BANGLADESH

People's Republic of Bangladesh

Gana-Prajatantri Bangladesh

COUNTRY OVERVIEW

LOCATION AND SIZE.

Bangladesh is situated in southern Asia, on the delta of the 2 largest rivers on the Indian subcontinent—the Ganges and Jamuna (Brahmaputra). It borders with India in the west, north, and east, with Burma (also known as Myanmar) in the southeast, and with the Bay of Bengal in the south. The country's area is 144,000 square kilometers (55,598 square miles), and it is divided into 6 administrative divisions (Dhaka, Chittagong, Khulna, Barisal, Rajshai and Sylhet) and 4 major municipal corporations (Dhaka, Chittagong, Khulna and Rajshahi). Comparatively, the territory of Bangladesh is slightly greater than the state of New York. Bangladesh's capital city, Dhaka, is located in the central part of the country. Bangladesh occupies the eastern part of the Bengal region (the western part of the region is occupied by the Indian state of West Bengal), which historically was part of the great civilizations in the northeast of the Indian subcontinent.

POPULATION.

The population of Bangladesh was estimated at 129,194,224 in July of 2000, making Bangladesh the tenth-most populous state in the world. Having a total area the size of New York state, the country has a population equal to half that of the United States or 8 times the population of New York State. It has almost doubled since the 1960s, due to improved health, medical facilities, and longer life expectancy. In 2000 the birth rate stood at 25.44 per 1,000 (slightly higher than the world average), adding around 190,000 people every month. Meanwhile the death rate stood at 8.73 per 1,000. The estimated population growth rate is 1.59 percent, and if the current trend remains unchanged, the population could double within the next 45 years.

The Bangladesh population is relatively homogeneous, with Bengalis making up 98 percent of the population and other ethnic groups, including various tribal groups, making up the remaining 2 percent. Religion plays a very important role in this country, and the main division is between Islam and Hinduism. Almost 88.3 percent of the population are Muslims, 10.5 percent are Hindus, and 1.2 percent are Buddhists, Christians, or animists. The Bangladesh population is very young, with 36 percent below age 14 and just 4 percent of the population older than 65. In 1998 over 80 percent of Bangladeshis were living in rural areas, although during the last decade the growth of the population in the urban areas was twice as fast as in rural areas (due to both the migration of the rural population and the high birth rate). The rapid growth of the urban population is especially noticeable in the urban centers of Dhaka, Chittagong, Khulna, and Rajshahi.

In 1970, the population of Bangladesh was about 66 million, and the country at one time had one of the highest birth rates in Asia. The country's population doubled between 1950 and 1977 and almost doubled again between 1977 and 2001, putting severe pressure on the natural resources and leading to land shortages. In the 1970s the government introduced population control and family planning initiatives, aided by various international organizations, including United Nations Children's Fund (UNICEF), United Nations Population Fund (UNFPA), and the World Bank. The fertility rate (the average number of children born to a woman) in Bangladesh declined from 6.8 babies per woman in 1965 to around 3 per woman in 1999. However, these population control initiatives were undermined by the fact that two-thirds of the population still lives in rural areas, where historically population growth was very high, and by the fact that almost two-thirds of the people in the country are illiterate. A number of issues still need to be addressed, including the supply of safe drinking water, malnutrition among children (which remains the highest in the world), early and forced marriages, and illiteracy among the population in general and women in particular.

The population growth in the country was offset by rapidly rising emigration of people, both permanent and temporary, in the 1980s and 1990s. The major destinations for Bangladeshi workers seeking temporary jobs are Kuwait, Malaysia, Qatar, Saudi Arabia, Oman, and the United Arab Emirates, where they are employed mainly in the low-skill and low-wage construction and service sectors and in agricultural plantations. Other popular destinations for emigration are Western Europe, the Americas and Australia, where large Bangladeshi communities formed during the last 3 decades. According to the CIA World Factbook, the emigration rate stood at the 0.77 migrant(s) per 1,000 population in 2000, or around 1 million a year.

OVERVIEW OF ECONOMY

Agriculture and labor-intensive manufacturing remain the 2 major pillars of the Bangladeshi national economy. Historically, a tropical climate and warm temperatures throughout the year made it possible to grow 2 or 3 crops of rice each year, although floods and cyclones regularly damaged crop yield. Flourishing trade, manufacturing—traditionally in light manufacturing and agricultural processing—along with the wealth of the region's nobility, attracted English, French, and Dutch traders. The British East India Company had slowly but steadily advanced into the region in the 17th and 18th centuries, acquiring trade privileges from the Mogul emperors and exploiting rivalries between local rulers, and gradually established control over the trade between India and Europe. The company and its often corrupt administration had greatly benefited from the trade between India and Europe. The British East India Company established control over administration of the Bengal province in 1765. However, in 1858 the company was abolished, and the British crown assumed direct control over British India, in response to the local uprising of 1857 to 1858 and to growing evidence of the company's inefficiency. Throughout the colonial era, East Bengal (the territory of modern Bangladesh) received very limited investments in its industrial sector or toward development of its transportation system, and largely relied on the production and export of its agricultural goods, including jute, rice, and tea. The British colonial rule in India was accompanied by uprisings, greater polarization of society, and a decline in the traditional values and institutions of the society; nevertheless, it included India in the global trade of the early capitalist era and introduced the British legal and political systems and the technological innovations of that era.

In August 1947, India was granted independence within the British Commonwealth and was divided into the dominions of India and Pakistan. Pakistan, which included the areas populated predominantly by the Muslims, was itself divided with the West Pakistan comprising the area now known as Pakistan, and East Pakistan, occupying what had been Eastern Bengal. Powerful West Pakistan was politically and economically dominant over East Pakistan, giving rise to a secessionist movement in the eastern province. Despite attempts to ease the tensions, these factions gradually grew into open hostility and in 1971 a brief but bloody civil war flared up that lasted for 2 weeks and ended with the intervention of Indian troops. On 17 December 1971 a new government in Dhaka declared the independence of the new state, Bangladesh.

After achieving independence in 1971, Bangladesh confronted the challenging task of developing and diversifying its economy, as the country had very limited natural resources and arable land with which to support its rapidly growing population. The task was complicated by years of political turbulence and military coups (in 1975, 1981, and 1982) that did little to attract international investors and by devastating natural disasters that regularly visited Bangladesh in the 1970s and 1980s. By the beginning of the 21st century, according to the World Bank, Bangladesh had become one of the poorest and least-developed economies in Asia.

During the 1970s and 1980s the government of Bangladesh promoted economic development based on heavy state involvement both in economic management and economic planning. In fact, after achieving independence, the government led by the Awami League, nationalized large and medium-sized enterprises in jute, cotton textile, sugar processing, banking and insurances. Its economic policies were centered on 5-year plans (the first 5-year plan was launched in 1973), which aimed at development and public resource allocation modeled on the Soviet 5-year experience. However, the Bangladeshi experiment with socialism did not last long, and the government eschewed radical changes. The country's average gross domestic product (GDP) growth of around 3.3 percent in the 1970s and 4.4 percent in the 1980s (World Bank calculation) were very impressive, but this growth was offset by even more rapid growth of the population.

