Micro Economic Problems of Bangladesh

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Introduction

Bangladesh is a country in Southeast Asia. It is bordered by India on all sides except for a small

border with Burma (Myanmar) to the far southeast and by the Bay of Bengal to the south. The

economy of Bangladesh is constituted by that of a developing country & suffers many

weaknesses. Several problems like corruption, negligible investment, financial and property

freedom, and high tariffs, are some challenges faced by Bangladesh's economy. Efforts by

Bangladeshi government are always on to improve economic conditions. But for Bangladesh to

move towards economic progress, serious issues need to be addressed on urgent basis.Despite

continuous domestic and international efforts to improve economic and demographic prospects,

Bangladesh remains a developing nation. In my opinion one of the major economic problems in

Bangladesh is its huge population. In global context, Bangladesh is now world’s seventh

populous country having 150 million people, but occupying only 3000th part of the world’s land

Major economic problem in Bangladesh and its proper solutions.

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space. Such a huge concentration of population in small land space cannot but draw one’s

attention. About 2.3 million people are currently being added to its existing population; and such

pace will continue in the next one decade and a half, even if Bangladesh achieves 2- child family

norm in any time between 2015-2020.

The medium variant projection that assumes NRR=1 and life expectancy at birth of 68 years by 2016,

shows that Bangladesh’s population will increase up to 172.3 million in 2021 and 218.04 million in 2051

which mean addition of 78.0 million more people to the present population in a span of four decades.

Population growth rate will be reduced from current level of 1.5 percent to 0.56 percent in 2051.The

implications of this projection are that there shall be a considerable shift in the age-structure of

population.

For example, the size of the population below 15 years shall be 49 million in 2051 against 52.4 in 2001.

Too many people in too little space will create enormous demands for public services which the sitting

Government may not afford and thereby, it may destabilize the Government. Thus, one may go on

relating this growing population to other social and economic objects, but that will make one instantly

feel bad about having too many people in too little space.


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High population can be very threatening for a developing country where resources are not

adequate enough to support this vast population. A high populated country faces several

problems and experience low economic growth. Rise in population can lead the following vital

problems:-

Traffic Congestion

Unemployment

Poverty

Low Per Capital GDP

Waste Management Problems


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High Population &Traffic Congestion

One of the major problems in Bangladesh is traffic congestion and it is due to this huge

population. Dhaka is a mega city. More than twelve million people live here. Day by day the

number is increasing and most parts of Dhaka are badly affected by the population growth. More

than 7 hundred thousand rickshaws ply the city road, but only 75 thousand have legal number.

This huge number of rickshaws is creating traffic jam. From time to time attempts are made to

reduce the number, but the initiative usually produces no results. The number of rickshaw pullers

is huge. Almost there are no roads or street or lane free from traffic jam. Traffic jam is

obstructing trade and commerce. Illegal parking is another reason for traffic jam. Cars, trucks

and other vehicles are parked almost everywhere The traffic managers have failed to do anything

about this problem and the situation is going from bad to worse day by day. Sitting in a road for

one hour during traffic jam is something common and due to this everyday many people get late

for work, schools and universities. Therefore, it comes as no surprise to see that Dhaka’s

pedestrians, rickshaw pullers, CNG drivers, van pullers, and bus/truck drivers all vie for tiny

spaces with noticeable aggression and utter disregard for others’ right of way. This all causes

noise pollution and air pollution which makes life unbearable. As a result, many people don’t

consider Bangladesh specially Dhaka city a suitable place for living.

High Population &

Unemployment

Bangladesh is one of the most populated countries in the

world but according to the people's demand there are not


The pictures above show the present scenario of hopeless traffic congestion in Dhaka city.

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enough job facilities. Unemployment is a great concern in Bangladesh. Every year hundreds of

thousands student are coming out from college and university. Though it is one of the major

responsibilities of the Government to provide job to those young generation but the Government

is failed to meet the job demand among the large population. Only a tiny fraction of total jobless

is managed by different government offices and private organization but a majority remain

unemployed.

According to World Bank, In Bangladesh, almost half (47 per cent) of the workforce are without

education. It is observed that a much higher percentage of female labor force than the male labor

force is without education – 59 per cent of the female and 42 per cent of the male labor force fall

into this category. Unemployment among the educated labor force is quite high in Bangladesh.

Among the people with secondary and more than secondary education, 27 per cent are

unemployed while among people with no education, the corresponding figure is 10

per cent. Among the poor people, the unemployment rate of people with secondary

and more than secondary education is 27 per cent in urban areas. The comparable

figure for non-poor people is 19 per cent. In rural areas of Bangladesh, the unemployment rate

among people with secondary and more than secondary level education is 30 per cent in non-

poor stratum, while for non-poor ones, it is 31 percent.

