints of
economic, social and gender relations will be reduced. (Mustafa et al 1996 p. 20)
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3.2 The overwhelming credit attraction:
The safest way for NGOs to get away from total economic dependency on shrinking aid
funds is to increase their share of revolving loan funds. Once these revolving loan funds
have been lent to my target group and then repaid, they become an asset fully controlled
by the NGOs. A real asset when it comes to future economic security and sustainability
from the NGOs point of view. This then becomes the solution for the NGOs in their
struggle for economic sustainability for their organization.
The description above reveals that almost all the major impact assessment studies
obtained positive pictures of the impact of micro credit on income. However one should
also examine the limitation of the performance of micro credit.
What we need is a systematic investigation into the question of whether women‘s
participation in the Grameen bank and income derived from such participation are valued
resources for decision-making power in the family. From the family sociological
perspective, answers to this question with data from Bangladesh may help to strengthen
the theoretical understanding of power in the family. Conversely, it may show the
limitations of the application of such a theory to developing nations. From the larger
perspective of a scientific discipline like sociology or family sociology, an attempt to test
the general theories of the field is certainly important in itself. While it adds to the
cumulative knowledge of the field in terms of enhancing a theory‘s generalize ability, it
can also validate or modify specific components of a theory.
4. METHODOLOGY
In this study exploratory-analytical research design has been followed. It has been tried to
explore the relationship between micro credit and women empowerment through
Grameen Bank‘s strategy of poverty alleviation. Concerning the study area, at first Sylhet
district is selected purposively. Secondly Mollargaon branch of Grameen bank is selected
purposively as it is one of the biggest branches of Grameen bank in Sylhet. The required
primary data for this study were collected from the above study area in July, 2011.
Population and Sampling
The total 3879 women participants of Grameen bank Mollargaon Branch are the
population of this study. Stratified random sampling is used as a method to draw the
sample size. At first the population is divided into four strata based on their joining date.
Strata 1(0-5 years length of attachment with Grameen Bank), strata 2(6-10 years), strata
3(11-15 years), strata 4(15+ years). Then total sample size ‗n‘ is selected by using the
following formula----
n = p.q z2/e2. deff n =sample size
z2 =Two-sided normal variate
value at 95% confidence level (1.96)
e = standard error (10%)
= 0.5 x 0.5 (1.96)2/(0.10)2 x 1.5 deff = Design effect
= 144
Now to draw the sample size from each stratum, proportional allocation formula is used
ni = n/N x Ni
So, the total sample size = n1+n2+n3+n4 = 69+34+26+15 = 144
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In this study, methodological triangulation (sample survey, case study) used. Firstly by
using schedule questionnaire, information is collected from 144 respondents through
sample survey method. And guide questionnaire is also used for case study to get in depth
understanding of the respondents. The collected quantitative information is processed
through SPSS program by using computer. To represent qualitative information several
case studies have been made.
5. RESULTS AND DISCUSSION
Credit programs target credit to the rural poor- those who are functionally landless
(owning less than half an acre of land) or having assets amounting to less than the value of
an acre of medium quality land or engaging in wage labor for once livelihood. Since
collateral is not required, credit program generally relying on the group mechanism,
transfers risks of non repayment from the program to the group itself. The problem of
asymmetrical information (program having limited information on borrowers) is resolved
through selection of members by the group (screening out high risk borrowers) and
through imposition of joint liability on the group. While individual borrowers receive
loans, sanctions (in the form of suspension of new loans) are imposed on the collective
group in the case of default by any individual borrower.
From the early days of the expansion of MFIs, the skeptics have put forward the views
that the micro credit financed activities bring in a law return and micro credit cannot
therefore be instrumental in raising household income. Given the law rate of return from
most rural activities investment opportunities would soon be exhausted and the scope for
further expansion of micro credit would be limited. Even though such evidences have not
been established through rigorous quantitative research, skeptical views have been
expressed in a number of newspaper report and in some case study based research paper.
From this study, it is viewed that among the 144 respondents aged woman have high
frequency and in age group 45-49, highest amount of people (21.5%) remains on that
(Appendix Table 1). We see that among total population in our study area, 77.8% people are
married, only 2.8% are unmarried, 5.6% divorce, 2.8% are separated and 11.15% are a
widow. It can be said that maximum loan taker are married women (Appendix Table 2).
Turning to religious status, we find 120 people (83.3%) are Muslim and 16.7% people are
Hindu. Hence we can say most of the respondents are Muslim who have been involved with
Grameen bank‘s micro credit program in our study area (Appendix Table 3). Concerning
the educational qualification, it reveals that more than fifty percent people (53.5%) are
illiterate. Twenty five percent respondents have primary education, 16% have secondary
education, and only 5.6% have higher secondary education. So it is clear that most of the
people are involved with micro credit program are illiterate (Appendix Table 4).
As regard this study, we see that 69 people out of 144 (47.9%) are involved with micro
credit program from 1-5 years. And the lowest 15 people (10.4%) have attachment with
Grameen bank for more than 15 years (Appendix Table 5). We found that 88.9% people
have the house of their own and only 11.1% people have no house (Appendix Table 6).
We see a large number of people (41.7%) have the income between 4001-6000 taka. Only
1.4% among the 144 people has income more than 10000 taka (Appendix Table 7). Our
findings shows that 112 respondent out of 144 pay the installment from their business
profit but sometimes it goes tougher and 32 female feel burden; that indicates they are
unable to pay installment from the profit money (Appendix Table 8). We found that, from
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144 respondent 41% follow the family planning program and 56.3% respondent are not
following this (Appendix Table 9).
Our study represents 36.1% family out of 144 respondents, husband plays headship role,
in 32.6% family son plays headship role and in 22.2% family respondent herself plays
headship role (Appendix Table 10). From the study, we found that 24 women out of 144
look after their property by themselves, 52 women said their husbands look after their
property. And 68 women out of 144 replied their son look after their own property. So it is
clear that very few member of micro credit look after their own property (Appendix Table
11). It can be said from the study, women who have the control over the property are only
16.7% of 144 women. And 36.1% replied their husband have the control over the property
and the highest percentage 47.2% women said their son have the control over the
property. Hence it is noticed that very few percentage of women have the control over the
property (Appendix table 12). According to the respondent‘s view, 50.7% respondent feel
micro credit program is good, 29.9% respondent think micro credit activities are very good
program. And 19.4% respondent mentioned it is satisfactory to them (Appendix Table 13).