In 1991 the first free and fair election was held in Bangladesh and the Bangladesh National Party (BNP) won the election. The new civilian government considerably revised the economic policies of the previous government, introducing elements of free market economy, limiting state intervention, downsizing the government, launching privatization and attempting to attract foreign direct investments (FDIs) and technologies. The political stability of the 1990s and the new economic policies attracted international investors and greatly contributed to the economic growth of around 5 percent throughout the 1990s. However, Bangladesh still depends heavily on international assistance and loans, as well as remittances from Bangladeshis working abroad. According to the International Monetary Fund's (IMF) Country Report, in 1999 the country's external debt stood at US$15.145 billion, or 35 percent of GDP. This amount is relatively small according to international standards and mainly due to past capital account restrictions. According to the IMF, one of the peculiarities of the Bangladeshi foreign debt that makes it different from that of Indonesia or Malaysia is that it is almost entirely public, with private debt accounting for a low 5 percent of the total country's debt. Bangladeshi official reserves stood at a level of US$1.522 billion in 1999.

The structure of the Bangladeshi economy changed gradually over the last 3 decades. According to the World Bank, the contribution of agriculture to the country's GDP has been steadily declining from 55 percent in 1970 to 31.6 in 1999, although it still provides employment to large numbers of people. Bangladesh remains one of the world's leading producers of jute and rice, although most of the rice is for domestic consumption rather than export. The proportion of manufactured production grew from 9 percent of GDP in 1970 to 19.3 percent of GDP in 1999. Manufactured products accounted for around 60 percent of gross export earnings in 1999, with clothing goods becoming the single most important product. Tourism is a very small but rapidly growing sector of the economy that increased by around 42 percent between 1993 and 1998. Approximately 171,000 tourists visited the country in 1999, contributing Tk2.4 billion to the national economy. By comparison, tiny Singapore attracts a similar number of tourists every week.

For a long time Bangladesh struggled to diversify its economy. Large and medium state-owned enterprises dominate the manufacturing sector, although a number of private enterprises were established during the 1990s. Medium and small farms dominate the agricultural sector, and many farmers are still engaged in subsistence agriculture. Meanwhile, a number of medium and small, usually family-owned, enterprises dominate the service sector, especially retail . Bangladesh tried to catch up with the information technologies boom in the 1990s, but unlike neighboring India, it failed to promote this sector of its economy on a similar scale.

Economic growth and stability failed to bring economic prosperity to a large proportion of the population, especially in rural areas. Since the 1970s there has been an outflow of large numbers of the young and the most talented people from the country through various legal and illegal channels. Allegedly, organized criminal groups connected to drug trafficking control this outflow. Drugs are another important issue, as Bangladesh shares a border with Burma (Myanmar), which is a part of the world's largest opium producing region called the "Golden Triangle" (an area between Burma, Laos, andThailand). The shadow economy is believed to be very large due to incomplete economic activities data collection, tax evasion, and a strong tradition of cash economy, although this shadow economy is not necessarily related to organized criminal activities. In 1996 a national account task force was formed to upgrade the outdated and inefficient system of national accounting, having among other goals to deal with the problem of calculating and capturing shadow economy activities.

POLITICS, GOVERNMENT, AND TAXATION

Bangladesh is a parliamentary democracy largely influenced by the British parliamentary system. Executive power is in the hands of the prime minister, who is the head of the cabinet, and who must be a member of the 300-seat Jatiya Sangsad ( unicameral parliament). She/he recommends the council of ministers to the president. The president is the constitutional head of state and is elected for a 5-year term by the parliament, but plays a largely ceremonial role. The president can act only on the advice of the prime minister, as the presidential power was significantly reduced in accordance with constitutional changes in 1991.

All adult citizens (18 years old and over) are eligible to vote, including women and ethnic minorities. One of the unique features of the political system in Bangladesh is that 30 seats (10 percent) in the parliament are reserved for female members, and they are elected by the members of the parliament.

Bangladesh experienced a number of military coups after achieving independence in 1971, and several military governments tried to restrict activities of political parties. However, after the return to civil rule in 1990, all political parties may openly function in the country. There are a number of political organizations in Bangladesh. Most prominent of them are: the Awami League (a coalition of 8 parties); the Bangladesh Nationalist Party; the Jatiya Party; and the Jamaat-e-Islami Party. The Awami League (AL), which led the country to independence in 1971, generally supports more government interventionist policies and has a very cautious attitude towards liberalization or opening of the national economy to international competition; in fact, in the early 1970s the party had strong pro-socialist elements in its economic policy. The Bangladesh Nationalist Party (BNP), which was the ruling party from 1991 until its defeat in the parliamentary election of 1996, is more free-market oriented. The BNP introduced the policy of economic liberalization and privatized some state-owned enterprises. It opened the national economy to international competition in an attempt to attract foreign investors.

Once Bangladesh had achieved independence, political stability, the creation of a viable national economy, and the elimination of poverty became the major political issues shaping political debate and conflict in the state. The political process in the country was complicated by the hostility and often violent confrontations between the 2 leading parties, AL and BNP. The Awami League won the first post-independence general elections while promulgating ideas of nationalism, socialism, democracy and secularism. In economic areas, this government took a strongly interventionist role in the development and industrialization of the national economy. The party, however, could not overcome the economic and political divisions within Bangladeshi society and lost its power in a military coup in August 1975. The coup pushed the country towards even greater political instability, which continued until 1990, when charismatic General Hossain Ershad was forced to resign. Military rule failed to bring stability to the country because it did not stop the rivalry between the 2 major parties, the AL and BNP. In fact, the army was drawn into the groups' political confrontations.

In 1991, the first free and fair election was held in Bangladesh. Begum Khaleda Zia (widow of General Ziaur Rahman, the president from 1978 until his assassination in 1981) and her party (BNP) won the election. The new government brought radical changes to the economic policy, promoting private entrepreneurship, especially among representatives of poor communities, and supporting small- and medium-size businesses and privatization. This program was successful, and Bangladesh experienced economic growth throughout the 1990s. According to the World Bank, between 1989 and 1999 the average annual GDP growth was around 4.8 percent, with industrial production growing at an annual average of 7.3 percent and exports of goods and services at an annual average of 14.2 percent, albeit from a very low base. For the first time in decades the Bangladeshi government had brought a sense of stability to the country.