The number of the unemployed in Bangladesh now is estimated at 30 million. The way the

population & rate of unemployment is increasing, it is feared that at this rate unemployment

would soar to some 60 million by 2015. According to another estimate, every year some 2.7

million young persons are becoming eligible for jobs whereas only about 0.7 million of them are

getting employment.

The huge number of the unemployed and the underemployed in the workforce gives an idea of

the number of the parasitic ones in the population. Employed persons not only consume from the

economy but they also contribute to the economy through production activities and discharge of

various services. The unemployed people in contrast only live off the economy or their families

and society. They are an absolute burden on the state. Not only being liabilities in the economic

sense, politically and socially they are considered to be a source of tension and turmoil. The


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linkage between unemployment and crimes is obvious. Therefore, all governments in

Bangladesh will need to address the unemployment issue very seriously indeed before it turns

worse. The recent floods and the devastating Sidr storm plus the restructuring activities leading

to retrenchment of workers from state operated enterprises, have added to the unemployment

problem. Government will have to start up urgently different work programs like road building

and repairs, reconstruction of infrastructures, etc., specially in the rural areas and continue them

for some time, to mitigate the worst woes of the jobless ones at the grass roots level.

High Population & Poverty

Bangladesh is a country of 150 million population with a population density 840 sq/km.

Bangladesh economy is not vast enough to support such a huge population and high incidence of

poverty is the ultimate result. Though the country is making progress in socio economic field in

increasing the literacy rate, improving the expectation of life, increasing food production &

decreasing infant mortality and total fertility but progress of poverty reduction is slow. Macro


The diagram above shows the unemployment rate of Bangladesh from 2003-2008

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economic growth could not help reducing poverty. Poverty has been assigned the number one

national problem for the development of Bangladesh. Poverty reduction is very slow because of

its population size. Every year, about 2 million people are adding to the country’s population

size. Country’s resources are struggling to support such increasing population.

According to World Bank, the size of the population below the upper poverty

and the lower poverty line has declined by nearly 6 million and 8.3 million respectively. In spite

of these reductions however, around 56 million Bangladeshis are still below the (upper) poverty

line, 35 million among whom are below the lower or extreme poverty line level. The two

diagrams bellow compares Bangladesh poverty for several years.

The density curves in Figure 1 show that the distribution of per capita expenditures has

shifted slightly downward and to the right, which is consistent with a rise in consumption (in real

terms) for the entire population. The cumulative distribution curves indicate the same

phenomenon, and also show clearly that for a wide range of values for the poverty line, the

reduction in poverty rate between 2000 and 2005 is significant and almost unchanged. These

facts are also consistent with the trends in average consumption and inequality measures.


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Longer-term trends are useful to see the extent of fall in poverty over the last 15 years as

well as how the changes during 2000-2005 compare with earlier periods. The Figure 2 above

shows that significant decline in poverty occurred from 1991-92 to 2005 – using both upper and

lower poverty line. National poverty headcount using the upper poverty line declined from 57

percent in 1991-92 to 40 percent in 2005, while extreme poverty rate (using the lower poverty

line) declined from 41 to 25 percent over the same period .Among the three interim periods, the

highest reduction in poverty occurred during the period 2000-2005.

Poverty Mapping

Poverty mapping is a very helpful statistical exercise to measure the incidence of poverty level

of relative areas. Bellow is a sample of poverty mapping.


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The poverty headcount rate refers to the proportion of poor population living in a specific area. It

reflects the density, prevalence, or rate or poverty in a given area. It is one of the most poverty

statistics used. The areas near Dhaka (circled in Blue), record low poverty headcount rates:

however the absolute size of poor population is large. Bandarban District (circled in red), in

contrast, has a high poverty rate; however the size of its poor population is relatively low. Finally

Monga areas (circled in green) record high poverty headcount, rates and also have large poor

populations.


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Figure 15 shows the estimated decline in poverty in Bangladesh under alternate growth

scenarios. If the per capita GDP were to grow at the current rate (5.3 percent)between 2005 and

2015, the incidence of poverty (with respect to upper poverty lines)would decline from 40percent

in 2005 to 27 percent by 2015, which means Bangladesh will meet halving poverty rates between

1990 and 2015.However, if the country were to grow at only 4.5 percent per annum, poverty

reduction would likely not meet the target. By contrast, if the country were to instead grow at 7.5

percent per annum over this period, the incidence of poverty would decline to 22 percent by

2015.

