ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Globalisation and Economic Transformation in a Peripheral Economy

There are two major interpretations of the term "globalisation". The first and mainstream view takes globalisation as the rational outcome of global economic "progress". A second, and dissenting view, gives more emphasis to the power and ownership aspects of the globalisation process. This paper argues that the present globalisation process embraces elements of both views and is essentially monopoly capitalism, advancing on a world scale that seeks to integrate peripheral economies into a single global system. As a peripheral economy Bangladesh has become more marketised, more globalised, and more urbanised; and in the process it has now a large number of super-rich and an increasing number of uprooted poor people. This paper makes an attempt to understand the integration process of Bangladesh with the global econom

Globalisation and Economic

Transformation in a Peripheral Economy

The Bangladesh Experience

There are two major interpretations of the term “globalisation”. The first and mainstream view takes globalisation as the rational outcome of global economic “progress”. A second, and dissenting view, gives more emphasis to the power and ownership aspects of the globalisation process. This paper argues that the present globalisation process embraces elements of both views and is essentially monopoly capitalism, advancing on a world scale that seeks to integrate peripheral economies into a single global system. As a peripheral economy Bangladesh has become more marketised, more globalised, and more urbanised; and in the process it has now a large number of super-rich and an increasing number of uprooted poor people. This paper makes an attempt to understand the integration process of Bangladesh with the global economy.


he concept of “globalisation” has the ability to indicate certain recent phenomena but it also has the ability to hide certain relations and conflicts within world economic/ political system/s. It appears that the all-embracing term “globalisation” has replaced, especially in the recent years, many earlier economic and political discourses. It is fair to say that the ideas, programmes, initiatives, planning and monitoring under the current phase of the globalisation project have usurped most of the earlier development thinking at the policy-making level, both within state or multilateral global agencies.

There are two major interpretations of the term globalisation. The two appear to conflict with, and even oppose, one another. The first, and the mainstream view, takes globalisation as rational outcome of global economic “progress”. This view describes it as a process of (i) expansion of free trade; (ii) more integration of all economies of the world; (iii) more communication amongst different regions; (iv) faster diffusion of knowledge; (v) increasing mobility of capital and labour; (vi) increasing competition and (vii) emergence of global economy-global market. They believe that there is no alternative (TINA) to this.

A second, and dissenting view, lays more emphasis to the power and ownership aspects of the globalisation process. It looks at the process as being increasingly dominated by multinational corporations (MNC) and global institutions like the World Bank, International Monetary Fund (IMF), and World Trade Organisation (WTO). Thus, according to this view, the present globalisation process is in fact the manifestation of the monopolisation of power by large corporate entities, which are mainly centred in the north. They also argue that the worldwide expansion of the capitalist drive for profit has endangered the environment, people’s lives, local authority, biodiversity as well as diversity of culture. They also insist that an alternative to the present globalisation process exists, which is, a real and peoples globalisation that is possible.

I would like to argue that the globalisation process, in fact, embraces elements of both views. It is essentially capitalism, which is advancing on a world-scale and is integrating peripheral economies into a single global system. Since the last decade, when globalisation became a “buzzword”, world trade has been expanding, and most economies have become more integrated into single global economic system, information and communication systems too have developed at a faster rate because of the rapid development of information technology; now the opportunity for greater diffusion of knowledge has emerged, and capital has become more mobile. These facts support the mainstream version of globalisation. But at the same time, we must not ignore the fact that mobility of labour could not take place along with that of capital; and competition, in most cases, is increasingly being replaced by monopoly or near monopoly situation. Global economy has become more a playing field of big corporate bodies located in the G-7 countries. Institutions like the World Bank, IMF and the WTO have gained an unprecedented authority over most nation states. All the processes of integration of peripheral economies into global economy have not been taking place through the “invisible hand”, i e, free market processes. Moreover, the fact is increasingly coming into light that the present globalisation process, directed by corporate bodies and motivated by profit, has further endangered the environment, people’s lives, common property, local authority, biodiversity as well as diversity of culture.

In this paper, an attempt has been made to understand the integration process of the Bangladesh economy, a peripheral one in the global capitalist system, with the global economy. Along with an historical overview of the country, quantitative and qualitative changes in different sectors of the country will be analysed to identify the main trends in economy and society.

Legacy of Economy and Polity

Bangladesh earned its status as an independent country through an armed struggle in 1971. The road map to Bangladesh’s emergence as a nation state began with the partitioning of British India into India and Pakistan in 1947. At that time, Pakistan consisted of two geographically separate territories. The eastern section (East Pakistan), that later became Bangladesh, faced

Economic and Political Weekly April 15, 2006 regional and ethnic discrimination in different forms. Soon after independence, Pakistan came under military autocracy, which was dominated by the big propertied oligarchy centred in West Pakistan.