Correlations Matrix
Monthly
income of
responden
ts at
present
Present
assets of
respondents
Educational
qualification
of
respondents
Duration
of
involveme
nt
Amount of
loan taken
Control
over loan
Monthly income
of respondents
at present
Pearson
Correlation
1 .226 .148 .435 .597 .364
Sig. (2-tailed) . .007 .076 .000 .000 .000
N 144 144 144 144 144 144
Present assets of
respondents
Pearson
Correlation
.226 1 .087 .116 .306 .194
Sig. (2-tailed) .007 . .302 .166 .000 .020
N 144 144 144 144 144 144
Educational
qualification of
respondents
Pearson
Correlation
.148 .087 1 -.251 -.015 -.106
Sig. (2-tailed) .076 .302 . .002 .861 .205
N 144 144 144 144 144 144
Duration of
involvement
Pearson
Correlation
.435 .116 -.251 1 .373 .373
Sig. (2-tailed) .000 .166 .002 . .000 .000
N 144 144 144 144 144 144
Amount of loan
taken
Pearson
Correlation
.597 .306 -.015 .373 1 .330
Sig. (2-tailed) .000 .000 .861 .000 . .000
N 144 144 144 144 144 144
Control over
loan
Pearson
Correlation
.364 .194 -.106 .373 .330 1
Sig. (2-tailed) .000 .020 .205 .000 .000 .
N 144 144 144 144 144 144
** Correlation is significant at the 0.01 level (2-tailed).
* Correlation is significant at the 0.05 level (2-tailed).