Using poverty estimates based on the lower poverty lines, the incidence of extreme poverty in

Bangladesh would decline from 25 percent in 2005 to 15 percent in 2015 under the 4.5 percent

growth scenario, or to 9 percent under the 7.5 percent growth scenario. These indicate that for

both the high-case and low-case growth scenarios considered here, Bangladesh would be well on

track to halve extreme poverty by 2015 from the 1990 level (if the lower poverty line is taken as

the threshold for extreme poverty).It is important to note however that these projections are


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based on elasticities estimated from historical data, which are not perfect predictors for future

trends. In other words, actual poverty reduction, given any growth rate, can be quite different

from what was experienced in previous periods if the distributional impact of growth changes

from what was seen in recent years. This could happen because a growth process can generate all

sorts of dynamic changes in the economy, for which history is an imperfect guide. Therefore, the

projections shown here must be interpreted carefully, as showing the poverty reduction path if

the current association between growth and distributional changes in Bangladesh were to hold

for the future, rather than as definitive future trends.

For the millions of people who live in Bangladesh’s crowded urban centers, life can be very

hard. The everyday challenges of poverty are compounded by a number of other problems,

including over-crowding, poor sanitation and a highly competitive labor market. Therefore,

government should take immediate measure and form many programs to reduce poverty.


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High Population & GDP

The economy of Bangladesh is constituted by that of a developing country. Its per capita income

in 2008 was US$1389 lower than the world average of $10,497. GDP is the market value of all

final goods produced within a country in a given amount of time. However, GDP per capita

shows what the average person earns and spends. It assumes that every dollar earned is spent.

The Gross Domestic Product is one of the most used indices . It provides an understanding of the

size of the market economy. In South Asia, India clearly has the largest GDP at $US 510 Billion

which is less than half of China’s and yet about 10 times the GDP of Bangladesh (at $US 48

Billion) and Pakistan (at $US 59 Billion). Sri Lanka (at $US 17 Billion) and Nepal (at $US 5.5

Billion) are followed by Bhutan and Maldives whose market economies are much smaller (less

than $US 1 Billion).Compared to some of the major countries in Asia, Bangladesh is GDP quite

low.


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GDP Per Capita

While GDP provides a snapshot of the size of a nation’s market economy, it is skewed by the

population. A better index is the per capita GDP. Here it is expressed in terms of Purchasing

Power Parity. Expressed thus, it is an indication of the buying power of an individual within the

nation. It gives no indication of the distribution of wealth within the nation, though. While the

per Capita PPP in China is much higher than countries in South Asia, within South Asia, Sri

Lanka is way ahead of all other nations followed by India and then Bangladesh and Pakistan.

So, Bangladesh’s per capital GDP is very low. Thus, it has less purchasing power, less income

which leads to low standard of living.


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Trend in GDP Per=Capita from 1975-2005

Two main phases of GDP growth in Bangladesh

Mediocre per capita growth of 1.2% during 1976-89.

Much more robust per capita GDP growth of 3.3% over 1990-2006.

Growth acceleration since 1990 has been accompanied by faster progress in poverty reduction

and on some human development measures. After stagnating in the 1980s, poverty rate fell from

58% in 1992 to 49% in 2000 and further to 40% in 2005. However, if poverty continues to rise

due to this increase in population there will be not be much growth. Therefore, immediate action

has to be taken nor Bangladesh may end up having the lowest per capita GDP.


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Bangladesh Growth Challenge achieving middle income status

Four key transitions would be key for achieving the faster route to MIC status

Much higher degree of industrialization and less reliance on agriculture – productivity

improvement in each sector will be key.

An economic environment characterized by openness to global trade and investment –

with Bangladeshi firms plugged into global supply chains and the country figuring

prominently on global investment maps

A well-trained labor force with market relevant skills, and job opportunities to match

Diverse, dynamic urban centers -- enabled by strong local governance and absence of

policy biases at the central level

However the biggest challenge remains to have well trained labor force. With over 1.5 million

entrants each year, the economy is under tremendous pressure to create jobs. Labor market

outcomes have been generally healthy. However, Labor laws and regulations do not appear to be


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serious hindrances to the functioning of the labor market. There is huge supply of labor but lack

of skilled labors. Low education levels and lack of job market orientation in higher studies and

vocational education are of the main concerns.

In the end low GDP per capital is a threat to Bangladesh as ultimately it decreasing the average

income of each person which in turns results in low standard of living.

