Socio Economic Analysis of Rural-Urban Disparity in Bangladesh by Nourin Shabnam Examination Committee: Prof. Jayant Kumar Routray (Chairperson) Dr. Mokbul

Socio Economic Analysis of Rural-Urban Disparity in Socio Economic Analysis of Rural-Urban Disparity in BangladeshBangladesh

byNourin Shabnam

Examination Committee: Prof. Jayant Kumar Routray (Chairperson)

Dr. Mokbul Morshed Ahmad (Member)

Prof. A. T. M. Nurul Amin (Member)

Asian Institute of TechnologySchool of Environment, Resources and Development

ThailandMay 2008

The development of urban areas has been at the expenses of rural areas- Michael Lipton, 1977. The issue is still active, not yet resolved.

Rural-urban disparity is one of the central problems around the world. The greatest challenge that lies ahead for rural-urban disparity is related to the underdevelopment of the national economy.

Although urban economy is the hub of the national economy and, as the global society expands, a nation’s welfare is determined increasingly by the roles its urban areas play in the global economy, it is not possible to do the economic development with carrying on the imbalanced development between rural and urban areas within a country.

Rural-urban disparities are persisting in Bangladesh in terms of rural (agricultural) and urban (nonagricultural) share of GDP, income, expenditure, savings, investment, poverty, literacy rate, housing structure, availability of electricity, water and sanitation facility, health facility etc. over the time periods.

The degree of rural-urban disparity in Bangladesh is widening over the periods in most of the cases such as the gap in terms of rural (agricultural) and urban (nonagricultural) share of GDP was 6.58% in 1981 followed by 29.14% in 1991 and 48.96% in 2001. 2

Background of the Study

3

Research Objectives

Specific Objectives

To study the pattern and trend of rural-urban disparities at the regional (divisional) level

To investigate rural-urban disparity at the local level

To identify the factors contributing to rural-urban disparities

To analyze related policies and programs, and their related outcomes

To recommend a development policy framework for lessening rural-urban disparity.

Broad Objective

To analyze the pattern, trend and factors contributing to rural-urban disparity in Bangladesh with some confirmatory statistical tests.

4

Scope and Limitations

Scope

Analysis of rural-urban disparity with respect to three time periods at the regional (divisional) level

Analysis of rural-urban disparity at the local level

Analysis of factors contributing to rural-urban disparity

Evaluation of policies and programs based on secondary data sources and rural-urban HHs’ perceptions.

Limitations

District level analysis could not be done due to the non availability of data.

Data and Materials Used

Both primary and secondary sources of data have been used.

Analytical Tools

Qualitative analysis

Qualitative statement to analyze the status of rural and urban areas, factors enhancing rural-urban disparity, different policies and programs etc.

Quantitative analysis

Descriptive statistics to analyze the basic features of data Analytical/inferential statistics

Fixed effect model of panel/pool data regression analysis (with respect to time and space)

Coefficient of determination and F-statistic Multiple regression analysis Chi-square test and t-test 5

Research Methodology (contd.)

Analytical Tools

Economic dependency ratio Correlation coefficient

6

Research Methodology

Ranking of priority

1st 2nd 3rd 4th No priority

0.75-1 0.5-0.75 0.25-0.50 0.1-0.25 0

Scale

1= strongly dissatisfied/same as before

2= dissatisfied/ slightly improved

3= moderately satisfied/moderately improved

4= Satisfied/substantially improved

5= strongly satisfied /highly improved

1-2 2-3 3-4 4-5

Priority index

Priority index value varies between 0-1.

Assigned value for the 1st ranking/priority of factor is 1, followed by 0.75 for the 2nd,0.50 for the 3rd, 0.25 for the 4th, and 0 for the no priority.

Index of satisfaction/ WMI (Weighted Mean Index)

5-point scale has been used.

)10( PI

<1

7

Rural-Urban Disparity at the Regional Level (contd.)

Indicators UsedSelected Indicators Based on Secondary Data Sources

Economic indicators Social indicators

1. Agricultural and non agricultural share of GDP (%)

1. Education

Literacy rate (%)

2. Households’ average monthly income (in taka)

2. PovertyPopulation below poverty line (%)

3. Households’ average monthly expenditure (in taka)

3. Water and sanitation

Proportion of households with access to safe drinking water source (%)Proportion of households with access to sanitary toilet facility (%)

4. Households’ average monthly savings (in taka)

4. Health and nutrition

Child nutrition status (%)Infant mortality rate (per 1000 live births)Maternal mortality rate (per 1000 live births)

5. Dependency ratio (%) 5. Housing infrastructure

Households’ access to pacca and semi pacca housing structure (%)Households’ access to electricity (%)

6. Per capita investment (in taka)

Time series data (1981,1991, and 2001)

Divisional level (6 divisions)

Rural-Urban Population

Total population in Bangladesh is 153.3 million Urban and rural proportions are 25% and 75% respectively The intercensal annual growth rate of urbanization is 3.15% Urbanization trend in Bangladesh is upward sloping

Source: Bangladesh Population Census, 1981, 1991 and 2001

8


0

20

40

60

80

100

1981 1991 2001

Urban Rural

% R

ate

of

Ru

ral

an

d U

rba

n P

op

ula

tio

n

Year


Level of Urbanization by RegionsLevel of Urbanization by Regions

0

5

10

15

20

25

30

35

40

45

Barisal Chittagong Dhaka Khulna Rajshahi Shylhet

Years

Level

of

urb

an

izati

on

(%

)

1981 1991 2001

9

Patterns of the level of urbanization among the regions is always same.Patterns of the level of urbanization among the regions is always same.

Level of urbanization is always more in Dhaka division followed by Level of urbanization is always more in Dhaka division followed by Chittagong, and Khulna.Chittagong, and Khulna.

Level of urbanization is the lowest in Sylhet.Level of urbanization is the lowest in Sylhet.

Divisions with Highest Rural-Urban Gap in Terms of Economic Indicators

10


Indicators Highest rural-urban gap

1981 1991 2001

Agricultural non-agricultural share of GDP (%)

Dhaka(16.74)

Dhaka(42.82)

Dhaka(72.34)

Rural-urban HHaverage monthly income (in Tk.)

Dhaka(1,242)

Dhaka(1670)

Dhaka(2110)

Rural-urban HHaverage monthly expend. (in Tk.)

Dhaka(1055)

Dhaka(1241)

Dhaka(1970)

Rural-urban HH average monthly savings (in Tk.)

Dhaka(187)

Chittagong(559)

Barisal(435)

Dependency ratio (%) Sylhet(1:2.64)

Barisal(1:1.47)

Barisal(1:1.43)

Per capita investment (in Tk.)

Dhaka(0.713566)

Dhaka(0.833392)

Dhaka(1.031657

)

Rural-urban gap is always more in the highly urbanized region in most of the cases

The gap is widening over the time periods in terms of most of the economic indicators

Divisions with Highest Rural-Urban Gap in Terms ofSocial Indicators

11

Rural-Urban disparity at the Regional Level (contd.)

Indicators and sub indicators Highest rural-urban gap

1981 1991 2001

Literacy rate (%) Dhaka(5.89)

Dhaka(7.79)

Dhaka(12.92)

Population below poverty line (%)

Dhaka(13.25)

Dhaka(10.09)

Dhaka(8.55)

Number of safe drinking water user HHs (%)

Sylhet(23.84)

Rajshahi(14.85)

Khulna(18.56)

Number of sanitary toilet user HHs (%)

Dhaka(19.62)

Dhaka(34.49)

Dhaka(52.33)

Child nutrition status in terms of underweight (%)

Khulna(6)

Dhaka(5)

Sylhet(5)

IMR (per 1000 live births) Dhaka(17)

Dhaka(15)

Dhaka(15)

MMR (per 1000 live births) Khulna(3.17)

Chittagong(3.38)

Sylhet(4.73)

HHs having access to pacca and semi pacca housing structure (%)

Dhaka(27.28)

Dhaka(31.17)

Dhaka(30.57)

HHs having access to electricity (%)

Dhaka(35.25)

Dhaka(52)

Dhaka(54.56)

Rural-urban gap is always more in the highly urbanized region in most of the cases

The gap is widening with respect to time in terms of all social indicators except poverty


Urbanization and R-U GDP Gap

Fixed effect model of panel regression analysis for the relationship between rural-urban GDP gap and urbanization with respect to 3 time periods and 6 regions (divisions), where urbanization in 6 divisions is dependent variable and rural-urban gap in the corresponding region is the dependent variable

H 1: Urbanization tends to determine rural-urban GDP gap

So, the higher is the urbanization, the greater is the rural-urban GDP gap over the periods.

Divisions 1981 1991 2001

Urbanization (%)

R-U GDP gap(%)

Urbanization (%)

R-U GDP gap (%)

Urbanization (%)

R-U GDP gap (%)

Barisal 5.39 8.28 4.45 9.04 14.2 28.02

Chittagong 22.12 12.46 21.19 36.38 23.7 54.48

Dhaka 39.77 16.74 42.85 42.82 34.30 72.34

Khulna 12.83 11.08 11.20 20.65 20.0 41.58

Rajshahi 16.24 10.06 16.92 11.7 14.9 38.56

Sylhet 3.64 6.12 3.36 9.9 12.4 23.36

RU_BA = 2.77040714 + 0.2329958998*U_BARU_CH = 12.5410184 + 0.2329958998*U_CHRU_DH = 23.2439602 + 0.2329958998*U_DHRU_KH = 5.76293649 + 0.2329958998*U_KHRU_RA = 7.65706126 + 0.2329958998*U_RARU_SY = 2.743373487+ 0.2329958998*U_SY

Division-Wise Urbanization and Rural-Urban GDP Gap, 1981, 1991 and 2001

= 0.705102 and F-statistic = 3.156380 The hypothesis is accepted at the 99% confident level.2R

Rural-urban Disparity at the Regional Level (contd.)

Urbanization and R-U HHs’ Average Monthly Income Gap

H 2: Urbanization tends to determine rural-urban HH average monthly income gap

So, the higher is the urbanization, the greater is the rural-urban average monthly income gap over the periods.

RU_BA = 3.91220 + 0.2329958998*U_BARU_CH = 9.34301 + 0.2329958998*U_CHRU_DH = 11.2359 + 0.2329958998*U_DHRU_KH = 6.06184 + 0.2329958998*U_KHRU_RA = 4.16206 + 0.2329958998*U_RARU_SY = 2.34127 + 0.2329958998*U_SY

Division-Wise Urbanization and Rural-Urban HHs Average Monthly Income Gap, 1981, 1991 and 2001

= 0.676391 and F-statistic = 4.312021

Divisions 1981 1991 2001

Urbanization (%)

R-U income gap (%.)

Urbanization (%)

R-U income gap (%.)

Urbanization (%)

R-U income gap (%.)

Barisal 5.39 10.54 4.45 12.28 14.2 13.3

Chittagong 22.12 16.74 21.19 20.0 23.7 21.3

Dhaka 39.77 19.0 42.85 22.92 34.30 22.52

Khulna 12.83 16.68 11.20 17.56 20.0 18.52

Rajshahi 16.24 14.86 16.92 16.04 14.9 17.13

Sylhet 3.64 9.18 3.36 12.54 12.4 13.88

13

2R The hypothesis is accepted at the 99% confident level.

Rural-Urban Disparity at the Regional Level

Urbanization and R-U Gap in Terms of Other Indicators

14

The higher is the urbanization, the greater is the rural-urban disparity in terms of the most of the indicators over the periods

Significant at 99% confident level.

Hypotheses F-statistic

Overall assessment

H 3. Urbanization tends to determine rural-urban households’ monthly expenditure gap

0.691452 3.985 Accepted

H 4. Urbanization tends to determine rural-urban households’ monthly savings gap

0.45512 6.214 Rejected

H 5. Urbanization tends to determine rural-urban per capita investment gap

0.7325 3.739 Accepted

H 6. Urbanization tends to determine rural-urban literacy gap

0.728491 4.302 Accepted

H 7. Urbanization tends to determine rural-urban poverty gap

0.7129 3.2295 Accepted

H 8. Urbanization tends to determine rural-urban safe water user households’ gap

0.4320 7.0219 Rejected

H 9. Urbanization tends to determine rural-urban sanitary toilet usage gap

0.78340 3.02187 Accepted

H 10. Urbanization tends to determine rural-urban child nutrition status gap

0.34340 9.22041 Rejected

H 11. Urbanization tends to determine rural-urban infant mortality rate gap

0.70146 4.24579 Accepted

H 12. Urbanization tends to determine rural-urban maternal mortality gap

0.470115 6.29745 Rejected

H 13. Urbanization tends to determine rural-urban HHs by pacca and semi pacca housing structure gap

0.83461 3.21395 Accepted

H 14. Urbanization tends to determine rural-urban households’ access to electricity gap

0.80695 3.89732 Accepted

2R

Rural-Urban Disparity at the Local Level (contd.)

Location of Study Areas

Area

Shiromoni (rural)

Fulbariagate (urban)

Area (acres) 891 1860

HHs (No.) 337 992

Population (No.)MaleFemale

4,9792,5732,706

14,76279496813

Literacy rate (%) 37 51

Occupation (%)AgricultureNonagricultural

7129

6931

Study Areas at a Glance

16


Indicators Used

Selected Indicators as a Basis for the Questionnaire Survey

17


Rural-Urban Population by Age Group

Household size

Source: Field survey, October 2007.

0

10

20

30

40

50

60

% o

f ru

ral-

urb

an H

H

mem

ber

s

0-14 14-64 64+

Age group

Rrural

Urban

Age range

Rural households’ members

Urban households’ members

n % n %

0-14 193 55.14 101 40.4

14-64 117 33.43 130 52.0

64+ 40 11.43 19 7.6

Total 350 100 250 100

Number of economically unproductive members is more in rural households compared to urban households.

Rural-Urban Population by Age Group

Household type

Nuclear- R(18%); U (78%) Joint- R (82%); U (12%)

18


Analysis of Rural-Urban Disparity by Household Members’ Education


Educational status

Teacher-student ratio

R: 1:92 U: 1:76

Educationrelatedindicators

Rural Urban t-value (urban vs. rural)

Significance

n % n %

Illiterate 183 52.29 106 42.4 2.789 P<0.000

Maleliteracy rate

96 49.74 82 58.99 11.755 P<0.054

Femaleliteracy rate

78 49.68 62 55.86 17.078 P<0.037

Can sign 57 16.29 32 12.8 3.555 P<1.301

Primary 71 20.29 59 23.6 2.137 P<0.024

Secondary 36 10.29 38 15.2 1.587 P<0.009

Above 3 0.86 15 6.0 3.332 P<0.000

Rural-Urban disparity is more in the secondary and above secondary level of education.

The No. of people who can sign only is more in rural area.

19


Analysis of R-U Disparity by HH Income, Expenditure and Savings

HHs' income, expd. and savings

892.02 R

921.02 R


Significance

Average household income

2,090 2,752 43.340 P<0.006

Average household expenditure

1920 2,471 29.294 P<0.013

Average household savings

170 281 3.671 P<0.071

54321 *545.0*503.0*512.0*521.0*662.0305.712 fffffY

1098765 *519.0*563.0*523.0*559.0*562.0*689.021.1001 ffffffY

HHs income by sources

Rural HH income is mostly determined by agricultural activities.

Urban HH income is determined by nonagricultural activities.

Rural

Urban


(Coefficient values are significant at 95% confident level)

(Coefficient values are significant at 95% confident level)

f1 = HH income from crops production; f2 = HH income from livestock raising; f3 = HH income from fisheries and poultry raising; f4 = HH income from vegetables production; f5 = HH income from rickshaw & van pulling; f6 = HH income from tailoring; f7= HH income from working in biscuit factory; f8 = HH income from working in jute mills; f9 = HH income from working as technician; f10= HH income from other sources

20


Dependency Ratio of Rural and Urban Household Members

Dependency ratio

Area Income group

Total members

HH income earning members(%)

HHDependent members (%)

Dependencyratio

Rural Below 10001000-20002000-3000

1490

246

21.4318.8922.76

78.5781.1177.24

1:3.671:4.291:3.39

Urban 1000-20002000-30003000-4000

5015545

20.0022.5828.89

80.0077.4271.11

1:4.001:3.431:2.46

In both rural and urban areas, in the income range of Tk. 1000-2000, the dependency ratio is the maximum.

In rural area, it is 1:4.29 and in urban it is 1:4.00.

21


Institutional skill training

Rural HHs have got more access to institutional skill training.

Organizations are more active in rural area than urban area in terms of functional literacy training and income generating training.


Types of skill training

Skilled people t-value (urban vs. rural)

Significance

Rural Urban

n % n %

Functional literacy training

23 17.55 8 10.0 6.001 P< 0.174

Income generating training

75 57.25 27 33.75 9.239 P<0.188

Community based skilled training

11 8.40 24 30.0 2.546 P<0.001

Other 22 16.79 21 26.25 2.336 P<0.072

Total 131 37 80 32 P<0.137

Analysis of R-U Disparity by HHs Access to Different Types of Institutional Skill Training

Water and sanitation

There is a significant disparity between rural and urban HHs.

Analysis of R-U Disparity by Safe Water and Sanitary Toilet Usage

Rural Urban t-value (urban

vs. rural)

Significance

n % n %

Safe water users

18 36 43 58 2.440 P<0.000

Sanitary toilet users

26 52 44 88 3.833 P<0.032

22


Health status

Rural-Urban Disparity by Health Status

Indicators Related to Health Rural Urban t-value (urban vs. rural)

Significance

Average duration of ailment by patients (in months)

42 37 15.800 P<0.040

Patients’ access to govt. health centre (%)

10.44 25.55 2.382 P<0.007

Patients’ access to NGO health centre (%)

2.78 1.11 4.700 P<0.133

Patients’ access to private health centre (%)

8.35 11.89 1.412 P<0.000

Patients’ access to homeopathic doctor (%)

16.05 13.04 1.332 P<0.057

Patients’ access to pharmacy/dispensary (%)

39.45 42.59 2.931 P<0.003

Patients’ access to peer/fakir/kabiraj (%)

22.93 5.82 5.900 P<0.000

Average times required for reaching the treatment service (in minutes)

49 28 1.367 P<0.001

Coverage of vaccination/immunization doses by 0-5 years children (%)

67 89 7.845 P<0.000

In terms of all Indicators rural area issignificantly worse off than urban areaexcept ‘patients’ access to NGO health center ’.


23

Rural-Urban Disparity at the Local Level

Rural-Urban Disparity by Housing Structure and Electricity Connection Housing structure and

electricity connection

Most of the rural HHs are katcha in nature.

In terms of HHs access to pacca and semi pacca houses and electricity connection, there is a significant gap.

HH access to mobile

R: 46%

U: 62%

HHs’ access to telephone: No HH


Significance

n % n %

Pacca house 10 20 19 38 3.052 P<0.000

Semi pacca house 19 38 23 46 2.114 P<0.003

Katcha house 21 42 8 16 3.459 P<0.113

Having electricity connection

34 68 50 100 2.124 P<0.001Significant at 95% confident level.

24

Factors Contributing to Rural-Urban Disparities in Bangladesh

25

Policy/Programs at the Regional Level

Key factors Policies and programs Remark

Skewed urbanization Decentralized urbanization policy through more investment in urban functions/services in rural areas and proper guidance to rural-urban migration for avoiding over concentration of population in one or few cities

Sectors of investment in rural areas has not been properly addressedThe way to guide the concentration of rural-urban migration in some specific cities has not been addressed

Policies/Programs at the Local Level


Problem in the marketing of farm produces

Road infrastructure development programRural Maintenance Program (RMP)Access to mobileAccess to land phone

DissatisfiedStoppedSatisfiedDissatisfied

Poor road infrastructure Local Government Special Project Dissatisfied

Absence of agro processing center Agro processing center development Dissatisfied

Seasonal unemployment Food Assisted Programs Moderately satisfied

Lack of skill labor Skill development program Dissatisfied

Lack of income and employment generation opportunity in the rural areas

Goat and gavi prodan kormoshusiMicro credit program

Moderately satisfiedSatisfied

Concentration of economic activities in the rural area

Agro processing center development Dissatisfied

Lack of educational facility in the rural areas

Education for all program/total literacy movementPrimary education stipend schemeFood for Education ProgramNon-formal education programAdult literacy program

