Bangladesh

1 Introduction and background

1.1 Key demographic and economic data

Bangladesh is located in South Asia, bounded by the Bay of Bengal to the south, Myanmar to the south-east, and India to the east, north and west. In 1995 it had a population of 119.8 million people, packed into an area of only 144,000 square kilometres. The resulting population density of 832 people per square kilometre is one of the highest in the world. While population growth has slowed considerably in recent years, it remains relatively high at around 1.6 per cent per year between 1990 and 1995, with the total fertility rate in 1995 of 3.5 births per woman well above replacement level.

High population densities have placed considerable strain on resources and contributed to severe economic and environmental problems. Bangladesh is one of the poorest countries in the world, with an annual per capita income estimated at $240 in 1995. Only Nepal and a handful of African countries have lower per capita incomes. Bangladesh also performs poorly in terms of indicators of human development, such as life expectancy, infant mortality and educational attainment. The UNDP human development report for 1997 ranked Bangladesh 143rd out of 174 countries, with Nepal, Cambodia, Bhutan and Afghanistan the only countries outside Africa to rank lower. In 1995, life expectancy at birth was only 58 years, and only 38 per cent of adults were literate.

Bangladesh is still predominantly a rural society, with only 18 per cent of the population living in urban areas in 1995. This is lower than for all other countries included in this study except Nepal. Nevertheless, the structure of production has changed considerably in recent years, in both rural and urban areas. While the share of agriculture in GDP stood at 50 per cent in 1980, by 1995 it had declined to 31 per cent. This was matched by an increase in the share of services from 34 to 52 per cent, partly reflecting population pressure in the rural areas and the need to find alternative sources of income to agriculture. Microfinance is particularly important to many such microenterprises in the service sector. The share of industry increased only marginally from 16 to 18 per cent.

Estimates of poverty

Given the above, it is not surprising that poverty is pervasive, with nearly half the population living in absolute poverty. Official estimates of the number of people in poverty are available from the Bangladesh Bureau of Statistics (1995), based on the periodic household expenditure survey (HES). The HES has been conducted in 1981–82, 1983–84, 1985–86, 1988–89, 1991–92 and 1995–96, but data from the most recent survey are not yet available. Estimates of poverty are based on the food-energy intake method of setting poverty lines. By this method, separate poverty lines for rural and urban areas are obtained by estimating the expenditure level at which the benchmark calorie intake equals the predetermined food-energy requirement.

It is estimated that in 1991–92, 47.5 per cent of the population lived below the absolute poverty line, set at a direct calorie intake of 2,122 calories per day. Based on population data for 1995, this equates to around 57 million people. The incidence of poverty was broadly similar in rural (47.6 per cent) and urban (46.7 per cent) areas. Poverty was only slightly lower than in the 1988–89 survey (47.8 per cent), but well below the level recorded in 1983–84 (62.6 per cent). The 1991–92 survey also included estimates of the hard-core poor (28.0 per cent), based on a poverty line equivalent to a direct calorie intake of 1,805 calories per day, and the ultra-poor (17.8 per cent), based on a poverty line equivalent to a direct calorie intake of 1,600 calories per day.

Some independent researchers have criticised the official estimates, questioning the comparability of the surveys, the methodologies used in deriving the poverty lines, and their consistency with other poverty data. There have also been other estimates of poverty, some of which are based on work carried out by the Bangladesh Institute of Development Studies. These have generally been based on the cost-of-basic-needs method, by which the poverty line is set as the cost in each sector of a ‘basic needs’ bundle of goods.

An important such study by Ravallion and Sen (1996) estimated that in 1991–92, 49.7 per cent of the population were below the poverty line, comprising 52.9 per cent of the rural population and 33.6 per cent of the urban population. Unlike the official estimates, Ravallion and Sen found that the proportion of people living in poverty was much higher in rural than in urban areas. Moreover, they found little evidence that poverty had fallen in the 1980s. While poverty had fallen from 52.3 per cent in 1983–84 to 43.9 per cent in 1985–86, it had risen consistently since that time. Indeed, the World Bank (1996) has argued that poverty has got worse in the last decade, primarily due to the rapid increase in the working age population, increasing landlessness, and slow growth in non-farm employment. Moreover, the burden of poverty falls disproportionately on women, with the incomes of female-headed households 40 per cent lower than for male-headed households.

Hence, while there is debate as to precise estimates, it is clear that widespread absolute poverty remains a major and intractable problem in Bangladesh. It is evident that a major policy focus on poverty will be necessary if poverty is to be reduced and eradicated.

Policies for poverty reduction

As noted by Hossain and Sakhawat (1996) policies for poverty reduction in Bangladesh, as in other countries, can generally be divided into three broad strategies: