THE BANGLADESH DEVELOPMENT STUDIES
M.G. Quibria
Sign up for access to the world's latest research
checkGet notified about relevant papers
checkSave papers to use in your research
checkJoin the discussion with peers
checkTrack your impact
Abstract
Page 1. THE BANGLADESH DEVELOPMENT STUDIES Volume XXXII December 2009 No. 4 Articles Mustafa K Kujeri : An Analysis of Interest Rate Spread Sayera Younus in the Banking Sector in Bangladesh Monzur Hossain : An Assessment of Exchange Rate Policy Mansur Ahmed under Floating Regime in Bangladesh Sharifa Begum : Maternal Health, Child Well-Being and Binayak Sen Chronic Poverty: Does Women's Agency Matter?
Related papers
Bangladesh development update : Moving forward with fading tailwinds
2016
The objective of this report is to update the Government of Bangladesh, think tanks and researchers, the general public as well as the Bank’s senior management on the state of the economy, outlook, risks, progress on structural policy reforms, and key challenges the economy is currently facing. The coverage includes developments in the real sector focusing on growth, inflation, and poverty; external sector developments focusing on the balance of payments, foreign exchange reserves, and the exchange rate; fiscal developments focusing on revenue mobilization, public expenditures, and deficit financing; financial sector developments focusing on credit and interest rates; and monetary developments focusing on reserve money and broad money growth trends. The update also covers an assessment of Bangladesh’s prospect of graduating out of the least developed country (LDC) status and eligibility for concessional financing from the World Bank and the Asian Development Bank.
Challenges of price stability, growth and employment in Bangladesh: Role of the Bangladesh Bank
2015
This study is inspired by the current debate on whether central banks, especially in the developing world, should pursue a single mandate or dual/multiple mandates. It examines the Bangladesh Bank's (BB) aspiration to adopt a multiple mandates approach. These include, besides the objective of price stability, the promotion of "output, employment and real income". In recent years, the BB has widened its developmental role to play its part in the national strategy of "inclusive growth", and is seeking to model itself as a developmental central bank. According to an ILO content-analysis study of objectives and missions of central banks, Bangladesh is cited among the very few countries where the central bank has an explicit development objective. This study has shown that Bangladesh has enjoyed a period of relative macroeconomic stability, with inflation around 7 per cent. With respect to price stability, the BB is trying to bring the inflation rate down further through the credit/money channels. The study contends that BB has an "imprecise control" over price stability owing to weak transmission mechanisms. Also, its existing instruments have a limited capacity to address volatile food inflation that weighs heavily in general inflation. The study contends that the BB has solid reasons to engage in multiple mandates, especially in financial structure development and financial inclusion initiatives. These, apart from serving the national strategy of social inclusion, could potentially lead to strengthening and deepening of the financial sector and, hence, support both price stability and employment creation. While tangible progress is observed, concerning financial structure and financial inclusion, the study discerns a number of limitations and constraints. It then recommends some broad policy initiatives that might circumvent these constraints and enable the BB to strengthen its role as a developmental central bank. An important feature of this study is that it has relied heavily on stakeholder consultations and benefited from the support received from the Governor's Office of BB. This has enabled the author of the study to provide insights into the policy implementation process of the BB that would otherwise not be possible.
Bangladesh Economic Update Economic Policy and Poverty Team
Overall, the macroeconomic indicators for FY09 2 suggest that Bangladesh has weathered the global economic crisis well so far. Low integration with the world econom y helped cushion Bangladesh from the negative effects of the crisis. Annual GDP growth dipped slightl y to reach a still healthy 5.9 percent in FY09. 3 Lower international food and oil prices, co mbined with a bum per rice crop, helped brin g d own inflation . The exte rnal current account record ed a large surplus of US$2.5 bi llion because of strong rem ittance inflow s, double-di git export growth and a declining import bill. The nominal exchange rate was kept stable through interventions by Bangladesh Bank to absorb the large influx of dollars from remittances. As a result, the official foreign exchange reserves reached a record high of nearly US$7.5 billion at end-June 2009. Meanwhile, the budget deficit and its domestic financing were largely contained in FY09.