The 1996 parliamentary election, however, was again accompanied by irregularities and almost pushed the country into chaos again. The BNP won the February 1996 parliamentary election, which was boycotted by the AL-led opposition. The confrontation escalated in violence, and the BNP handed power over to a caretaker government. After 2 decades in opposition, the Awami League won the June 1996 parliamentary election, with support from the Jatiya Party. This time the Awami Party significantly moderated its position, supporting a gradual liberalization of the national economy, encouraging private entrepreneurship, and advocating the secular state; it had largely abandoned socialist ideas. One of the most important achievements of the 1990s was the diminishing role of the army in the political life of the state, although the army threatened to take matters into its own hands during the period of political conflict in 1996.

According to the IMF Country Report, the major source of government revenue comes from taxes, although the tax ratio of 7.6 percent of GDP remains one of the lowest in the world. Total government revenue was Tk210 billion in the 1997/1998 financial year. Tk51 billion came from value-added tax (VAT), Tk43.5 billion from customs duties , Tk20.0 billion from income and profit taxes, Tk21 billion from supplementary duties, and the rest from other sources. According to the U.S. Department of State, the maximum customs duty rate has been reduced from 350 percent in 1991 to around 37 percent in 2000.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Bangladesh is a country of a thousand rivers, large and small, and most of its territory is regularly flooded during the monsoon season. This fact makes it extremely difficult and expensive to build modern transportation and communication networks. The river boats and ferries traditionally used for transportation are cheap, but slow and inefficient. The situation is further complicated by the fact that the Bangladeshi government has sharply limited resources not only for building new infrastructure but also for maintaining the existing one. From the colonial era Bangladesh inherited underdeveloped and unevenly distributed infrastructure and transportation networks. Poor and inefficient infrastructure undermined the economic development in the country, and only recently has the government been able to address the problem systematically and channel investments towards expanding its highways, railroads, seaports, and airports. More recently, with international assistance the government has also started to modernize its telecommunications infrastructure and introduce the Internet.

According to the CIA World Factbook, Bangladesh is served by a network of 201,182 kilometers (125,014 miles) of primary and secondary roads, but only around 10 percent of them, or 19,112 kilometers (11,876 miles) are paved. In June 1998 the huge US$1 billion Jamuna Multipurpose Bridge was completed, becoming the 12th-longest bridge in the world. The bridge connected for the first time the eastern and western parts of Bangladesh. The completion of this project made an important contribution to the development of the country's transportation network and significantly boosted the quality and speed of passenger and freight transportation. The number of privately-owned cars grew throughout the 1990s, albeit from a very low level (there were 40,000 private cars in 1994). Many cars are very old and in poor repair and produce high levels of pollution on the congested roads of the capital and other major cities. Despite all the problems with the roads and the often-outdated equipment, 66 percent of all freight and 73 percent of all passengers are carried by roads; however, animal-driven carts are still a part of the national landscape, as they provide the cheapest and most reliable transportation for people and goods in most of the country's rural areas.

Bangladesh has a railway system of about 2,745 kilometers (1,706 miles), of which only 923 kilometers (573.5 miles) is a broad gauge (1.676 meter gauge) and the remaining 1,822 kilometers (1,132 miles) is narrow gauge (1.000 meter gauge), according to CIA estimates for 1998. Major links run from the largest Bangladeshi port, Chittagong, to Dhaka and further to the north of the country; other links connect such centers as Khulna and Rajshahi. Historically, the railway was built by the British colonial administration in 1884, running between Calcutta (now India) and Khulna (now Bangladesh). Rail services were halted following the Indo-Pakistan war in 1965. In the 1970s cargo trains resumed their services between the 2 countries. According to a BBC report on 26 January 2001, the government of Bangladesh has expressed its interest in "seriously studying the potential of linking the national railways with the proposed Trans-Asian Railway Network." The Bangladeshi railway system remains a state-owned monopoly requiring large

subsidies , as it is notorious for its poor management and a long-established tradition of ticketless travel among the local population. In recent moves, the government began the privatization of some railway services, including ticket reservation and in-service catering. Despite all shortcomings, the railway remained an important mode of transportation, operating 3.7 billion passenger-kilometers and carrying 3.76 million metric tons of goods in the 1998-99 financial year.

The waterways are an important mode of transportation, especially to some remote areas of the country, as no other mode of transportation is available during monsoon season. Bangladesh has 3 major seaports, at Chittagong, Dhaka, and Mongla, and several smaller ports. The largest and most important port is Chittagong, situated around 200 kilometers (124 miles) southeast of Dhaka. According to the EIU Country Report, in 2000 the Chittagong seaport handled around 80 percent of country's imports and 75 percent of exports, or 14.6 million metric tons of cargo and 420,850 containers. There have been several plans backed by private investors to set up 2 modern container terminals (in Chittagong and in Dhaka), but these plans have met opposition from the labor unions. According to the U.S. Department of State, in 1998 the U.S.-based company Stevedoring Services of America (SSA) signed a US$440 million contract to develop a private container project, which includes the construction of 2 container terminals.

Currently, Bangladesh is putting considerable efforts into developing its aviation industry to serve growing tourism and business needs. According to the CIA World Factbook, the country has 16 airports with paved run-ways, including 2 international airports (Chittagong and Dhaka). The largest, Zia International Airport at Dhaka, is capable of handling 25 million passengers and 1.2 million tons of cargo annually. Bangladeshi Biman Airline, the national air carrier, operates a fleet of about 15 aircraft, including 3 Airbus 310-300s, flying to 25 international destinations and serving several domestic routes. In the 1998-99 financial year it carried 1.22 million passengers and 30,869 metric tons of cargo.

Bangladesh belongs to the group of countries with the lowest commercial energy consumption per head in the world. The CIA estimated that in 1999 the country produced 12.5 billion kWh, 85 percent of which was produced using gas, 7.0 percent was produced at hydroelectric power plants, and around 8 percent by using liquid fuel. According to the EIU Country Profile, 85 percent of households in Bangladesh have no electricity and in these places where it is delivered, 40 percent of the electricity generated is not paid for. The country experiences regular electricity blackouts and shortages, and its poor reliability is often cited among factors driving away foreign investors. The Bangladeshi government is willing to address the problem but in general has not had enough resources to build new electric power generating plants. In a recent trend, the Asian Bank of Development (ABD) approved a US$140 million loan to construct a 450-mw gas-fired power station near Dhaka, scheduled for completion in 2003.

Telecommunication services in Bangladesh are underdeveloped and provide one of the lowest rates of telephone ownership per 1,000 inhabitants in the world. The largest company is the Bangladesh Telegraph and Telephone Board (BTTB), which enjoyed a state monopoly until 1972, when private operators were allowed. As most of the telephone service uses outdated analogue technology, the quality of telecommunication services is often poor and in need of upgrades. In 2000 the country had a mere 490,000 telephone lines and 52,000 mobile phones serving 129 million people. The government is aiming to provide telephone coverage of remote towns and villages that until now have had no telephone connections. With international assistance and increasing private investments, Bangladesh is upgrading its telecommunication system, replacing analogue technology with digital, introducing the Internet and e-mail services, and expanding cellular mobile services.

ECONOMIC SECTORS

According to the World Bank Development Indicators, Bangladesh is the 50th-largest economy in the world, judged by its gross national income, although it is the 10th-largest state in the world if judged by its population. Although it has a good environment and climate for the production of various crops and huge potential for developing a tourist industry, the country suffers from scarcity of natural resources, shortage of arable land, regular natural disasters (flooding and cyclones), and a lack of investment.

For decades after independence, political instability, low demand in the local market, and economic stagnation hindered the economic development of the country. Since establishing a civil government in 1991, Bangladesh has been struggling to diversify its economy, to reform its agricultural sector, and to expand its industrial sector, as it needs average annual economic growth of at least 7 percent in order to eliminate widespread poverty. In the 1990s while Bangladesh was unable to solve its economic difficulties and eliminate poverty, it achieved impressive growth in many areas, including manufacturing and agriculture. Recognizing the difficulties, the Bangladeshi government was willing to accept the IMF's recommendations and to conduct structural changes, which included relinquishing its socialist orientation and state control over the economy, decentralization of economic management, and privatization, although many of these changes were painful and implemented only slowly.

Agriculture is still the single most important sector of economy. Between 1989 and 1999, it experienced stagnation with an average annual growth of only 1.6 percent, which was not enough to support a rapidly growing population. Throughout the 1980s and 1990s, Bangladesh tried with some success to achieve politically and economically important self-sufficiency in food production, increasing productivity and diversifying the crop base. Nevertheless, the share of agriculture in the GDP declined from 55 percent in 1970 to 19.6 percent in 1999.

The role of the manufacturing sector is growing, but the growth is painfully slow due to a lack of foreign investment, small demand in the local market, and red tape and inefficiency in the local bureaucracy. According to the World Bank, the industrial sector in Bangladesh grew at an average annual rate of around 4.1 percent between 1979 and 1989 and around 7.3 percent between 1989 and 1999. Bangladesh has a relatively large reserve of gas, which has become increasingly important as a source of energy and has potential to become a source of export revenue.

Bangladesh tries to promote its service sector, especially tourism and the information technologies sector. However, in doing so it has to compete with neighboring India. Local trade, tourism, and other services currently make important contributions to the country's GDP, providing employment for 26 percent of the labor force in the country.

AGRICULTURE

Agriculture remains the most important sector of Bangladeshi economy, contributing 19.6 percent to the national GDP and providing employment for 63 percent of the population. Agriculture in Bangladesh is heavily dependent on the weather, and the entire harvest can be wiped out in a matter of hours when cyclones hit the country. According to the World Bank, the total arable land in Bangladesh is 61.2 percent of the total land area (down from 68.3 percent in 1980). Farms are usually very small due to heavily increasing population, unwieldy land ownership, and inheritance regulations. The 3 main crops—rice, jute, and tea—have dominated agricultural exports for decades, although the rice is grown almost entirely for domestic consumption, while jute and tea are the main export earners. In addition to these products, Bangladeshi farmers produce sugarcane, tobacco, cotton, and various fruits and vegetables (sweet potatoes, bananas, pineapples, etc.) for the domestic market.

Rice is the staple food in the everyday diet of Bangladeshis. The production of rice, which can be harvested 2 or even 3 times a year, reached 19.9 million metric tons in 1998-99. The production of wheat reached about 2 million metric tons in 1998-99. Both crops play an important role in achieving self-sufficiency in food production. However, due to weather conditions the production of rice and wheat fluctuate greatly, forcing Bangladesh to import food from the international market or turn to international aid. Bangladesh imported 1.6 million tons of wheat (mainly from the United States) in 2000 in order to meet the demand in the local market.

Jute, often called the "golden fibre" of Bengal, is the main export-earner for Bangladeshi agriculture, as Bangladesh remains the world's second-largest producer of jute (after India) and the world's largest exporter of fiber. Jute is traditionally used for the fiber of carpet backing, burlap bags, cheap paper, and various other purposes. Its importance for the Bangladeshi economy comes from the fact that almost 3 million farms are involved in jute production. In 1999 Bangladeshi export earnings from jute amounted to US$55 million, with the country producing 720,000 metric tons of jute, although this is about one-third of the jute production of the middle of the 1980s. The decline in jute production is attributed to declining world prices for this crop and to farmers switching to other crops.

Bangladesh also produces tea leaves, mainly for export, although the export of this product contributes only 1 percent of the country's hard currency earnings. In 1998-99 the country produced 56,000 metric tons of tea leaves, but it could produce twice that amount. The main obstacle to increasing production is in falling prices for tea in the international market and in management and regulation problems in the industry in the country.

Tropical rainforest is important for maintaining the ecological balance in Bangladesh, and forestry contributes 1.9 percent to the GDP (1999-2000). The forest covers around 17 percent of the country's territory, or 2.5 million hectares (6.18 million acres). The timber is used by the construction industry as a source of building materials, by the printing industry as a source of materials to produce paper, and in the agricultural sector as a source of firewood. Commercial logging is limited to around 6.1 million cubic feet, and the government plans to plant more trees within the next 15 years.

Fishing is another important activity in the country, contributing 4.9 percent to the GDP (1999-2000) and providing 6 percent of the total export income. The overall fish production was around 1.6 million metric tons (1999-2000). Bangladesh mainly exports its shrimp to the international market.

INDUSTRY

MINING.

The main commercially viable natural resource in Bangladesh is gas, although there are reports of the existence of moderate-sized reserves of coal. Total gas reserves are estimated at 21,000 billion cubic feet. In 2000 Bangladesh utilized 370 billion cubic feet, mainly for domestic consumption. The major gas fields are situated in Greater Sylhet district, the Bay of Bengal, and Greater Chittagong district. Transnational corporations are keen to be involved in gas exploration in Bangladesh and its exportation to the huge Indian market, however the Bangladeshi government is resistant to the idea of exporting the gas, as according to local experts' estimates the proven reserves could run out within the next 30 to 40 years.

MANUFACTURING.

During the 20th century Bangladesh, like neighboring Burma (Myanmar) and Nepal, largely missed the industrialization wave that changed the economies of many countries in the Asian region, such as Malaysia, Singapore, and Taiwan. At the beginning of 2001, manufacturing contributed about 24.3 percent of the GDP, providing employment to 6.2 million people or 11 percent of the workforce. Between 1989 and 1999, the manufacturing sector in Bangladesh grew at an average annual rate of around 7.2 percent, albeit from a very low base. The cheap, reliable, and abundant labor available in Bangladesh is attractive to the world's leading transnational corporations, but they have been very slow to move into the country, as they face regular industrial unrest led by radical trade unions, poorly developed infrastructure, red tape, and a very small local market. As in neighboring India, the Bangladeshi government promoted the idea of state-led industrialization combined with heavy state involvement in and state control of enterprise activities.

