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close this bookDeveloping the non-farm Sector in Bangladesh: Lessons from other Asian Countries (WB, 1996, 116 p.)
View the document(introduction...)
View the documentForeword
View the documentAbstract
View the documentAcknowledgements
View the documentSummary
View the documentImperatives and models
View the documentMacroeconomic trends in Bangladesh
Open this folder and view contentsWhat drives growth?
Open this folder and view contentsPattern of development
View the documentChoosing appropriate technologies
Open this folder and view contentsOther lessons from comparative experience
Open this folder and view contentsRural industry in Bangladesh
Open this folder and view contentsRural industry and export-led growth
View the documentGrowth poles
View the documentConcluding observations
View the documentTables and chards
View the documentBibliography

Growth poles

A degree of pert-urban industrial activity is visible along the outskirts of Dhaka, and handloom-based weaving activities are ubiquitous in villages within a thirty-mile radius.

On a lesser scale small manufacturing enterprises are clustered along the edges of other cities. But the possibilities for creating urban growth poles for rural industrialization are most promising in a handful of locations, chosen on the basis of five indicators:

· The extent and diversity of the industrial base. This measure reflects available skills, the size of the market, entrepreneurial resources, and the likelihood of linkage effects.

· The density of the surrounding surface transport network. Road density in Bangladesh is as much as 70 kilometers per 1000 square kilometers of land area, or as little as 29 kilometers depending on whether the lower category of rural feeder roads are included. By and large, the road network is of poor quality reflecting geographic and climatic conditions, the cost of building roads 39 and the unavailability of suitable material for building and paving. Water transport has traditionally been important and in recent years has increased its 40 share of freight transported to over a third.

The characteristics of the adjacent rural economy, including its growth rate, mix of crop outputs, and industrial base.

The banking network. This measure, however, says nothing about informal mechanisms for generating resources and delivering credit.

School enrollment, which is a crude proxy for skill availability and, more importantly, of the value that the population assigns to skill development. It is also an indicator of services provision by the public sector and private willingness to provide services using local funds (tables 11 and 12).

Armed with these indicators, a short list of the most promising districts can be compiled from the total sample of eighteen (table 29). Because each indicator yields a different ranking-some overlap-a certain amount of judgment and sense of place is also needed. Excluding Dhaka, the districts that combine an urban industrial base with good scores in the other areas are Kushtia, Bogra, Rajshahi, and Jessore. Other districts with reasonable strengths are Comilla, a major center of the handlooms industry, and Faridpur, where the dominant industrial activity is sugar processing. Chittagong has the advantage of being the main port, of having acquired some industrial trappings, and of being near to Cox's Bazaar, which has the potential to become an attractive tourist resort.

Rajshahi, Kushtia, and Bogra lie alongside the Padma and Jamuna rivers, while Jessore lies close to the Madhumati, a major tributary of the Padma. Thus they enjoy three advantages that are important in Bangladesh: their closeness to rivers provides 41 access to waterborne transport; their cultivable land is superior in quality; and the ease with which surrounding land can be irrigated allows for more intense water usage. Looking to the future, these districts are also better placed to benefit from spillover effects from India and to trade with West Bengal and Orissa.

Kushtia has registered fairly rapid agricultural growth over the past decade (2.15 percent per year) because of intensive irrigation, use of HYVs, and crop diversification. It has a high level of electrification and is second only to Dhaka in the ratio of bank branches per union (1.69). In addition, road density is about aver age-0. 16 kilometer per square kilometer. Kushtia city is 40 kilometers from the border from the Indian border and across the Padma river from Pabna, another medium-size city of local significance. Kushtia city has a population of more than 100,000, and it has attracted a number of manufacturing activities, tobacco processing being the most important. Nearly 9 percent of the district GDP is derived from manufacturing, which is higher than that in Rajshahi (2.1 percent), Bogra (3.2 percent) and Jessore (3.3 percent).