The Current State of the Financial Sector of Bangladesh: An Analysis
AIUB Bus Econ Working Paper Series, 2011
The financial sector of Bangladesh is generally small and underdeveloped. This sector consists of a banking segment and an emerging but still nascent capital market segment. The banking segment in the country is relatively more developed than the equity market segment, even though both are quite underdeveloped in international comparison. The root causes of the Bangladeshi financial sector problem are the lack of market discipline due to lack of competition in the banking industry. Excessive government intervention and political connections, economic and political corruptions, operational and managerial inefficiency and ineffectiveness result in vicious circle that inhibits economic development, industrialization, and social progresses in poor and developing countries in general and in Bangladesh in particular. Authors' suggested that in the financial regulation should be strengthened and further needed reforms should be carried out. In addition, an ombudsman may be appointed in the financial sector. The ombudsman can act independently to investigate any complaints regarding financial services and must work freely and independently. Better financial services and diversified financial products would be the natural consequence of competitive financial industry. The authors argue that a strengthened regulatory environment and additional much needed financial sector reforms, a better and more efficient financial sector may evolve over time and serve better the development needs of the country.
Economic development of Bangladesh
Bangladesh is a developing country in the South Asia. Its illiterate and unskilled large population is a burden to the country. Agriculture is the main source of the income of the country. Government of the country is taking various steps to decrease poverty, but yet about one-third of people of Bangladesh are living below the national poverty line. More than half of the children of Bangladesh are underweight. The gross domestic product (GDP) is hovering around 6% for the last decade. Migrated labor and send remittances were on the increase. Conversely, inflation, government debt and GDP growth are nothing to write home about. Shortage of electricity and gas supplies, poor road network, bridges and ports, political unrest and natural calamities are major problems in national production and economic development. Debt burden of the government is increasing rapidly over time due to increase in the budget deficit. Both the internal and external debts of the government are increasing every year. Among the various obstacles, Bangladesh is advocating for poverty reduction by means of improving the quality of education and promoting gender equality. This has led to an achievement of reduction in child mortality and improvement in maternal health.
Bangladesh Development Update, April 2021
2021
Bangladesh's development progress has been remarkable. Bangladesh has recently been among the fastest growing economies in the world, resulting in higher living standards and improved social and health outcomes. The COVID-19 pandemic interrupted growth, but the country navigated the economic impact relatively well. The country is expected to graduate from the United Nations' Least Developed Country category in 2026 and to become an upper-middle-income country within the next decade. These milestones serve as a reminder that further transformation will be required for a prosperous future. As Bangladesh approaches upper-middle-income status, several emerging megatrends, such as advances in technology and climate change, challenge its growth model. Current growth is driven by structural reforms in the past and macroeconomic stability. In the mid-1980s, markets and public investment were strengthened, including for infrastructure. Further reforms in the early 1990s allowed for more private sector participation in trade, finance, and land ownership. These reforms were accompanied by complementary reforms in agriculture ((e.g., liberalization of agricultural input markets, seed sector reforms), and in social sectors (e.g., mandatory primary school, a female stipend program for secondary schools, and family planning programs). The rise of Ready-made garments exports during that period evolved from a combination of private investment and public policy support. Structural improvements provided strong impetus to inclusive growth especially between the early 1990s and mid-2000s but major reforms have not been sustained since then. Bangladesh has yet to move to the next phase of economic transformation. The current growth rates are no reason for complacency. First, Bangladesh still has significant unrealized potential for growth and development. Despite similar conditions in the 1970s, the pace of poverty reduction and economic growth was slower than in its peer countries. Second, economic booms are difficult to sustain, and few economies remain among global growth leaders over longer periods. Third, persistent rapid growth without additional structural improvements is rather unusual and may imply that the pace of growth could slow. Bangladesh's Gross Domestic Product (GDP) growth is increasingly difficult to explain with fundamentals, exacerbating concerns that the current pace of growth will