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Concerning the above correlation matrix, it can be said that, with the respondent‘s current
monthly income, present assets of respondents, educational qualification, duration of
involvement with micro credit, amount of loan taken and control over loan are positively
correlated. With present assets of respondents, educational qualification, duration of
involvement, amount of loan taken, and control over loan are positively correlated. With
educational qualification, duration of involvement, amount of loan taken and control over
loan are negatively correlated. With duration of involvement, amount of loan taken and
control over the loan are positively correlated. Finally with amount of loan taken, control
over loan is positively correlated.

Table: Current assets of respondents Vs Duration of involvement with micro credit
Duration
of involve
ment
Total
1-5 6-10 11-15 15+
Current assets
of respondents
House 29 3 32
Boat 1 3 4 8
Shop 2 2 4
Wood business 4 4 8
Raw materials 4 7 4 15
Rice business 2 2 4 8
Fish business 1 3 4
House+ rickshaw 3 1 4
House+ cattle+ firming land 5 7 4 16
House+ rickshaw + raw materials
business
2 7 6 15
Polli phone 4 4
House+ polli phone 12 12
House+ boat 1 2 1 4
House+ Cattle 4 4
House+ Tractor 4 4
others 1 1 2
Total 69 34 26 15 144
Turning to the table above, we see that among 144 respondents, 32 women have no
property without house and they are been involved with micro credit from 1-10 years. 8
respondents have boat only as assets and among them one is involved for 6-10 years, 3
women are involved between 11-15 years, and 4 women are involved in more than 15
years. 4 respondents have only shop. Among them 2 have involved between 1-5 years, and
rest of 2 are involved between 6-10 years. 8 respondents have wood business. Among
them 4 are involved within 6-10 years, and another 4 are involved within11-15 years.15
respondent have raw materials business. Among them 4 are engaged within 1-5 years, 7
are involved within 6-10 years and4 are involved within 11-15 years.8 respondent have
rice business where 2 of them are engaged between6-10 years, 2 are involved within 10-15
years and 4 are involved in more than 15 years.4 respondents have fishing business where
one is engaged within 1-5 years, and rest of 3 are involved between 6-10 years. 4
respondents have house and rickshaw. Among them3 are involved in 1-5 years, and one is
involved within 6-10 years.16 respondents have house, cattle and firming land. Among
them 5 are engaged in 1-5 years, 7 are involved within 6-10 years, and 4 are involved
within10-15 years.15 respondents have house, rickshaw and raw materials business.2 are
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involved between 6-10 years,7 are involved within 10-15 years and 6 are involved in more
than 15 years.4 respondents have Polli phone business where everyone is involved within
1-56 years.12 respondents have house and polli phone. All of them are involved in 1-5
years.4 respondents have house and boat. Among them one is engaged in 1-5 years, 2 are
involved in 6-10 years and 1 is involved in 10-15 years.4 respondents have house and cattle
where all of them are involved in1-5 years.4 respondents have house and tractor where
everyone is involved in 1-5 years. And finally among others two respondents one is
involved in 10-15 years and the second one is involved in more than 15 years. From the
above table it is significant that as far as duration of involvement is increasing the
numbers of respondents are decreasing.
6. FINDINGS FROM CASE STUDIES
Jahanara Begum (Pseudonym, age 26) is the eldest one among the five siblings. She is a
widow woman. Her father is late and mother is a paralyzed patient. Her younger sister
(second in siblings) is married and two brothers (third and fourth) is doing job in a
workshop. And the youngest sister is studying in class six. She and her two brothers earn
about 3500-4000 taka per month. But they are to spend about 3000-3500 taka each month.
So their family cannot save money. Jahanara went to school up to class three. They have
no land for cultivation. They got three decimal lands and a bamboo made house from their
father by inheritance. When she asked about the reasoning behind involvement with
micro credit, she said, ―I got married with Abdul Sattar in 2002. My husband was a
rickshaw puller. And unfortunately my husband died in December, 2005 by road accident.
I have no children. My husband‘s family did not accept me cordially and continued rude
behave with me. I felt unsecured and returned to my father‘ family in March, 2006. But the
economic situation in my father‘s family is not good for survival. Then I thought, I have to
do something. I took decision to do business. But I had no capital to start business. Few
