M. Hossain

Income Distribution and Poverty

It was shown in Chapter 2 that compared to the pre-independence period, the average standard of living fell sharply immediately after independence, but subsequently living standards grew significantly faster than in the period prior to independence. The average levels of real income per capita and real consumption per capita were respectively 5 per cent and 12 per cent higher in the first six years of the 1980s than in the second half of the 1960s. The reason for the higher increase in per capita consumption than in per capita income was the massive increase in external aid between the two periods. Compared to the depressed levels in the immediate post-independence years, the improvement in average living standards has been impressive: per capita income and consumption increased at annual rates of at least one and two-thirds per cent. To what extent were these improvements shared by the poor and low income groups?

Growth and Structural Change

This chapter provides a macroeconomic background for the analysis of the development experience in Bangladesh since independence. It begins with a discussion of the trends in population growth and changes in the size and occupational distribution of the population. Next it analyzes the trends in the growth of national income and other macroeconomic aggregates.

Trade, Public Finance and Prices: Some Issues

This chapter is concerned with an analysis of selected issues in external trade, public finance and inflation. It begins with a discussion of some issues of foreign trade, namely those concerning the magnitude of the trade gap and debt service, the nature of import dependence and the changing composition of exports. Next it discusses some issues of public finance, especially those related to the generation of an investible surplus in the public sector. Finally, it analyzes the rate of inflation since independence and some factors behind it.

The Development of Infrastructure

The subject matter of this chapter is infrastructure, both physical and social. The former includes facilities such as energy and transport while the latter includes services such as education and health. These activities are usually characterized by lumpy investment and economies of large scale. The efficient expansion of these actvities, by reducing unit costs, generates substantial external economies of a “pecuniary” character. That is, the availability of cheaper and more extensive energy and transport services increases the profitability of other activities by reducing their costs of production and widening the market for their products. These characteristics of investment in infrastructure underline the fact that one of the essential functions of government in promoting economic development is to ensure an adequate provision and efficient expansion of infrastructural facilities. It may sometimes be possible to obtain the cooperation of local communities, private individuals and groups in developing some segments of the systems, e.g., local communities may be persuaded to contribute to, or take responsibility for, the construction of feeder roads and local schools. The basic responsibility for the provision of these facilities and their expansion in step with the needs of economic development must however remain with the government.