Economic Development of Bangladesh since 1960 - Essay Example

How Policy Initiatives in Agriculture and Savings and Investments have Influenced Economic Development of Bangladesh since 1960 Name Institution Date How Policy Initiatives in Agriculture and Savings and Investments have Influenced Economic Development of Bangladesh since 1960 Introduction Republic of Bangladesh is one of the lower middle income countries in the world. According to the World Bank, the countries with GNI per capita of between US $1,026 and 4,036 are considered low middle income countries. The per capita income of Bangladesh is US $ 2,800. The country is located in South Asia and it has been making a lot of progress despite the economic and political problems. The agricultural sector of the country has been growing at a fast rate due to the policies that were put in place. The country is a leading exporter of some of the agricultural products like tropical mangoes, jute, rice and tea (Manni, 2012). The fishing industry which is under agriculture is also performing well in the country. The saving and investment policies of the country were initially strict. However, it has undergone some changes and it is currently friendly to the investors which have impacted positively on the economic growth of the country. The foreign investors are also gaining confidence and hence their increased investments in the country. The economic development of a country is dependant on the policies that are in place with regards to different sectors. However, a report by the world bank indicates that poor governance and weak institutions impacts negatively on the economic development of the country. The paper thus discuses the policy initiatives that have influenced economic developed since 1960 in agriculture and saving and investment sector. Discussion Agricultural policies in Bangladesh The policies in agriculture have played an important role in improving on the economy of the country. The policies with regards to the marketing of the agricultural produce were put in place in Bangladesh as early as 1964 for the purpose of promoting the commercialization of agriculture. The commercialization of agriculture saw the GDP of the sector rising to about 60%. However, it is also important to note that most of the industries were not performing well at the time. Different institutions have also been created in the country since then for the purposes of promoting agriculture. The Ministry of Agriculture was also established in 1971 for the purposes of developing policies to promote agriculture in the country. The Ministry of Agriculture was responsible the development of the new agricultural extension policy. Under the policy, research and extension services were enhanced for the purposes of benefiting the farmers (Asaduzzaman, et al, 2010). This led to the improvement in the agricultural production and hence contributing positively to the income of the country. An increase in agricultural production impacted positively on the economy of the country as the country was able to increase its export and hence earning more in terms of foreign exchange. The ministry of agriculture has also been involved in the revision of the policies which has impacted positively on the growth and development of the sector. It is also important to note that the growth of the economy has been dues to the continuous revision of the agricultural policies since 1960. The ministry of Agriculture also came up with a seed policy in 1993 which saw the development of high quality seeds. The development of high quality seeds also impacted positively on the increase in the yields for most of the crops. The country was able to produce more and at the same time import more agricultural products which impacted positively on the economy of the country. The Seed Rule policy was also developed in 1997 and it was for the purposes of improving on the quality of seeds and hence improving productivity. The seed policies were important for the country in terms of ensuring that the farmers were able to access top quality seeds at a fair price and hence leading to the generation of more income. National Agricultural policy 1999 was set up for the purposes of improving on profitability and sustainable production (Mondal, 2010). The income gains were also improved through the introduction of the policy. This impacted positively on the economy as it increased the revenue of the country. The policy also played an important role in protecting the small farmers from exploitation. This led to an improvement in the income of the small farmer and hence an improvement in their living conditions. Input supplies as well as fair output prices were also introduced for the purposes of improving on agricultural production. The policy played an essential role in ensuring that the farmers were able to increase on their productivity and profits and hence impacting positively on the economy of the country. An Actionable policy brief was also put in place in 2004 for the purposes of prioritizing the medium terms and long term goals with regards to agricultural production. The plan s played an essential role in ensuring that the farmers benefited from mechanization, marketing and agricultural research. The mechanization policy was important in terms of improving on the yields and hence increasing the agricultural products to the export market. Improved risk management was also introduced in the agricultural sector by the actionable policy brief. This encouraged the farmers to invest more in agriculture without fearing the risks. The risk management policy therefore impacted positively on the productivity of the sector and hence improving on the revenue generation process. The National jute policy 2002 was also developed for the purposes of ensuring that the production is kept at a desirable level (Sarker, 2013). This is considering that the country is among the top export of the product in the world. The National jute policy promoted the developed on the commercially viable jute industries and hence increasing the export of the product. The Ministry of Jute was responsible for the development and implementation of the policy which played an important role in ensuring that the country is able to generate more revenue from the jute industry. Increasing labor and irrigation is also an important agricultural policy in the country. The increase in labor and irrigation has played an important role in ensuring that the country is able to improve on its productivity in terms of the agricultural produce. This has played an important role in increasing revenue of the country and hence improving on its economy. Policies have also been developed in the non-crop sector for the purposes of increasing on the productivity of the industry. Livestock policy and action plan was developed in 2005 for the purposes of developing the livestock sector. The policy has played an important role in increasing the animal products for both the local and international