The manufacturing sector in Bangladesh comprises mainly small, privately-owned, often unmechanized enterprises or large, state-owned, often loss-making enterprises. The main industrial centers are Dhaka, Chit-tagong, Khulna, and Rajshahi, which have (by local standards) well-developed transport infrastructure, including access to seaports and railways and the sizeable and very cheap unskilled and skilled labor force. The industrial enterprises concentrate mainly on the production of jute goods, ready-made garments, foodstuff processing, and chemical production.

Most of Bangladeshi jute goods are produced in large state-controlled enterprises for export to the United States, Europe, and other markets, contributing Tk13.3 billion in 1997-98 to the country's export earnings and Tk11.7 billion in 1998-99. According to the EIU Country Profile, Bangladesh accounts for 90 percent of world jute fiber exports. The jute processing enterprises are vulnerable to downturns in the regional and international market and experienced some recession in 1998-99. Additionally, during the last few years the demand for jute in the international market has been in decline due to increasing use of synthetic materials in the areas where jute was previously used. However, these jute processing businesses still have plenty of the cheap local supply of raw materials and, if they continue to improve the quality of their products, with efficient management and marketing they may expand their export potential.

During the last 2 decades Bangladesh has found a strong niche in ready-made garments (RMG), becoming one of the world's leading exporters of these products. There are around 2,600 small and medium-size garment-manufacturing enterprises, providing employment for about 1.4 million local workers, mainly women. Access to cheap and reliable local labor makes Bangladeshi RMG manufacturers very competitive in the international market, although most of the fabrics and machinery must be imported (in 2000 Bangladesh imported 160,000 metric tons of cotton from the United States). According to the U.S. Department of State, total clothing exports reached about US$5 billion in 1999-2000, mainly to the United States, Europe, and Canada. Bangladesh especially benefited from the multi-fiber arrangement with the United States and the generalized system of preferences with the European Union, which set special quotas for the RMG imports from Bangladesh. The RMG sector experienced rapid growth during the last 5 years, but with the rise of free trade and elimination of the quota system at the end of 2004, Bangladesh will face very tough competition from other Asian countries such as China, India, Indonesia, Thailand, and Vietnam.

Bangladesh has a well-established food processing sector, which relies on domestic agricultural production and is oriented mainly to domestic needs. It includes sugar refining and milling, production of edible oils, processing and preserving of fruits and fruit juices as well as fish processing, especially shrimp and prawns. As a tropical country Bangladesh has a plentiful domestic supply of exotic fruits and sea species.

In the 1990s 2 major changes affected the development of the industrial sector in Bangladesh. First, the end of the numerous military coups and the establishment of civil government brought in political stabilization, which attracted direct international investments and encouraged the inflow of foreign aid. Secondly, the policy of economic liberalization, structural adjustment, and privatization helped to increase the competitiveness of the local industries and encouraged them to search for new overseas markets. In order to promote the attractiveness of the Bangladesh economy, the government established special export-processing zones (EPZ). They are situated in Chittagong, Dhaka, Chalna (near Mongla port in Khulna) and in Commila, where investors are given access to well-developed infrastructure and enjoy tax breaks and other privileges. By the year 2000, the EPZs had attracted around US$415 million worth of foreign investments and more than 150 firms had moved there. According to the U.S. State Department, the United States is the single largest foreign investor in Bangladesh with total fixed direct investment of about $750 million. The major investment projects were in the chemical, electronics, and electrical industries. The United States is followed by Malaysia, Japan, and the United Kingdom, and the next tier of investors are Singapore, India, Hong Kong, China, and South Korea. The U.S. State Department estimates U.S. investment in Bangladesh will be about $2.5 billion in 2 to 4 years.

SERVICES

TOURISM.

Tourism is a small but rapidly growing sector of Bangladeshi economy. According to the International Labor Organization, together with the wholesale and retail sector it provides employment for almost 6.0 million people (1996), or around 10.8 percent of the labor force. Government statistics state that 171,000 tourists visited the country in 1998, contributing Tk2.4 billion to the national economy. Most visitors were from India, Australia, Germany, the United Kingdom, and the United States.

Tourism could only take off in the 1990s, after the stabilization of the political situation in the country and the end of the tribal insurgency in the Chittagong Hill Tracts area (southeast of the country). Bangladesh has huge potential for attracting foreign tourists as it has a deep cultural heritage, a number of ancient monuments and temples, and a rich natural heritage, including tropical forests, beautiful hills, rivers, and national parks. The country offers bargain-shopping and exotic souvenirs, as well as a wide variety of activities, from eco-friendly to adventure tourism. However, it needs to renovate and expand its hotels' infrastructure and other services, which are still underdeveloped.

FINANCIAL SERVICES.

The financial service industry remains underdeveloped in spite of a decade of major reforms conducted under the Financial Sector Reforms Program. According to the International Labor Organization, this sector provides employment for 213,000 people (1996). Since independence it has been under state control, as the major commercial banks were nationalized soon after independence. The local banks are often accused of providing poor financial services and being beset by corruption, inefficient management and capital inadequacies. Bangladesh lags behind in the introduction of computerized banking payment systems, the development of electronic payment systems, and electronic banking. The Agrani Bank, Janata Bank, Rupali Bank and Sonali Bank are the main financial institutions still under state control. They account for almost half of all deposits.

In 1999 the government launched a Commercial Bank Reform Project intended to improve the functioning of the private commercial banks. One bank has provided a success story: the Grameen Bank, which was founded by university professor Mohammad Yunus, pioneered in providing small credits to local communities in need. At present the IMF and the World Bank, which are often notoriously ineffective in the poor countries of Asia and Africa, have carefully studied the Grameen Bank's microcredit model with a view to applying it in other developing countries.

RETAIL.

In Bangladesh, as in many other Asian countries, many small- and medium-sized businesses have been built around the retail sector and are often associated with small shops and restaurants. The retail sector provides employment for a large number of people, but it still remains relatively underdeveloped, due to a generally low level of income among the population. There are still a number of small family-run traditional shops and cafes, selling mainly locally-made products.

The United States has found that the enforcement of intellectual property rights is "weak" and that "intellectual property infringement is common." The Bangladeshi government has begun to address this problem seriously, introducing a new Copyright Act in 2000 in order to bring the country's copyright laws into compliance with the WTO. This act updated the Patents and Design Act of 1911, and some other outdated regulations.

INTERNATIONAL TRADE

Bangladeshi international trade is extremely small relative to the size of its population, although it experienced accelerated growth during the last decade. It is not very diversified and depends on the fluctuations of the international market. The Bangladeshi government struggles to attract export-oriented industries, removing red tape and introducing various financial and tax initiatives. Between 1990 and 1995 Bangladesh doubled its exports from US$1.671 billion in 1990 to US$3.173 billion in 1995 and then almost doubled them again from US$3.173 billion in 1995 to US$5.523 billion in 1999.