All are doing well in the lower level of education, but not in upper level of education

Lack of health services Increasing Govt. health facilities NGOs performance

DissatisfiedSatisfied

Lack safe water and sanitation facilities BRAC’s Wash program, SHARD programArsenic testing strategies Installation of tube wellQuick institutional performance Increasing No. of pacca and semi-pacca toilet

SatisfiedSatisfiedDissatisfiedDissatisfiedModerately satisfied

Lack of electricity facility in the rural area

Rural electrification Dissatisfied

General Policies and Programs


Problem in the marketing of farm produces and lack of better road infrastructure

Infrastructure Development Policy - Rural roads, bridge, culverts and growth center development - Pally phone service

Not so activeSatisfactory

Absence of agro processing facilities

Agro processing center development strategy

Not satisfactory

Absence of betteremployment opportunity

Skill training programMicro credit program

Under considerationSatisfactory

Absence of better education opportunity

Education for all program/total literacy movementPrimary education stipend schemeFood for Education ProgramNon-formal education programAdult literacy program

All are doing well in the lower level of education, but not in upper level of education

Absence of health service

Govt. health servicesNGOs performance

DissatisfactorySatisfactory

Absence water and sanitation services

NGOs performance Satisfactory

Absence of electricity facility

Rural electrification Satisfactory

27

28

Conclusions and Recommendations

The level of urbanization is very much skewed in nature.

The degree of regional rural-urban disparity is widening.

Significant rural-urban disparity at the local level.

Skewed distribution of urban population is the key factor behind regional rural-urban disparity

The other factors contributing to regional rural-urban disparity are absence of secondary city, absence of agro processing facilities, urban bias investment policy, drain of skill manpower, problem in the marketing of agro produces etc.

Insufficient government and non governmental organizations’ supports in terms of better income employment opportunity and educational opportunity, health service, water and sanitation facilities, electricity facility is the 1st prioritized factor behind rural-urban disparity at the local level.

The other factors are problem in the marketing of farm produces, seasonal unemployment, lack of skill labor, lack of better income and employment opportunities in the rural area etc.

Conclusions (contd.)

29


Conclusions

Understanding the trend and pattern of rural-urban disparity at the regional level testing through the extent of rural-urban disparity at the local level

Identification the factors contributing to disparity

Identification of the region (division), which faces severe rural-urban disparities compared to others and which should be given the first priority for planning and development.

Contribute for the policy makers of government and non-governmental organizations, which are engaged in balanced development policies and programs by observing what they have already done, what are the outcomes of that, what are their gaps and what should be done right now towards reducing rural-urban disparities.

30


Recommendations for Reducing Rural-Urban Disparity at the Regional Level

Short Term Policies

Targeted Public Investment in Urban Services in Rural Area

Agro processing center development

Better health

Better education

Vocational training

Technical inputs for agricultural production

Road, electricity etc.

Long Term Policies

Decentralizing urbanization

Secondary city development

Promoting small-sized town

Increasing the No. of growth centers

31


Recommendations for Reducing Rural-Urban Disparity at the Local Level

Long Term Policies

Rural industrialization with focus on agro processing

Investment in rural infrastructural development

Short Term Policies

Strengthening skill development

Employment diversification

Rural non-farm activities

Agro processing facilities and related services

32

CHAPTER 8: Conclusions and Recommendations

General Recommendations for Reducing Rural-Urban Disparity

Long Term Policies

Infrastructure development

Agricultural marketing

Production of high value crops

Short Term Policies

Strengthening NGO service delivery activities in rural areas

Strengthening the linkages between agriculture and industry

Recommendations for Further Study

This research should be conducted at the district level by using more indicators depending on the availability of data and information and testing through more sample areas under different levels of urbanized regions .

Documents

Socio Economic Analysis of Rural-Urban Disparity in Bangladesh by Nourin Shabnam Examination Committee: Prof. Jayant Kumar Routray (Chairperson) Dr. Mokbul