be difficult to sustain without major structural adjustments. In addition, higher GDP growth in the last decade has not translated to faster poverty reduction as in the preceding past two decades, indicating the current episode of high growth has not been as inclusive as before. Sustaining rapid growth and addressing current global challenges will require overcoming three critical growth constraints. First, exports remain highly concentrated. While RMG exports boosted development in the past, a protective trade regime has constrained export diversification. As a result, the share of exports in GDP has been declining in recent years, falling from 16.7 percent in fiscal year (FY) 2011 to 10.7 percent in FY2021. With the impending end of preferential access to markets due to LDC graduation, Bangladesh will need to find new drivers of exports and growth. Second, banking sector vulnerabilities are growing. The COVID-19 crisis intensified longstanding financial sector vulnerabilities, further impeding efficient channeling of savings to productive investments. A nascent domestic capital market is also 13 Change of Fabric Executive Summary constraining longer term financing for infrastructure, housing, and climate change mitigation. Third, the benefits of urbanization have slowed. While the growth of Dhaka had positive agglomeration effects in the past, it now faces high congestion and poor environmental conditions. Secondary cities are underdeveloped and do not yet provide a conducive environment for more spatially balanced development. Infrastructure bottlenecks and slow human capital development are additional constraints to growth. Addressing these three growth constraints can sustain a high rate of growth. GDP growth under a business-as-usual scenario is declining over time amid headwinds from capital deepening and declining population growth. Strong reforms, on the other hand, could sustain rapid growth.
Related papers
Essays on monetary policy in Bangladesh
2003
The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleed-through, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion.
Bangladesh Economics
This paper is prepared on the economy of Bangladesh. It is my first time so if any mistake is found on this book please notify me.
Goswami, G. G. & Sarker, M. (2011). Nominal and Real Effective Exchange Rates for Bangladesh: 1973:07–2008:12. Journal of Economics and Behavioral Studies, June 2011, 2(6), 263-274
Bilateral real exchange rate is used in examining the price of domestic goods in terms of partner's goods and it is especially useful for bilateral modelling. On the other hand, real effective exchange rate serves as the price of domestic goods in terms of a basket of foreign goods and is especially useful for aggregate or multilateral modelling.The method of construction of both the bilateral and the multilateral or effective exchange rate depends on the definition of nominal bilateral exchange rate (direct or indirect), the method of averaging (arithmetic or geometric), and the calculation of trade weight (considering either the value of export or import or total trade). This paper uses both the arithmetic and the geometric mean as averaging technique and considers three kinds of trade weights, namely, export weights, import weights, and total trade weights in the construction of effective exchange rate indices. Using twenty one major trading partners of Bangladesh, which covers about 80 percent of her total trade, we prepare a comprehensive data base on nominal effective exchange rates, real effective exchange rates, trade policy bias index etc. both by using the fixed and the variable weight for the period 1973:07-2008:12 on a monthly basis. From this study it has been observed that there is a declining trend in the effective exchange rates of Bangladesh, which indicates an overall devaluation of Bangladeshi taka against her partner currencies both bilaterally and multilaterally. The result is robust no matter whether we use the fixed or the variable weight. As a supplementary exercise, the prepared data has been used in estimating the trade policy bias index and it is found that Bangladesh's trade policy has become proexport starting from December 2000. However, the process has been slowed down slightly in the most recent time.
Analysing the Behavior of the Interest Rate Spread in Bangladesh
2016
The interest rate spread (IRS), as derived by deducting the deposit rate from the lending rate, depends on cost of fund, administrative expenditures, provisioning, and margin of profit of the banks. The interest rate spread in Bangladesh is the highest among SAARC countries after Bhutan and Maldives. The overall IRS in the banking sector in Bangladesh was above 5 percent during the past twelve years which was considered as an impediment to private investment, industrialization, and economic growth. The business community and the policymakers of the country have been concerned with the matter in recent years. The IRS is higher in the Foreign Commercial Banks (FCBs) all along. Even after slight decline, it remained 6.83 percent in September, 2016. Private Commercial Banks (PCBs) occupy the second position where the rate ranges between 3.30 percent (Mercantile Bank Ltd.) to 9.46 percent (BRAC Bank Ltd.) in September, 2016. Apparently, the main causes for this situation originate from t...