During the 1990s, the United States has been the largest trading partner for Bangladesh, with its exports to the United States reaching 35.7 percent in 1998-99. This percentage consisted mainly of Ready-Made Garments (RMG). Germany is the second-largest export market, with the proportion of goods reaching 10.4 percent; and the United Kingdom is in third place at 8.3 percent. Other export destinations are France, Italy, the Netherlands, Belgium, and Japan.

India, China, and Singapore are the 3 largest sources of imports. Most Bangladeshi imports originate from

neighboring India, reaching 20.8 percent in 1998-99. The second most important source is China, totaling 9.3 percent, third is Singapore with 8.6 percent, with Hong Kong fourth at 7.6 percent.

During the last decade, Bangladeshi exports shifted from the sale of agricultural products and raw and processed natural resources to labor-intensive manufactured goods (including clothing, footwear, and textiles), but the country, unlike neighboring India, could not catch up with the exporters of skill-intensive products. While India is becoming an important international player in the field of software and applications development, Bangladesh lags far behind, despite the government's efforts to promote this area.

Bangladesh has a long history of maintaining a negative trade balance, importing more goods than it exports. In the 1970s and 1980s it imported goods and services twice and sometimes 3 times as much as it exported. Even during the relatively successful 1999 financial year, the country exported just US$5.523 billion worth of products while it imported US$8.381 billion worth of products, leaving a large trade shortfall of US$2.858 billion.

At present, Bangladesh faces growing economic competition from India, Pakistan, and Indonesia, countries which could offer better infrastructure and larger and growing domestic markets. A border conflict between Bangladesh and India, the worst in the last 30 years erupted in April 2001, bringing political and economic uncertainty to the region and undermining international investor confidence in the Bangladeshi market. If the investors move out, they could cause further social polarization and increased poverty in the country.

MONEY

The Bangladeshi government tightly controls the exchange rate of the taka against the U.S. dollar and major regional currencies. During the last decade the value of the currency showed a steady decline, mainly due to the devaluation of many of the neighboring currencies

(especially the Indian and Pakistani rupees). In 1995 the Bangladeshi taka was valued at 40.278 taka per US$1; in January 2000 the value of the taka declined to 51.000 taka per US$1. According to the IMF, the Bangladesh Central Bank has followed a policy of gradual depreciation of the taka against the U.S. dollar since the middle of the 1990s, devaluing the taka in gradual steps of 1 to 2 percent 2 or 3 times a year. The taka's market value has been protected by the large sums of foreign currencies Bangladesh receives every year through aid transfers and through remittances from overseas workers. The taka is still not fully convertible. The government periodically revises its exchange control regulations, introducing further liberalization of the controls. The government lifted restrictions on the repatriation of the profit and dividends from foreign direct investments (in the industrial sector); however, non-residents are not allowed to buy money market instruments or treasury bills .

During the period between 1970 and 1980 inflationary pressure was relatively small, as the country's economy was closed to outside influences and was tightly controlled by the government. In the 1990s consumer prices became more volatile, fluctuating between a low of 2.9 percent and a high of 8.9 percent a year, due to the liberalization and gradual opening up of the national economy to international competition.

The Bangladeshi banking system suffers from a lack of capital and poor management. Other problems include banks' exposure to corruption and to bad loans allegedly made to politically well-connected businessmen. There are 43 private banks in the country, including 29 domestic and 14 foreign banks, but most of them are active in major urban areas (Dhaka and Chittagong). The foreign banks are represented by such names as the Scotiabank of Canada and Societe Generale of France.

The 1997 Asian financial crisis did not bring damages in the scale of the economic and financial downturn in Indonesia, although it did negatively affect Bang-ladeshi exports. This escape was mainly due to the limited size of the Bangladeshi market, existing currency exchange controls and the relatively closed nature of its economy. Nevertheless, the Bangladeshi taka depreciated between 1997 and 1999 at a faster rate, declining from Tk43.892 in 1997 to Tk49.085 in 1999.

Bangladesh has 2 stock exchanges, the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE; opened in 1995). Share prices shot up after the 1996 parliamentary election and market capitalization reached US$6.0 billion in November 1999; however, share prices fell dramatically the following year, with some shares losing up to 60 or 70 percent of their value. The all share indexes both in the DSE and the CSE still remain far below those of the 1996 levels.

POVERTY AND WEALTH

Bangladesh belongs to the poorest group of countries in the world; during the last 3 decades its GDP per capita income barely increased from US$203 in 1975 to US$348 per capita in 1998. The World Bank's World Development Indicators puts Bangladesh in 170th place (out of 207 countries) in the global ranking of gross national income per capita. Despite considerable international assistance, Bangladesh has been unable to eliminate extreme poverty and hunger. There is a huge disparity between standards of living in urban and rural areas of the country. The urban areas, especially the capital Dhaka, and major industrial cities such as Chittagong, Khulna, and Rajshahi, enjoy a better quality of living, with electricity, gas, and clean water supplies. Still, even in the major cities a significant proportion of Bangladeshis live in squalor in dwellings that fall apart during the monsoon season and have no regular electricity. These Bang-ladeshis have limited access to health care and to clean drinking water. The rural population, meanwhile, often lives in traditional houses in villages with no facilities associated with even the most modest standards of living.

Disparities encompass 3 dimensions that define considerable differences: geographic, educational, and gender. There is still considerable inequality in the distribution of income between rural and urban populations. In general, the urban population, in the areas around Dhaka, Chittagong, and other large cities, has long been involved in small- and medium-sized businesses or employed in various industries. They benefited from the recent growth and have higher incomes. Meanwhile, the rural population experience chronic shortages of land and regular floods and cyclones, which often a within matter of hours sweep away the results of months of hard work. The 1998 flood, for example, affected two-thirds of the country, wiping out the entire winter crop and displacing millions of people.

Education is another problem, as the adult literacy rate reached just 60 percent in 2000, despite the fact that primary education is universal, compulsory and free. The illiterate section of the population is generally much

poorer as they are missing employment opportunities in the industrial sector as well as government and international assistance in form of micro-credits, and awareness of better cultivation methods and other market skills. Also, women in Bangladesh, especially those with large families, have heavier workloads and often fewer skills than the male population; the illiteracy rate is much higher among women than men. These differences may be seen in the statistical data. The wealthiest 20 percent of Bangladeshis control 42.8 percent of the wealth. The poorest 20 percent of the population control only 3.9 percent of the wealth. In fact, the poorest 40 percent of the population controls just 20.7 percent of the wealth.

Since the 1970s, the Bangladeshi government has implemented a social policy aimed at the elimination of poverty and social inequality, and largely funded by international organizations and individual donors. This policy aims at increasing the literacy rate, providing access to safe drinking water, family planning, and micro-crediting the poorest and most disadvantaged groups of society.