High Population & Waste Management Problems


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Bangladesh is one of the populous countries in the world therefore it doesn’t have enough land

space for other recreational activities. Dhaka is the capital city of Bangladesh and it is the

primate city of the country. The city is one of the sixth municipalities belonging to the Dhaka

Metropolitan Area (DMA), which covers an area of 1530 sq km. The city covers an area of 360

sq km and a population of about 7.0 million, the density of population is 19,445 persons per sq

km. The growth of city population is estimated at 4.2% and the projected population of Dhaka

City would be around 9.0 million in 2010.According to Dhaka City Corporation (DCC)

estimates, everyday between 3,000 to 3,500 tons of solid waste is generated from residential,

commercial and industrial activities in the city. Per capita generation of solid waste in Dhaka

City is estimated at 0.5 Kg/day. Of the total waste generated in the city, DCC collects and dumps

50.0% and 15.0% are recycled and the rest 35.0%are discarded into streets, drains, ditches,

canals and open spaces.iii Slum and squatter dwellers constitute 35% of city population and only

9% of this population have any form of solid waste collection service, the remaining 91%

dispose their wastes into low-lying lands, road side drains or local drains or khals (canals).The

uncontrolled littering of solid waste has led to many environmental problems including localized

flooding through clogging of drains. One study thus remarks that despite high demand for all

forms of recyclable material in Bangladesh and a large number of people involved collecting and

recycling industrial, commercial and kitchen refuge, solid waste is one of the most visible form

of pollutants found in city streets, open areas, unused public and private lands, ditches and water

bodies Land is very scarce in Dhaka City. Only 360 sq. km. of land is available to accommodate

residences, offices, services and facilities for more than 5.4 million people. An international

airport, the river port, the central railway station and inter-district bus terminals are all located in

Dhaka city. As the capital of Bangladesh, central government offices, large educational

institutions, and hospitals are also set in Dhaka. Again, major economic activities like business,

commerce and industries have been developed in Dhaka over the years. There was no designated

place for disposal of wastes at the initial time. The public land was the only place for waste

disposal of the city. A good number of areas have been raised from low lying ditches to high

places for construction of bus terminals, play grounds and even residential sites. At present DCC

has acquired one piece of large land at the outer strip of the city for disposal of waste. It would

be very difficult to acquire more land for further disposing of wastes unless alternatives are


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explored. The diagram below shows that there is only waste disposal site which is 90% filled

and will be completely filled in one year

.

As day by day population is increasing in Bangladesh there has been a tremendous growth in

urban population This Rapid urban growth putting pressure on infrastructure and there is not

enough land for disposing wastes. Around half of this garbage is not collected because the city

council lacks the cash and the manpower. Therefore, this leads to huge illegal disposal. The

illegal disposal – which looks unsightly also damages environment and dumped rubbish attracts

rats and birds and adds to health risk.

This Lack of sewerage leads to surface latrines which causes several problems:-


Demographic Profile of DhakaMega CityIn terms of population Dhaka was 7thh biggestcity in the year 2008 and will be the 4th largest city.in world in 2015• Total Population: 150 million ( 2008)• Administrative Area: 1353 Sq. Km

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Smell/unsightly

Pollute water sources

Health risk diseases like cholera and dysentery

Diseases spread rapidly in overcrowded conditions

COMMUNITY BASED SCHEME

The community based composition project integrated with the door-to-door solid waste

collection service can not only solve disposal problem at source but also yield environmental,

economical and social benefits both for the municipality and for the community. This can lead

to several benefits:-

Helping the destitute and hardcore people for new employment

Integrates informal labor for the production of compost

Reduce the number of waste pickers near the dustbins & landfill sites

16,000 new employment can be created for the urban poor of Dhaka City and

90,000 for country

Waste Transformed into Income


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Families in five communities in Dhaka, are turning household waste into cold hard cash. Using

home composting kits distributed through an initiative supported by the UN Development

Program, more than 1,800 families in poor areas of the country's capital are converting kitchen

scraps to compost, which is then sold to increase their incomes. Scraps previously dumped in the

street, where they were left to rot, are now placed in a barrel punctured with tiny holes to allow

for air flow.