months later, I heard about Grameen Bank activities from my neighboring people. I went
to Grameen Bank office and talked with the officers about the system. I joined with
Grameen Bank in August 2006. I received 5000 taka loan from Grameen bank and started
rice selling business.‖ She explains about her present situation as, ―When I started my
business, I was not sure that I can do this business. But with the time being my
neighboring people know that I am doing rice selling business. I purchase 3 beg rice (150
kg) each week at whole sale rate and sell it in my home. I sell at very marginal profit. Even
my selling price is lower than local market. For this, many people come to my home. I can
give my installment from the profit money. Though sometimes I face problem, but this
problem is not regular. So I am in better position than my past.‖ Her perception about
micro finance institution like, ―I think Grameen bank is good for the poor people. We can
get loan easily than the other Banks. But I feel interest rate is little bit higher. And the
officers are very strict. They never consider if anybody fails to pay installment. Even
sometimes members have to borrow money to pay the installment. After all if anybody
can invest the borrowed money, then it brings benefits towards them.
Rubina Begum (pseudonym, age 35) is a divorcee woman. Her husband was a rickshaw
puller. She has two daughters and a son. Her first daughter is married and son is doing job
in a workshop. Her second daughter reads in class five. She has no house of her own. She
lives in a colony where she has to pay 500 taka rent per month. When she was asked for
reasoning behind her involvement with Grameen bank, she replied, ―I did household
work as a servant in neighboring houses. Two years back my husband got second
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marriage and divorced me. Then I fall in serious trouble. I couldn‘t maintain my family
expenses. Few days later I heard about micro credit program from a Grameen Bank
member. Then I went to Grameen bank office and took 5000 taka loan to start a tea stall.‖
As she said about her present situation, ―now I can maintain my family expenses and I can
pay the installment every week from my profit. I give 135 taka per installment on every
Sunday. I already paid 27 installments. Now I am planning to take second loan, about
10000 taka to expand my business. I can make profit daily 100-150 taka in average.‖ Her
perception about Grameen bank, ―I personally happy with Grameen bank. I have very
good relation with the field officers of Grameen bank. I regular pay my installments so
that the officers do good behave to me. But those who cannot repay the installment, they
are to face trouble. Hence, to me, Grameen bank is helpful.‖
Lokkibala Rani (pseudonym, age 44) is married and her husband Ashim Kumar pal is a
fisherman. Lakkibala has two daughters and a son. Her first child Shamoli is married and
second child Devu helps his father in fishing. Her third child Anupom is a student of class
five. When she was asked for reasoning behind her involvement with Grameen bank, she
responds, ―I have multiple loans. I took my first loan 5000 taka from BRAC and spent this
money on my daughter‘s marriage. I had no way of income then. For this we couldn‘t
repay the loan. Then I went to Grameen bank and took 5000 taka loan. From this amount,
I spent 2000 taka to repay the installments of BRAC and rest of 3000 taka I spent to repair
my house.‖ She said about her present condition, ―now I am ill. I have chronic back pain. I
cannot do any work. My family depends on my husband‘s income. Though my elder son
helps his father but he is very young. Moreover, fishing is seasonal business. Most of the
times my husband remains unemployed. So, sometimes I fail to repay the installments of
Grameen Bank. Two months back, my husband had suffered by typhoid and I had to
spend 2000 taka for his treatment. I was unable to pay the installment for four weeks.
Hence my center head Shumita Das and Grameen Bank field officer Harun sir gave
pressure on me. But I surrendered that time. I cried and requested them to consider me.
And I promised that, I will manage within two weeks. But they did not rely on me.
Following the next day, they take away off the sealing (tin made) of my house.‖ Her
perception regarding Grameen bank, ―I think, the poor people like me have the
opportunity to take loan from NGOs like Grameen bank. But those who have daily income
source, they get benefits from that. And those who consumed the borrowed money at time
like me, they suffered a lot. Though the field officers do misbehave with us, nevertheless
we need micro credit program.‖
The following observations illustrate the emerging concerns about the impact of micro