Bogra, like Kushtia, has a strong agricultural base. Both road infrastructure and water management facilities are relatively well developed. If anything, road density is higher than in Kushtia (0.18 kilometer per square kilometer), although the ratio of bank branches is somewhat lower. The city of Bogra (population 1.8 million) has emerged as a center for light manufacturing closely tied to the rural economy. Food processing, engineering, metal work, and repair facilities are numerous. The city is a major domestic supplier of irrigation pumps and engine parts. The proximity of several historic Buddhist sites makes Bogra the country's principal tourist spot.

Rajshahi (population 3.2 million) has several strengths. Its agricultural hinterland is one of the most dynamic in Bangladesh, electrification levels are high, and surface transport, including water based transport is adequate. The city is known for its sericulture factory which is supported by a government-run research institute. The mango orchards outside the city contribute significantly to the local economy. Rajshahi lies close to the Indian border and is strategically positioned to benefit from cross border trade.

Jessore district is a part of Bangladesh's agricultural heartland. Cotton growing is the major activity, and Jessore registered the highest agricultural growth during 1986-91. High growth has had a positive effect on other indicators of modernization . Only Patnakhali has a higher level of enrollment in primary schools, and Jessore is also ranked number two in secondary school enrollment. It tops the list with respect to rural electrification. Other indicators, such as bank branches and road density, are closer to the average. The city of Jessore (population 0.15 million) does not yet possess an industrial base, but its potential is comparable with that of the other three districts, and it could emerge as a producer of textiles. Local Government.

These top four districts are in the eastern, more fertile half of the country, closer to West Bengal. If the experience of East Asia is a reliable guide the development of rural industry around selected urban centers will be strongly motivated by the mediating efforts of local authorities. Local government in Bangladesh is weak and largely ineffectual in promoting development-whether through building infrastructure, providing services, or, as in China, actively pursuing rural industrialization. The East Asian experience and the worldwide trend toward transferring greater responsibilities to subnational governments argue for building up local government capacity. This effort has been underway, intermittently, for several decades (see Schroeder 1989; Moniruzzaman and Schroeder 1989).

Local government were formally established in Bangladesh by the Bengal Local Self-Government Act of 1885 and subsequently altered by the Village Self-Government Act of 1919. The 1919 Act created a two-tier system of district boards and union boards that persisted after the establishment of Pakistan in 1947. Next, the Basic Democracies Order of 1959 provided for a union council and a thana council. Ordinances and Amendments passed in 1976 (after the creation of Bangladesh), 1982, and 1983 brought the focus of local government on the zila, upazila, and union parishads. The upazila (formerly thana) parishad may be the most suitable nucleus for local government.

Thus Bangladesh has a tradition of local government-one necessary ingredient for building of capacity-and the scale of local government-taking the thana as the main 42 building block. The average population of a thana is 200,000, which, even at prevailing 43 income levels, adequately captures scale economies. Bangladesh is also unusual in having a large number of active NGOs that can supplement the efforts of local governments.

But five attributes critical to building capacity are lacking: Limited administrative autonomy of the upazila. The hand of central government rests heavily on the shoulders of local authorities, and central appointees largely run the show. This arrangement serves the political and the administrative objectives of the center, but prevents local institutions from 44 maturing.

· Low degree of local political participation, infrequent and unfair election, low accountability of elected officials, little independence from central government politics. Recent actions may have reversed trends that began emerging in the 45 latter half of the 1980s.

Narrow revenue assignments and weak incentives to exploit taxes and fees 46 assigned to local authorities. Likewise, the expenditure obligations are circumscribed and standards of service delivery are low and poorly enforced. There is no mechanism for letting locals have a voice.

· Limited incentives for locally motivated development activity. This problem stems in part from the lack of fiscal autonomy.

· Restricted administrative financial and technical skills that locally available. This problem is much less severe in areas adjacent to major centers.

Such capacity restrictions can and must be eased. Because Bangladesh's instruments for development are so few and its constraints so burdensome, the waste of local potential is a very serious problem. A determined effort to build capacity could easily begin to yield results in three to five years. Further, if a few local authorities, working jointly with NGOs and other private providers, could chart out the route to successful development, the contagion effects would quickly draw other localities toward a higher level of activity.