|Developing the non-farm Sector in Bangladesh: Lessons from other Asian Countries (WB, 1996, 116 p.)|
|Pattern of development|
Land productivity and the related use of biochemical and mechanical inputs are indicators of a country's medium-run growth and industrial prospects. With this in mind, we have compared Bangladesh with a number of Asian and African countries at different stages of development. Between 1950 and 1980 agricultural output grew steadily in several South and East Asian countries at close to 3 percent. Growth in Japan and India fell slightly below this level, and economies such as Thailand and Taiwan (China) registered higher rates (tables 15,16,17, and 18). A modest share of this increase, mostly in the earlier years, resulted from gains in the land-labor ratio. But most of the change is traceable to improved methods of farming, greater application of fertilizers, widening use of agricultural chemicals, and some mechanization. During 1950-80 land and labor productivity in Taiwan (China), for instance, grew by 4.0 percent and 5.1 percent, respectively; by 2.6 percent and 4.6 percent in Japan; and by 2.5 percent and 3.7 percent in Thailand.
By the early 1990s the average yield per hectare of cereals in Bangladesh was 2,572 kilogram, a 30 percent increase over 1980 (table 19). This yield is close to the average for Asia, greater than that of India and within the range of Sri Lanka and Malaysia. But it was only two-thirds of the output per hectare in Indonesia, 60 percent of that in China, and less than half of the average in the Republic of Korea. Evidence indicates that Bangladesh could expand its yield, but the performance thus far has been respectable.
Three factors stimulated higher yields in Bangladesh. First, fertilizer consumption more than doubled between 1979-80 and 1991-92 and is now on par with that in Indonesia (table 19). In the sample of countries only Malaysia, China, and the Republic of Korea use more fertilizer. Second, the ratio of irrigated land has risen from 17 percent to 31 percentjust a shade below the average for Asia. Third, the area devoted to high yielding varieties (HYVs) has climbed from 24 percent to 47 percent (table 20).
Each of these represents a substantial achievement. And together they suggest that good policies are being implemented and that farmers are responding to market incentives and technological possibilities. But the sheer density of the population has muted the effect on labor earnings, and labor abundance continues to promote "involution" in 13 husbandry practices. The threshold beyond which rural industry and nonfarm activities begin to multiply may be higher for Bangladesh than for some of the other East Asian countries because exceedingly high labor-land ratios together (until recently) with rapid population growth have diluted the spread effects of agricultural modernization. Population density has depressed the growth of household incomes, which, coupled with high dependency ratios, may be responsible for curtailing the accumulation of savings.
Rural investment and the incentive to save might also be hampered by perception of risk. Bangladesh is unusually vulnerable to natural disasters, a risk that is compounded by political instability. Regular floods and hurricanes destroy rural capital and increase the variance in returns from investment. Land shortage, rapid population growth, low savings, and environmental risks force Bangladesh to run much harder to enter a virtuous spiral. A slowing of population growth has opened a narrow window of opportunity. But if the window is to be opened wider, agricultural incomes must increase faster.
Raising crop yields and diversifying the product mix is the appropriate strategy for catalyzing rural development on at least three counts. Firs´, raising output ensures greater food security and opens the door to exports. Second, diversification can serve as a foundation for a range of off-farm activities. For instance, in Japan, Taiwan (China), Malaysia, the Philippines, and Thailand crop diversification, which increased the ratio of vegetables, fruit, and tree crops, triggered the emergence of processing industries, as well as service activities to handle collection, distribution, and marketing (see Oshima 1994). Third, the surge in incomes would promote local demand for goods and services and provide funds for building industry.