Solutions


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People are a good thing, but population growth without limit is not. Bangladesh should

reinvigorate its efforts to slow population growth. The future of the country depends on it. Once

we recognize the fact that overpopulation is a problem and work toward better solutions. In my

opinion, some of the solutions are as listed below:

(i) Family Planning Services- It has to be make sure people around the country have

access to family planning services. The public sector remains the primary source of

family planning methods. Sixty-four percent of current users of modern methods

obtain their methods from a public-sector source; 36% do so from a public facility

and 28% from a government field worker.Additionally, social marketing provides

access to oral contraceptives and condoms at thousands of non-clinical, commercial

outlets across the country. In 2000, 29% of pill users were using social marketing

brands, up from 19% in 1997, and seven out of ten condom users used a social

marketing brand, up from 58%. A high level of public awareness and knowledge of

family planning does not translate into an equivalent level of contraceptive use. There

is still a social preference for larger families and a male offspring. Abortion is illegal

except to save a woman’s life, and unsafe abortion is a major contributor to

Bangladesh’s high rate of maternal mortality. Menstrual regulation is practiced for

those who experience contraceptive method failure, among other reasons. The Health

Nutrition and Population Sector Program (HNPSP) began in July 2003, and forms the

basis for relevant national level policy. The Government of Bangladesh should be

strongly committed to family planning & should prioritized a national population

program to reduce population growth. Creating demand, and meeting existing met

and unmet need for family planning is very challenging. It is critical to continue to

meet the needs of existing family planning users, address unmet need for family

planning, and increase demand for family planning among non-users. These efforts

include:

Motivation of current non-users of family planning contraception to become

users;

Strengthening of the delivery system to provide quality services;


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Improving the quality of family planning services to meet the needs of

increasing number of users, and to decrease the persistently high

discontinuation rate among current users.

Expanding the contraceptive method mix, especially through increased use of

longer-term, cost-effective methods for those who want to limit their births;

Developing appropriate services specifically for hard to reach coastal and

urban slum areas, men and adolescents;

Ensuring contraceptive supply by: maintaining sufficient stocks at all levels;

fostering contraceptive manufacturing in the private sector; and through

public-private joint ventures.

(ii) Empowering women- The age at first marriage in Bangladesh is still young,

although it is rising. The legal age of marriage for women has been increased

from 14 to 18 years; the minimum for men is 21. In 2000, about 50% of

women in Bangladesh were married by the time they were 15 years old, down

from 60% just three years before. Still, 80% of Bangladeshi women marry

during adolescence thus they have less knowledge about family planning.

Besides, they focus less on career and education and lose freedom. As a result,

they most of the time comply with their husband uses and get pregnant at a

very early age. So, by empowering women in developing countries

economically, socially, and legally in a manner that results in them having an

equal say (with their husbands) in reproductive decisions and will result in

more effective family planning.

(iii) Reforming tax laws- It should be a way that encourages couples to have no

more than two children. They would still be able to have as many kids as they

want, but the tax code would no longer subsidize more than two. As a result,

parents will think twice before having more children. This proactive strategy


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will affect both female and male population as giving tax is issue everyone is

concerned about.

(iv) Modifying school curricula- The best way to learn and be aware of some

thing is at school. Nowadays young people learn many important lessons at

very young age. The growing rate of population is huge threat to our country

and all the people of the country should be aware of it. As a result, by

modifying school curricula to include information on population levels and

implications for the future more awareness and knowledge will be given to

future generation.

(v) Relocation of Industries- One of the reasons for overcrowding, congestion

and pollution is the location of many industries in the heart of the big cities

and their adjoining areas. As a strategy for urban population management, and

minimizing the urban problems, relocation of the industries to a suitably

located distant place is necessary. Countries having problems similar to ours

pursued this kind of policy strategy. South Korea is a case in example. Since

1980, it has been pursuing this policy to reduce population pressure in its

capital Seoul and thus, it was able to reduce its congestion by at least, 20%

percent. In order to materialize this strategic objective, Government needs to

provide land at a cheaper rate and tax rebate to the affected industrialists

together with other essential facilities like water, gas, and electricity, as well

as connectivity with the Capital and Ports.

(vi) Multi Sectoral Involvement- Since population cut across all sectors of

economy, their involvement and participation in all population activities are,

therefore, essential .Bangladesh Population Policy is un-equivocal on this

issue and has made ample rooms for their participation. But the ground reality

is that they are yet not fully involved nor the National Population Council

(NPC) has been made fully functional. The Ministry of Health and Family


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Welfare which provides secretariat support and stewardship needs to be fully

tuned with the spirit of Bangladesh population policy. The sooner (NPC) it

can be made fully functional and create enabling environment for other

Ministries to play their respective role as envisaged in the national population

policy, the better for the nation.


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References

www.discoverybangladesh.com

www.web.worldbank.org

www.intranet/cntryhealth/bangladesh/index.htm

w3.whosea.org/fchwww.unfpa-bangladesh.orgwww.cia.gov/library/publications/the-world-factbookwww.wasteconcern.orgwww.bbs.gov.bdwww.theindependent-bd.com/detailswww.icddrb.org


Documents

Micro Economic Problems of Bangladesh