credit on poverty alleviation.
(a) Case studies have shown that borrower have been initially successful but in the long
run face a downturn in terms of ownership of asset and level of income.
(b) 69 percent of dropouts resulted from inability to pay installments due to loss in
income generating activity.
(c) The older groups and branches of MFIs have higher loan default rate and longer
percentage of ineffective groups.
7. CONCLUSION AND RECOMMENDATION
Credit can certainly plays a very important role in the economic empowerment of the
poor. But all credit stories are not stories with a happy ending. When credit schemes turn
out to be unprofitable, when invested group savings as well as credits have turned into
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costly losses, then the empowerment endeavor turns into its opposite. The landscape of
poverty, powerlessness and gender subordination in rural Bangladesh forms the
contextual basis for Grameen bank and indeed the micro credit model in Bangladesh. It
was also the arena where interventions were easiest for allowing the poor to break out of
their cycle of poverty. The conventional banking structure however does not provide
access to poor because the poor can provide no collateral and because the overheads
required for servicing loans become to high for the small size of loans that poor people
requires. Amongst the poor women are even more discriminated against; because
patriarchal norms ensure their exclusion from de facto ownership of assets and because
the work that women generally engaged at home based productions are not classified as
economically productive. The concern with poverty is not only about preventing further
decline in welfare, it is also about breaking out of the vicious grip of poverty and making
definitive graduation from the vulnerable status. The redeeming feature of micro credit
program participation is that even without a significant increase in women‘s access to
resources whose allocation is structurally determined. It is possible to increase access to
other choice-expanding but less restricted resources and to enhance the exercise of
women‘s agency, both of which can eventually be effected in transforming the very
structures that restrict women‘s access to resources. In this respect, a long term and
sustainable programs strategy would be necessary to promote the expansion of women‘s
access to house hold resources, particularly income generated from loan investment. This
is possible if women to be active in decision about loan use and in the control over
incomes from loan investment. This is the reason why micro credit is an attractive business
for NGOs. Such quick multiplication of credit funds helps the MCIs to sustain and enlarge
their operations and prosper. But as seen in this study, micro credit borrowers often fail to
break out of income poverty and many even get caught up in an increasing debt-burden
syndrome and slide further into poverty. As indicated by the results of the study, not much
has happened in relation to women‘s empowerment through micro credit. Only about 16.75
of the respondents have said that they are in full control of the property run by using the
micro credit they take. To recapitulate, the positive impact of the amount of credit on income
without a corresponding positive impact of the length of membership indicates the
possibility that the successful members continue to obtain credit while the unsuccessful ones
drop out or become ineffective members. It is therefore pertinent that future research should
focus on the members who drop out or become ineffective members.
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Dhaka: The University press Limited
[12] Rahman R.I. (2000) Poverty Alleviation and Empowerment Through Microfinance : Two
decades of experience in Bangladesh, Dhaka: Bangladesh Institute of Development Studies.
[13] Sen Amartya (1999) On Economic Inequality, Third Edition, Oxford University Press.
[14] Todd Helen (1996) Women at the Center: Grameen Bank Borrowers After one Decade,
Dhaka: The University press Limited.
[15] Sahay S. (1998) Women and Empowerment: Approaches and strategies, New Delhi:
Discovery publishing House.
[16] Wood G.F. & Sharif I. (2001) Who Needs Credit? Poverty and Finance in Bangladesh,
Dhaka: The University press Limited
[17] Wright G.A.N. (2000) Micro Finance System, Dhaka: The University press Limited.
[18] Yunus Muhammad (1998) Banker to the Poor: The Autobiography of Muhammad Yunus,
Dhaka: The University press Limited
[19] Cochran William G.(1990) Sampling techniques, third edition, Wiley eastern limited, India
[20] Kothari C.R. (2005), Research Methodology –Methods and techniques, second
edition, New age international limited, India