market. The increase in the exports has played an important role in increasing the revenue in the sector and hence impacting positively on the economic growth. National fisheries policy, 1998 was also developed for the purposes of accelerating the fish export and improve on the public health. The policy led to the country being the fifth largest producer of fish in the world. The rural economy has been promoted by the agricultural policies and hence improving on the condition of the people. Land use policies have also been developed in order to put more land into agricultural use for commercial purposes. Currently agriculture is the backbone of the economy of the country. It accounts for more than 21% of the GDP of the country. However the super cyclone sidr which hit the country in 2007 had a negative impact on agriculture (Murshed-E-Jahan, et al, 2011). Agriculture also accounts for 67% of the total workforce of the country. This is an indication that agricultural policies have impacted positively on the economic growth of the country. The government is also keen on injecting more funds to the sector in order to promote its growth and development. Saving and investment policy in Bangladesh The policy initiatives have been put in place in Bangladesh for the purposes of boosting economic growth. However, the country still faces some challenges in terms of savings due to the low amount of revenue that it generates. All the sectors of the economy have currently been liberalized for the purposes of promoting investments. Measures have also been put in place by the government for the purposes of attracting the foreign investors and encourage privatization. In the 1970s, the country did not have a positive attitude with regards to the foreign direct investments. This is because it was associated with colonialism at the time. However the situation has been changing since the 1990s and foreign direct investments has become widely acceptable in the country. The interest deregulation policy was put in place in the 1990s and the banks are free to fix their own lending rates. However, the central bank is also responsible for setting its own lending rates in order to provide a guideline for the other banks. Between the year 1996 and 2001, the country was able to register a foreign investment worth USD 6.59bn in the energy sector alone (Cameron, 2013). This is an indication that the investment policy of the country is improving. During the same period, the domestic investment in the energy sector was worth USD 1.19bn. Privatization and facilitation of the foreign investments played an important role in increasing the investments and hence impacting positively on the economy of the country. The liberalization policy that has been put in place by the government has been useful in terms of developing the economy of the country. The country has been selling the state owned enterprises that are not making profits. This has led to the sale of 12 mills to private investors and about 50 state owned enterprises have been drawn up for privatization (Hossain, 2012). The policy has impacted positively on the development of the economy and the country is encouraging the private sector to continue playing an active role. The structural adjustment program was also put in place by the government after it was recommended by the world and the International Monetary Fund. The changes led to the reduction in tariff rates, simplification of the trade laws and minimization of the non-tariff barriers. This has played an important role in the development of the economy and hence impacting positively on the attraction of the foreign direct investment. Export promotion incentive is also part of the trade policy and it is for the purposes of stimulating export oriented activities. The country is a member of World Trade organization and it is also a member of other regional economic co-operations. The exchange rate policy has been put in place for the purposes of enhancing the exchange rates. The country relies on a floating exchange rate which has impacted positively on the investors. Bangladesh has also put in place a foreign investment policy aimed at promoting foreign direct investments which has played an important role in improving the economy of the country. Low cost production facilities are in place and this has plated an important role in attracting the foreign investors. Most of the foreign investors are also offered incentives and this has impacted positively on the ability of the company to attract Multi National Corporations. The presence of Multi National Corporations in a country impacts positively on the economy through foreign exchange (Perkins, et al, 2012). It is also important to note that the multinationals have employed thousands of people and hence reducing poverty in the country. This has a positive impact on the growth of the economy as the people have a source of income. The registration process for the companies is also simple and hence encouraging the investors. The increase in the number of investors has a positive impact on the number growth of the economy. Reducing the consumption expenditure by the government is also an initiative that has been put in place to encourage savings and hence impacting positively on the economic development. Strengthening the tax structures and collection system is also an important initiative that has been put in place by the government in the recent past (Saha, 2012). This has positively influenced economic growth considering the difficulties that are involved during the tax collection process in developing countries. Measures are also being put in place by the government to address the issues of corruption which has a negative impact on the revenue of the country. Conclusion In conclusion, it is evident that Bangladesh has put in place various policies to govern the growth and development of its economy. Agriculture is the backbone of the economy of Bangladesh and several policies haven developed to govern the sector since the 1960s. Most of the agricultural policies are aimed at increasing productivity and hence improving on the economy of the country. It is also important to note that the export market has been improved in the agricultural sector due to the policies. It is also evident that the investment policies of the company are important attracting the foreign direct investment and this has promoted the economy of the company. The country has also put in place measures to encourage saving although its does not collect much revenue. Tackling the issues of corruption is also an important step for the country in terms of promoting savings. References Perkins, D.W. et al. (2012). Economics of Development. 7th edition, Norton & Company, New York. ISBN: 978-0-393-11495. Manni, U. et al. (2012). An empirical investigation on trade openness and economic growth in Bangladesh economy. Asian Social Science, 8(11), p154. Asaduzzaman, M. et al. (2010). 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