Throughout the 1990s the Bangladeshi government achieved some positive results, although the 1998 floods put pressure on scarce government resources, brought hunger to some areas of the country, and made food prices higher. These difficulties particularly affected the most vulnerable social groups of society, both in rural areas and in major urban centers. The chronic poverty, under-employment and unemployment forced large numbers of people to migrate from the country, using all possible legal and illegal channels. Bangladesh's quality of life remains much lower than in neighboring India, Pakistan, or Sri Lanka. According to the CIA World Factbook, in 1996 around 35.6 percent of the population lived below the poverty line, most of them in rural areas of the country.

WORKING CONDITIONS

Due to rapid growth of the population in the last few decades the Bangladeshi labor force has grown rapidly, as there was a large proportion of young people born in the 1960s and 1970s. According to the EIU Country Profile the Bangladeshi labor force almost doubled in a matter of a decade, growing from 30.9 million people in 1985-86 to 56.0 million people in 1995-96. Although all sectors of the national economy experienced significant growth, they were far below the speed of the labor force growth. According to Bangladeshi national statistics, in 1995-96 only 12.4 percent of the labor force had formal employment, while 40 percent were considered "employed in family-based" businesses, 29.6 percent were considered "self-employed," and 17.9 percent had their jobs on a "daily basis." In general, the competition for working positions in the country is intense, and the working conditions are very harsh, especially in rural areas, where 63 percent of the labor force are employed.

The Bangladeshi government pays special attention to improving education at all levels, as it wants to attract labor-intensive manufacturing and services to the country. Primary education is compulsory. Various initiatives have been tried, including direct special stipends, designed to increase the proportion of female students at school. However, as the government admits, the country's education system suffers from poor quality education, chronic shortages of trained teachers, and a shortage of books. Secondary education is not accessible for

children from many poor families. The government channels considerable funds into tertiary education, and the quality of teaching in some areas, particularly in technical subjects, is relatively strong. Nevertheless, the overall quality of the Bangladeshi universities' graduates often does not match the demands of modern technological developments in many areas, including information technologies and engineering. A number of Bangladeshis, receive their education overseas, many with state or international organizations' support, although in the past many of the students have opted not to return home after graduating from overseas universities. Bangladesh suffers shortages of medical doctors, information technology specialists, qualified teachers, and professionals in various other areas.

The very low wages, starting from Tk1,500, and harsh working conditions drive large numbers of people to seek jobs as temporary workers in Kuwait, Malaysia, Qatar, Saudi Arabia, Oman, and the United Arab Emi-rates. According to some unofficial estimates there are as many as 20 million Bangladeshi illegal immigrants in neighboring India. Many are hired to work in the low-skill and low-wages construction and service sectors and on agricultural plantations. The workers' remittances, sent home regularly, are one of the most important sources of hard currency not only for the extended families of these workers, but also for the national economy as well, totaling, according to the IMF's figures, US$1.706 billion (1998-99) or equivalent to the Bang-ladeshi gross official currency reserves in 1998-99.

The trade unions are very strong in Bangladesh, although only 3.5 percent of the workforce is unionized, but most of the unions are limited to the public sector or state-controlled enterprises. According to the International Confederation of Free Trade Unions (ICFTU), there are a total of 23 national trade union centers in Bangladesh and approximately 5,450 trade unions. The largest of these are the Bangladesh Jatio Sramik League (BJSL); the Bangladesh Jatiyatabadi Sramik Dal (BJSD); the Jatiya Sramik Party (JSP); the Bangladesh Free Trade Union Congress (BFTUC); and the Jatio Sramik League (JSL). These bodies are organized together in the ICFTU Bangladesh Council. About 1.8 million of the country's workers belong to unions, out of a total workforce of approximately 58 million. The unions tend to have strong links to major political parties or are controlled by political figures, and they often lead political action and strikes in the country. The power of the trade unions is exemplified in the fact that their continuous general strikes (hartals) forced the BNP government to resign in 1996, and their support led to the victory of the Awami League in the 1996 parliamentary election. Strikes are extremely common in Bangladesh and can paralyze business activities for weeks. The private sector is less unionized and trade unions are practically banned from the Export Processing Zones (EPZ), as the EPZ is exempted from certain labor laws. In case of industrial dispute the problems are supposed to be solved through the Labor Tribunal.

Unlike many Middle Eastern countries, women in Bangladesh enjoy considerable freedom and are generally involved in education and labor, although the employment and literacy rates among them generally are lower than among men. Recent surges in the garment industry brought new employment opportunities for women, as around 95 percent of people employed in this sector are women. However, in the rural areas the women very often are disadvantaged and among the poorer members of the communities. Currently, more than 37 percent of the labor force is women. However, unionization among women, and hence the protection of their rights, is generally lower than among men.

Despite the presence of strong trade unions, the use of child labor was quite common until recently. Not until 1995 did the Bangladeshi garment exporters' association agree to eliminate children from the industry. However, according to the International Confederation of Free Trade Unions, included in export sectors such as garments and leather production, there are over 6 million child laborers between the ages of 5 and 14 years who work for pay and are not enrolled in school. About 1.9 million working children are below the age of 10. In addition to remunerated employment, children often have to work alongside other family members in small-scale and subsistence agriculture. Bangladesh has not ratified either of the ILO core conventions on child labor, although there are various laws and regulations protecting children.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1500 B.C. Hinduism, the system of beliefs, practices, and socio-religious institutions of the Hindus, is introduced in the Indian subcontinent.

327 B.C. Alexander the Great invades the province of Gandhara, in northwest Indian subcontinent.

800s A.D. The first Muslim Arabs appear in the north of the Indian subcontinent, and the first Muslim trading communities are established in various parts of the region.

1192. Muhammad of Ghur wins the battles of Taraori, which leads to the establishment of the Delhi sultanate, principal Muslim sultanate in North India from the 13th to the 16th century.

1341. Most of Bengal becomes independent of Delhi.

1498. Vasco da Gama, Portuguese traveler and adventurer, lands at Calcutta.

1576. Akbar, the great Mogul emperor, conquers the territory of modern Bangladesh.

1608. Dhaka becomes the Mogul's capital of Bengal province.

1757. The nawab (ruler) of Bengal is defeated by Robert Clive's British force at Plassey.

1765. The British East India Company establishes control over the administration of the territory of Bengal.

1857. Indian Sepoys (soldiers) in the Bengal army of the British East India Company rebel against British rule in India (known as the Sepoy Rebellion).

1858. The East India Company is abolished, and the British crown assumes direct control over British India.

1885. The Indian National Congress is founded.

1905. The British colonial administration introduces division into West Bengal and East Bengal, with East Bengal being more or less within the territory of modern Bangladesh, although the partition is withdrawn in 1911.