Appendices
TABLE1: AGE OF THE RESPONDENTS
Age (Years) Frequency Percent Valid Percent Cumulative Percent
20-24 16 11.1 11.1 11.1
25-29 12 8.3 8.3 19.4
30-34 20 13.9 13.9 33.3
35-39 24 16.7 16.7 50.0
40-44 8 5.6 5.6 55.6
45-49 31 21.5 21.5 77.1
50-54 16 11.1 11.1 88.2
55+ 17 11.8 11.8 100.0
Total 144 100.0 100.0

TABLE 2: MARITAL STATUS OF THE RESPONDENT
Type Frequency Percent Valid Percent Cumulative Percent
Married 112 77.8 77.8 77.8
Unmarried 4 2.8 2.8 80.6
Divorce 8 5.6 5.6 86.1
Separated 4 2.8 2.8 88.9
widow 16 11.1 11.1 100.0
Total 144 100.0 100.0

Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 156




Table 4: Educational qualification of the respondents


Table 5: Duration of involvement with micro credit program
Years Frequency Percent Valid Percent Cumulative Percent
1-5 69 47.9 47.9 47.9
6-10 34 23.6 23.6 71.5
11-15 26 18.1 18.1 89.6
15+ 15 10.4 10.4 100.0
Total 144 100.0 100.0

Table 6: Live in own house
Type Frequency Percent Valid Percent Cumulative Percent
yes 128 88.9 88.9 88.9
no 16 11.1 11.1 100.0
Total 144 100.0 100.0

Table 7: Monthly income of the respondents at present
Amount (Taka) Frequency Percent Valid Percent Cumulative Percent
1-2000 16 11.1 11.1 11.1
2001-4000 42 29.2 29.2 40.3
4001-6000 60 41.7 41.7 81.9
6001-8000 8 5.6 5.6 87.5
8001-10000 16 11.1 11.1 98.6
10000+ 2 1.4 1.4 100.0
Total 144 100.0 100.0

Table 8: Repayment from profit
Type Frequency Percent Valid Percent Cumulative Percent
yes 112 77.8 77.8 77.8
no 32 22.2 22.2 100.0
Total 144 100.0 100.0


Years of Schooling Frequency Percent Valid Percent Cumulative Percent
0 77 53.5 53.5 53.5
1-5 36 25.0 25.0 78.5
6-10 23 16.0 16.0 94.4
11-12 8 5.6 5.6 100.0
Total 144 100.0 100.0
Global Disclosure of Economics and Business, Volume 2, No 2 (2013) ISSN 2305-9168
Copyright © 2012, Asian Business Consortium | GDEB Page 157


Table 9: Using family planning







Table 10: Head of the family
Frequency Percent Valid Percent Cumulative Percent
Self 32 22.2 22.2 22.2
Husband 52 36.1 36.1 58.3
Son 47 32.6 32.6 91.0
Others 13 9.0 9.0 100.0
Total 144 100.0 100.0

Table 11: Property looks after
Frequency Percent Valid Percent Cumulative Percent
Self 24 16.7 16.7 16.7
Husband 52 36.1 36.1 52.8
Son 68 47.2 47.2 100.0
Total 144 100.0 100.0

Table 12: Control over loan/ property







Table 13: Respondent‘s perception about micro credit program of Grameen bank
Type Frequency Percent Valid Percent Cumulative Percent
Satisfactory 28 19.4 19.4 19.4
Good 73 50.7 50.7 70.1
Very good 43 29.9 29.9 100.0
Total 144 100.0 100.0



Frequency Percent Valid Percent Cumulative Percent
yes 59 41.0 41.0 41.0
no 81 56.3 56.3 97.2
n/a 4 2.8 2.8 100.0
Total 144 100.0 100.0
Frequency Percent Valid Percent Cumulative Percent
self 24 16.7 16.7 16.7
husband 52 36.1 36.1 52.8
son 68 47.2 47.2 100.0
Total 144 100.0 100.0
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