From the very beginning, Pakistan has been highly dependent on a military-civil bureaucracy; instability in civil governments and military rule was a reflection of that. It has also had a consistent patron-client relationship with the political and economic centres of the global capitalist system. During the mid-20th century, Pakistan became a test laboratory for western development theories that emerged during a period of swift decolonisation. Its client position was defined by the Pakistan-US military pact and by a long and decisive involvement of US consultants in shaping Pakistan’s planning, development and institutions.

Although formal military rule began in Pakistan in 1958, the military exerted power from the country’s beginning because of its fragile civil rule and institutions. Martial law, therefore, “was brought about by men who were already participants in the existing political system and who had institutional bases of power within that system. Long before the coup, the military had been working as a silent partner in the civil-military bureaucratic coalition that held the key decision-making power in the country” [Jahan 1972: 52].

This concentration of political power suited well the concentration of economic power. By 1968, distribution of resources showed a highly skewed picture. According to the then chief economist of the Pakistan Planning Commission, “66 per cent of all industrial profits, 97 per cent of the insurance funds, and 80 per cent of the banks in the country were controlled by some twenty families”.1 And all these 20 families were from West Pakistan.

Economic disparities, and regional and ethnic discrimination soon gave rise to democratic struggle in the then East Pakistan. That struggle turned into a nine-month long decisive armed struggle in 1971 when the (west) Pakistani military junta started a barbaric military operation that included genocide, rape and looting. The junta took the step to stop the transfer of power to the newly elected parliament, where the Awami League had won overwhelmingly in East Pakistan.

Integration with the Global Economy: Factors and Actors

After independence, despite continuous promise and rhetoric, Bangladesh failed to alter the power matrix in social and economic spheres that had prevailed during the Pakistan period. The structures and hierarchies of civil and military institutions, created during the British rule, were kept intact in Bangladesh. Similarly, the legal and judicial systems remained untouched and land administration, despite reform measures taken in 1972 and 1984, remains unchanged to this day.

During the last three decades, Bangladesh has experienced different forms of government: civil, military, parliamentary and presidential. Emergency was declared twice (1974 and 1997), martial law promulgated twice (1975 and 1982). During the period two presidents have also been killed. Since 1991, elected governments have been ruling the country. A form of non-party caretaker government has been introduced in 1991 to make elections acceptable to all.

Despite changes in political power and governance and the bloody conflicts among groups wishing to govern, the economic front experienced a continuity of policy and ideology. One of the major factors behind this continuity could be the increasing authority of the global institutions that have been operating in Bangladesh and their decisive involvement in formulating policies and monitoring implementation of these policies. These institutions include the World Bank, IMF, Asian Development Bank (ADB), United Nations Development Programme (UNDP) and United States Agency for International Aid (USAID).

Initial Stage

The process of integration into global capitalism cannot be seen as an absolutely recent phenomenon for Bangladesh. The Bangladesh economy, like other peripheral economies, has been in the process of integration with the world economy for long. During the last few decades and specially since the mid-1950s the integration process received a momentum with the introduction of “foreign aid” based development projects and interventions in agriculture and water resource management under the banner of “green revolution” in the 1960s (see Table 1 for a summary of historical records).

After becoming an independent state, Bangladesh experienced a massive increase in “foreign aid” inflow and related projects. Soon after independence, the “Bangladesh aid consortium” was formed with the World Bank at its head “on the same lines as the Pakistan consortium” [Sobhan 1982]. From a review of 30 years of the Bank’s assessment of government’s policies, its suggestions and policy recommendations to the government of Bangladesh, it is clear that the Bank has been consistent in its policy prescription and ideological framework. But it is interesting to note that the Bank has always worked to sell its own agenda by keeping the government of the day in good humour, always supporting to the government’s political agenda, no matter what the political philosophies of successive governments have been [Muhammad 2003]. Such diplomacy proved to be an effective sales management technique for global institutions.

World Bank’s Support and Agenda

It would be useful to retrieve some documents of the World Bank in this regard. In Bangladesh’s First Five-Year Plan (1973-78) document, which was explicitly biased towards public sector growth, the Bank’s comments were appreciative. For instance, it termed the “socialist” Plan “a remarkable document” and “analytically sophisticated” [World Bank 1974]. In May 1975, after the establishment of one party presidential rule, the Bank seemed to be “happy”. It argued favourably for political change.

