Industrialization in

Bangladesh

Industrial Development in
Bangladesh:
There are four stages to discuss the
industries and industrial development
of Bangladesh during the 100 years:
Stage 1: Up to the eve of World War I
(1900-1914);
Stage 2: At the time of Partition, 1947;
Stage 3: At the time Independence,
1971 (1947-1970);
Stage 4: The Contemporary phase.

Stage 1: Up to the eve of World War I

(1900-1914):
The early part of the 20th Century was of
great significance in industrial development
in Bangladesh and several parts of India.
But in Bangladesh (East Bengal) a start was
not made with any kind of machine-driven
industry until a later period. There were few
industrial developments happened namely:
handloom weaving, silk, metal; industry,
leather, jute, sugar, rice milling, tobacco,
oil-mills, fruits, tea, and other industries.

Stage 2: At the time of Partition,

1947-1948:
At Partition in August 1947, the area
inherited a legacy of industrial
backwardness, dating from the dawn
of the modern industrial era in British
Bengal. The variety of agricultural
resources and vast multitudes, the
Bangladesh (East Bengal) area made
little progress with modern industry.

Stage 3: At the time Independence, 1971

(1947-1970):
During Pakistan period situation did not change
touch in favour of local entrepreneurship to grow.
In 1947 there was only a handful large-scale
industrial unit- a few cotton textile mills and few
sugar mills developed in this area. In 1949/50
manufacturing sector to the GDP was very
insignificant. In 1950s and 1960s manufacturing
units established in the then East Pakistan were
mainly Jute and Cotton industries and these were
mostly established which the organization named
was East Pakistan Industrial Development
Corporation (EPIDC).

Stage 4: The Contemporary

Phase:

At the time of independence Bangladesh

was a predominantly agricultural country
that inherited a tiny manufacturing sector.
80 percent of which owned either by
Pakistani business houses or state
agencies only 18 percent of those owned
Bangalee were mostly small industries.
Table 1 is given below depicts more vividly
the structure of ownership of industrial
enterprises prior to independence in 1971.

Importance of Industrialization:

Industry is contributing about 17% in the GDP of Bangladesh. Not only that the second
step towards development is industrialization. Following table depicts the importance of
industrial sector in the economic development of Bangladesh.

To increase the national income of the economy:

Industry plays a very crucial role in the national income of
a country. It can contribute from different point of view. For
example, the output produced in the sector will add value
in national income and the employment creation will add
value in the labor force. Moreover, industrial wage is
higher than that of agricultural wage. So a better living
standard can be expected by industrial development in
the country. Industry also helps the economy to reduce
BOP deficit.

Table 1: Contribution of Manufacturing Sector in

GDP (in Crore Taka) and its growth (1995-96 as base
year periods)
Industry

1988-1989

2003-2004

2005-2006

Small &
Cottage

8184.9

11496.5

13529.7

(0.75)

(7.45)

(9.04)

20803.3

27572.3

33156.3

(4.2)

(6.95)
39068.8

(11.04)
46686

(7.1)

(10.45)

Medium &
Large

Total

28988.2
(3.2)

Source: GOB (2007).

For Agricultural Development:

Our country still is highly dependent on

agriculture. Unfortunately agricultural
growth has become stagnant in last few
years. The main reason of less growth
in agriculture was identified as lack of
modernization. Farmers are not using
modern technology in the agriculture
due to its unavailability and high cost of
import.

Table 2: Employment in different

sectors (in million)
Economic Sectors

LFS, 1989

LFS, 1990-91L

L.FS. 1995-96

Agri, fores.
Fishery
Mining
Manufacturing
Construction
Trade, Hotel,
Restu
Transport.
Storage
Total

32.6

33.3

34.5

0.1
7
0.6
4.1

0.0
6.9
0.5
4.3

0.0
4.1
1.5
0.1

1.3

1.6

2.3

50.1

50.2

54.6

Contribution in the Employment of the

Economy:
In 1986, BBS conducted the first ever census of
non-farm activities. It has provided three broad
types of economic units: (a) permanent
establishment (b) temporary establishments and
(c) household premise based establishments.
To increase the standard of living:
Main determinants of living standard are higher
national income, high level of employment and
better
per
capita
income.
By
creating
employment and by increasing income level we
can increase our living standard.

Economic
Stability:
Inflation
remained
a major problem
in Bangladesh economy. The reasons
may

be the low supply

of the

demanded products and high price of

the

imported

inputs.

For

price

stability and enough supply of goods

industrial sector has no alternative.

Avoiding External
Dependency:

To avoid external dependency, all the

developing countries should establish
their own industrial sector where they
can produce machineries required for
both

agricultural

and

industrial

development. This is a kind of import

substitution strategy to reduce the
import bill of the country.

Urbanization:

Urbanization is recognized as another

determinant in the development of the
economy as whole. If the industrial areas are
established, people will shift to urban areas
from rural areas with an aim to get job in
industries at a higher wage. This total
process will create urbanization in the world.
Urbanization is encouraged as it is capable to
provide better living standard to people by
fulfilling the basic needs in a better way.