An Analysis of Macroeconomic Trends in Bangladesh
The present study is an effort to investigate the macroeconomic trends in Bangladesh. The study is based on secondary data which were collected from different sources. The study found that the growth pattern of Bangladesh economy has been relatively strong during the 1990s and 2000s showing considerable improvement over the previous two decades. During last five years Bangladesh has managed to achieve a continued growth of GDP above 6%. The satisfactory growth in export-import, FDI inflow, domestic and national savings, continued flow of remittance, favorable current account balance have stabilized the economy of Bangladesh. However, the country is facing inflationary pressure in last several years despite governments strive to control inflation through combined fiscal, monetary and other supportive policies. Domestic and national savings were 20.31 and 30.21 percent of GDP, respectively, in FY 2007-08. The rates of domestic and national savings have become 19.18 and 29.78 percent of GDP in FY 2009-10 due to the effect of financial crisis. The study also found total FDI inflow in Bangladesh is gradually increasing. A significant number of people are employed in abroad and they contribute in the economy through sending remittance. In all these counts, the economy of Bangladesh has registered significant positive changes over the last few years.
The Exchange Rate Determination in Bangladesh Does Purchas
In the situation of waning values of currencies following financial flu that swept the countries of the Far East and South East, the authors felt a need to analyze efficiency of exchange rate management system of Bangladesh. Defining the exchange rate, which reflects balance of payments position of a country, as the domestic price of a unit of foreign currency, the paper explains relevance of purchasing power parity theory propounding that changes in the exchange rate between two countries is equal to the ratio of inflation rate of them. From a system of pegging to one currency, over the last 26 years, Bangladesh has developed a regime of pegging exchange rate to a basket of currencies keeping in view the need for strengthening the country's competitiveness in international trade, improving the current account position and maintaining the stability of the value of taka. This is ensured through monitoring of purchasing power parity based Real Effective Exchange Rate index. The paper has used co-integration technique, a modem concept of econometrics, to examine the long term relationship among world and Bangladesh inflation rates and our exchange rate. The method is employed to comprehend whether purchasing power parity really holds in Bangladesh. Though our result assures a long term relationship among PPP and exchange rate characterizing appropriateness of our policy stance, it also indicates possibilities and necessity of a better accomplishment.
Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS 12 (July 2011)
2016
ii The views and interpretations in this paper are those of the author(s) and do not necessarily represent those of the
Socio-economic challenges of Bangladesh
The Financial Express on December 21, 2014 Economic development without socio-economic challenges is inconceivable. The journey to development has never been easy for any nation and it is always a long hard battle to turn promises into achievements. Bangladesh is a developing economy growing with an annual growth rate of around 6 per cent, striving to become a member of the middle income group. The per capita income and GDP size of Bangladesh are also growing with time. The country's economy is changing from traditionally agro-based to industry-based entity. The country is making progress which is more or less visible. At the same time, it is also visibly clear that the growth is not inclusive. Economists have defined economic growth as the increase in the market value of the goods and services produced by an economy over time. It is conventionally measured as the percentage rate of increase in real gross domestic product, or real GDP. In our case, not all the people are getting...
Impact of Floating Exchange Rate on Economic Indicators of Bangladesh: A Case Study
Khulna University Studies
In past few years there has been a lot of controversy about the appropriateness of the exchange rate system adopted by the country. Bangladesh has been pursuing a liberal trade policy consistent with the trend of free market economy and WTO agreement. In process of liberalization of the economy, Bangladesh adopted a free-floating exchange rate system since May 31, 2003. The level and extent of movement of exchange rate have a significant impact on the macroeconomic variables of the economy. On the other hand, unsustainable economic policies and other factors also lead to a volatile exchange rate. Both the fixed and floating exchange rates have their own merits and demerits. The present article offers an analytical discourse on the prospects and implications of floating exchange rate in Bangladesh. The study is mainly exploratory in nature. In this study the authors have tried to assess the impact of new exchange rate system on the economy of an underdeveloped country like Bangladesh.
This document is currently being converted. Please check back in a few minutes.