Introduction of Bangladesh

1. Industry of Bangladesh
Cambridge O Level Bangladesh Studies Learners Guide (Latest Version)
Paper 2: Environment and Development of Bangladesh
Topic: 7 and Internet sources
1
Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
LECTURE 7

2. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Lecture Overview
• The Importance of Industrialization to Bangladesh's Development
• Obstacles of Industrial Development to Overcome
• Role of State, Private Sector and Multinational Corporations in
Industrialization and the Impact of Policy
• Types of Industries in Bangladesh and their Characteristics
2

3. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Importance of Industrialization
3
• In the phase of economic growth, country move from low to middle
income status with growth in industrial sector
• Industrial sector enables a country in
• High employment
• Rise of social productivity
• Increased foreign earnings
• Purchase of new machineries
• Advancement of technological development

4. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Importance of Industrialization
4
• Industrialization helps to increase GDP as average productivity of
industry is higher than in agriculture or most service-sector activities
• Industrialization and specialization in manufacturing is the obvious
way in which Bangladesh can raise its per capita income and social
productivity, because of
• Poor land-person ratio
• Scarcity of natural resources (except gas)
• Lack of technologies and infrastructure

5. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Importance of Industrialization
5
https://data.worldbank.org/
country/bangladesh

6. Figure 1: Value-added by different sectors as a percentage of Bangladeshi GDP for 2010-2019
Source: World Bank, 2021, author’s aggregation and calculations
Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Importance of Industrialization
6
0
10
20
30
40
50
60
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Value
Added
(%
of
GDP)
Year
Agriculture Industry Services

7. Figure 2: Percentage of total employment generated by different sectors in Bangladesh for 2010-2019
Source: World Bank, 2021, author’s aggregation and calculations
Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Importance of Industrialization
7
0
5
10
15
20
25
30
35
40
45
50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Percentage
in
total
employment
Year
Agriculture Industry Services

8. 0
10
20
30
40
50
0
10
20
30
40
50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Percentage
of
GDP
Percentage
of
GDP
Year
Total Trade Trade in Goods Trade in Services
Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Importance of Industrialization
8
Figure 3: Different categories of trade as a percentage of Bangladeshi GDP for the period of 2010-2019
Source: World Bank, 2021, author’s aggregation and calculations

9. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Obstacles to Overcome
9
• Though a number of different types of obstacles need to be
overcome, these could be categorized into three groups
Obstacles
General
Environment
State Assistance Finance

10. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Obstacles Related to General Environment
10
General
Environment
Legal
framework
Contract
Enforcement
Law
Enforcement
Bureaucratic
Court System
Quality of
Infrastructure
Physical
Infrastructure
Communication
Network
Utilities and
Services
Political
Instability

11. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Obstacles Related to State Assistance
11
• Entrepreneurs are unable to compete in international markets
because they do not have the experience and knowledge of new
technologies, market opportunities, and legal systems
• Carefully determined conditions or monitoring support from the
state, targeted towards specific entrepreneurs and industries could be
provided, which is usually absent in Bangladesh

12. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Obstacles Related to State Assistance
12
• State assistance can take any of the following forms,
• Improvements to local infrastructure
• The training of workers and manages
• Developing market in foreign countries
• Assistance with technology licensing
• Establishing partnerships with foreign companies
• However assistance should not be unconditional
• Infant Industry, Inefficiency, Low Productivity

13. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Obstacles Related to Finance
13
• Failure of financial system
• Bad debts
• Difficulties in taking loan from bank in a long term
• Implementation of Policies
• Poor monitoring and effort to recover bad debt loans

14. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of State in Industrialization
14
• In the 1960s and 1970s state ownership was encouraged to promote
and support public sector enterprises in the industrial sector with
subsidies and cheap credit from the nationalized banking system
• The state failed to impose discipline on public and private sector
enterprises, consequently they remained inefficient, and had low
productivity

15. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of State in Industrialization
15
• Raising productivity and efficiency takes a lot of effort, and managers
and owners of enterprises would only put in this effort if
• They believed that failure would result in the withdrawals of state support
and the bankruptcy of the enterprise, or at the very least result in a change
of management
• Mangers rightly believed that the state was too weak to upset vested political
interests and withdraw subsidies or support from failing enterprises

16. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of Private Sector in Industrialization
16
• From the 1980s onwards, the international consensus shifted towards
Liberalization and Privatization, and a reduction in the role of the
state in leading industrial development
• Liberalization is the lessening of government regulations and
restrictions in an economy in exchange for greater participation by
private entities
• Privatization is the sale of state-owned enterprises to private
investors

17. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of Private Sector in Industrialization
17
• Traditionally as a state support, domestic industry had been protected
using Tariffs, Quotas and Subsidies (among many other forms of
protection)
• Liberalization led to a reduction in all these forms of assistance to
domestic producers and resulted in many of the companies that had
been set up under the earlier system of state-led development facing
growing difficulties.

18. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of Private Sector in Industrialization
18
• The prime objective was that the removal of this assistance would
lead to firms making greater efforts to raise their efficiency and
productivity.
• In fact, this did not happen, and many of the privatized industries, for
instance in the jute and cotton textile industries, simply closed down.
• Alternatively a strategy could be implemented where selectively and
gradually subsidies would be withdrawn from poorly performing
industries.

19. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of Private Sector in Industrialization
19

20. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of Private Sector in Industrialization
20
• Development of Large Scale Industry
• A number of success in large scale industry should be acknowledged
• Domestic gas production increased rapidly and gas has been successfully
substituted for oil in the production of electricity and as the primary source of
energy in industry
• Gas based fertilizer production has also increased

21. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of Private Sector in Industrialization
21
• Growth of New Smaller Industry
• Low state assistance need
• Simpler technology
• Cheap labor
• International demand
• International competitiveness
• Example: RMG sector

22. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Role of MNCs in Industrialization
22
• To raise productivity, efficiency and achieve better quality requires
investment in advanced technologies, which will come from foreign
countries in the form of Foreign Direction Investment (FDI) or
investment by multinational corporations (MNCs)
• Traditionally, Bangladesh has had limited success so far in attracting
foreign investment.

23. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
FDI in Bangladesh
23
• FDI inflow in Bangladesh for last 10 years

24. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
FDI in Bangladesh
24
• Average (mean) of FDI inflow in Bangladesh

25. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
FDI in Bangladesh
25
• Trend projection of FDI inflow in Bangladesh

26. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Why FDI in Bangladesh
26
• Bangladesh provides following benefits
• Industrious low-cost workforce
• Strategic location, regional connectivity and worldwide access
• Strong local market and growth
• Low cost of energy
• Proven export competitiveness
• Export processing zones
• Positive climate

27. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Conclusion
27
• The future challenges for Bangladesh are
• To move up the technology ladder through backward and forward linkage
industries
• To develop a combination of policies involving improving the investment
environment, attracting foreign investments, and providing support to new
entrepreneurs
• To develop capacity of the state
• To withdraw support from poorly performing industries and entrepreneurs

28. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Types of Industries in Bangladesh
28
• Raw Jute and Jute Industry has traditionally played an important role
in the national economy
• Over time, RMG Industry has replaced Jute Industry as the principal
export-earner for the country
• Considerable progress has been attained in leather, ceramic, shrimp,
fish, pharmaceuticals and frozen food, cotton, textile, fertilizer,
engineering, shipbuilding, steel, oil-refinery, paper, newsprint, sugar,
chemicals, cement

29. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Types of Industries in Bangladesh
29
Industry
Small Scale
Small Scale Industries
Cottage Industries
Large Scale

30. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Types of Industries in Bangladesh
30
• Cottage Industry refers to family based/owned small-sized production
units with small amounts of capital whose production process in
based mostly on local raw materials, inherited artistic skills and
simple indigenous technology.
• The Small-scale Sector includes micro-scale informal sector firms
involved in bamboo working, handloom weaving and metalworking.

31. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
Types of Industries in Bangladesh
31
• The Large-scale Industries are defined as enterprises that employ 10
persons or more.
• The large-scale sector includes jute and textile mills employing several
thousands of workers each, and garments industries that can
employee several hundreds of workers each.

32. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
How Do they Differ in Characteristics?
32
Issues Cottage/Small-Scale Large-scale
Employment
Value of Output
Productivity
Wages
Machinery Used
Export
Productivity Growth
Others

33. Bangladesh Studies
BBA 15th Batch 2022
Saiful Islam
Dept. of International Business
End of Lecture 7
33
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