1947. Bangladesh becomes independent as a part of Pakistan under the name "East Pakistan."

1970. In November, a powerful cyclone hits Bangladesh, causing great damage and more than 500,000 deaths, one of the worst natural disasters of the 20th century.

1970. In December, Sheikh Mujibur Rahman (popularly known as Sheikh Mujib) and his political party, Awami League (AL), win both national and provincial elections and demand greater autonomy for East Pakistan.

1970. The AL declares its intention to achieve independence from West Pakistan.

1971. With the help of Indian forces, the Bangladeshi pro-independence movement wins independence.

1974. A state of emergency is declared in Bangladesh.

1975. Sheikh Mujibur Rahman becomes president and assumes absolute power.

1975. President Sheikh Mujib is assassinated in a military coup in August.

1975. Abusadat Muhammad Sayem becomes president but resigns 2 years later.

1978. General Ziaur Rahman wins the presidential election.

1981. President General Ziaur Rahman is assassinated in a military coup.

1981. Abdus Sattar wins the presidential election in November.

1982. General Hossain Ershad takes power in a military coup.

1985. General Hossain Ershad wins the presidential election and bans all active political opposition.

1988. Devastating floods hit three-quarters of the country, leaving 30 million people homeless and causing food shortages.

1990. General Hossain Ershad resigns.

1991. The first free and fair election is held in Bangladesh. Begum Khaleda Zia (widow of General Ziaur Rahman) and her party, Bangladesh Nationalist Party (BNP), win the election.

1991. A powerful cyclone hits Bangladesh, causing the deaths of more than 120,000 people and great damage to the economy.

1996. Begum Khaleda Zia wins the April parliamentary election, which is accompanied by violence and a low turnout, but is forced to resign shortly after.

1996. Hasina Wajed, daughter of Sheikh Mujib, and her Awami League (AL) win the June parliamentary election.

1996. An important 30-year agreement is reached with India on the sharing of the Ganges River's water.

1997. A peace treaty is signed between the government and Chakma rebels, ending a 20-year uprising.

1998. Another powerful cyclone hits the country, causing extensive damage to the national economy.

2001. Indian and Bangladeshi forces clash on the border between their 2 countries.

FUTURE TRENDS

For decades after 1971 the development of the Bangladeshi national economy has been hindered by political instability, poor economic performance, pressure on scarce natural resources by the rapidly growing population, and an ineffective bureaucracy. The major changes introduced during the 1990s included more flexible economic policies, export-oriented industrialization, and inflow of foreign direct investments. Inflation remains low and is under control. The Bangladeshi currency exchange managed to avoid any spectacular failures similar to Indonesia or South Korea during the Asian financial crisis of 1997, and it is still stable, tightly regulated and pegged to the basket of the regional currencies. In 1999 and 2000 Bangladesh achieved strong economic recovery after the devastating floods of 1998, and if the regional and global economic environment remains positive, the Bangladeshi economic annual growth rate of 5 to 6 percent might continue. This development may ease the poverty, low standards of living, underemployment, and unemployment problems.

Nevertheless, there are several issues to be addressed. There is strong potential for all the problems, including political instability and recession, to return if the government fails to improve the economic situation in the country or if global recession or global competition negatively affect the country's exports. Both the border clashes with Indian border guards in early 2001, which led to heavy casualties, and confrontations along the border with Burma (Myanmar) show how fragile regional stability is. Meanwhile, although the changes brought some positive results to the national economy and some level of prosperity to some groups of the population (often limited to the educated urban population of the large metropolitan areas), they also brought new social ills such as growing criminality and drug usage among youth. The government has often been criticized for its intervention in economic development and its inability to improve economic management or to conduct further reforms, including privatization. There is also a serious problem with widespread corruption, with some political groups accused of wasting public resources. The experience of Indonesia shows how dangerous corruption and political instability are. It remains to be seen whether economic liberalization combined with the force of globalization measures will strengthen the performance of the national economy.

In the longer term, Bangladesh will need to maintain its international competitiveness, since the current globalization trend eliminates borders for international trade and brings growing competition from emerging markets for FDIs and for the transfer of modern technologies. Political and social unrest in neighboring Burma might affect Bangladesh, threatening and undermining regional stability and thus scaring off potential investors. Environmental issues are also very important for Bangladesh in the longer term, as global climate change and the rise of the surface level in the world's seas may undermine the country's agriculture, which still plays a dominant role in the national economy. In fact, a warmer Earth could well witness sizeable areas of the country covered by water, or it might increase salinization of the currently arable land, making it impossible to continue agricultural activities.

DEPENDENCIES

Bangladesh has no territories or colonies.

BIBLIOGRAPHY

Alauddin, M., and Samiul Hasan, editors. Development, Governance and the Environment in South Asia: A Focus on Bangladesh. New York: St. Martin's Press, 1999.

Caf, Dowlah. Privatization Experience in Bangladesh, 1991-1996. Washington D.C.: World Bank, 1997.

Economist Intelligence Unit. Bangladesh: EIU Country Profile 2000. London: Economist Intelligence Unit, 2000.

Economist Intelligence Unit. Bangladesh: EIU Country Report. London: Economist Intelligence Unit, February 2000.

Government of the People's Republic of Bangladesh. <http://www.bangladeshgov.org>. Accessed August 2001.

Government of the People's Republic of Bangladesh. Ministry of Planning Statistics Division. <http://www.bangladeshgov.org/mop/ndb/index.htm>. Accessed August 2001.

The Independent (newspaper). <http://www.independent-bangladesh.com>. Accessed August 2001.

Moon, P. The British Conquest and Dominion of India. London: Duckworth, 1989.

Spear, Thomas. The Oxford History of Modern India. 2nd edition. Delhi: Oxford University Press, 1978.

Statistical Pocketbook of Bangladesh. Dhaka: Bangladesh Bureau of Statistics, 1998.

World Bank. Bangladesh: from Stabilization to Growth. Washington D.C.: World Bank, 1995.

World Bank Group. The World Bank Dhaka Office. <http://www.worldbank-bangladesh.org>. Accessed August 2001.

—Rafis Abazov

CAPITAL:

Dhaka.

MONETARY UNIT:

Taka (Tk). One Bangladeshi taka equals 100 paisa. Notes are in denominations of 1, 2, 5, 10, 20, 50, 100, and 500 taka. There are coins of 1, 5, 10, 25, 50, and 100 paisa.

CHIEF EXPORTS:

Garments, jute and jute goods, tea, leather and leather products, frozen fish, and seafood.

CHIEF IMPORTS:

Machinery and equipment, chemicals, fertilizers, iron and steel, textiles, raw cotton, food (mainly rice and wheat), crude oil and petroleum products, and cement.

GROSS DOMESTIC PRODUCT:

US$187 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$5.523 billion (1999). Imports: US$8.381 billion (1999).