Table 1: Programmes Initiated in Bangladesh by Global Institutions at Different Periods
Period Programmes Initiated Significance 1950s and after Foreign aid, education and training programme, Structures on rivers, canals and ‘khals’. Krug mission and water resource projects. New generation of experts, skill manpower dependent on aid-consultancy. 1960s and after Green revolution Mono cultivation and increasing market orientation of agriculture 1970s and after Poverty Alleviation Programmes, NGOs. New institutions and civil society compatible with the philosophy of GIs. 1980s and after Structural Adjustment Programmes (SAP) Deindustrialisation, deregulation, privatisation, trade liberalistion and expansion of service sector. 1990s GATT Agreement Opening up common properties to the profit making activities. 2001 and after Poverty Reduction Strategic Paper (PRSP) Sugar coated Structural Adjustment Programme.
Economic and Political Weekly April 15, 20061460

It asserted that “recent political changes have strengthened the hand of the government in its attempts to put down lawlessness, smuggling, hoarding and black marketeering”. They were satisfied because “slum clearance in Dacca has gone on apace”. At the same time, they also issued “mild threats”. The Bank did not hesitate to say that, “this report indicates a number of economic reforms which Bangladesh must consider urgently”. They reminded the government that, “... Bangladesh would need about US$ 1.2 billion of disbursements of external aid in 1975-76. The willingness of donors to continue providing aid in generous amounts to Bangladesh will no doubt depend on its ability to demonstrate, by the implementation of satisfactory economic policies and measures...” [World Bank 1975].

Within three months of publishing the above report a violent political changeover took place. The president was killed and Bangladesh was placed under martial law. Again, the Bank seemed appreciative of the new government. The reasons given were the same as those given as supporting statements for the previous government; those included “serious efforts” made towards the law and order situation. It also stated that, “on the industrial side, capacity utilisation has improved in a number of sectors, as a result of a more liberal import policy and an enhanced supply of raw material and spares...There has been some movement in the direction of a more market oriented economy”. The report also expressed optimism about the continuity of “reform programme begun in May 1975, with the devaluation of the taka and the agreement with the IMF”. And finally it supported the new government by including assurances that, “the new government confirmed that it intended to introduce such further economic reforms as subsidy reduction, agricultural taxation and import liberalisation” [World Bank 1976]. The process continued and accordingly different policies were born as “national policies”, to echo the global formulation of the global institutions.

Table 2: Ups and Downs within Manufacturing Sector

Growth Pole Industries

Positive growth, high range Cement, MS rod (more than 10 per cent) Positive growth, low range Garments, tea, beverage, soap and

(less than 10 per cent) detergent , leather and leather products Negative growth, high range Jute textiles, fertilisers. Negative growth, low range Sugar, paper, iron and steel

Source: Bakht, 2000.

Therefore it is not surprising that although the Structural Adjustment Programme (SAP) sponsored by the World Bank and the IMF appeared in the 1980s, the programmes it covered were being prescribed by these institutions much earlier. The SAP, in fact, has brought all the earlier “reform” programmes into a single fold.

From Krug to PRSP

Since the early 1970s international bodies including the World Bank have been emphasising poverty related programmes. Women related programmes have received attention from UN bodies since the mid-1970s. Funding into these areas started flowing which in many ways also influenced or guided government programmes, as did the emergence and quick growth of nongovernment organisations (NGOs). Perhaps, the GATT agreement of 1995 was the single-most important document that created a global foundation seeking an integration of all economies.

In general the programmes, sponsored by global institutions like the World Bank, IMF etc, have played a key role in accelerating the process of integrating peripheral economies such as Bangladesh with more central economies. Those include: (i) the “Green” Revolution, (ii) Structural Adjustment Programme, (iii) “Poverty Alleviation” Programmes, (iv) GATT agreement, and (v) Foreign “aid” supported trade, technical assistance, reform, consultancy, training and education. The current Poverty Reduction Strategy Paper (PRSP) is the latest in the series.2 These programmes also have played a crucial role in determining the shape and direction of the economy and creating a strong support base amongst the ruling classes.

Polarisation, Decomposition and New Formations

During the last three decades, the political economy of Bangladesh has shown fundamental continuities along with several changes. Both the changes and the continuities are important to the understanding of the internal dynamics and external effects influencing Bangladesh. As these also show the shaping of the national economy, some selected areas are briefly discussed below. Transition from an agricultural to service economy: In the early years following independence, Bangladesh’s economy was characterised as an agrarian based one. Agriculture accounted

Table 3: Bangladesh Following the ‘Globalisation’ and ‘Modernisation’ Process

On the increase On the decrease or in crisis

Super market Manufacturing enterprises

Car shop Machine factories

Hybrid seed, mechanisation Local variety, biodiversity

Water resource projects Safe water, water bodies

High rise buildings General housing

NGOs and projects Local/national initiative

Foreign investment in service sector, oil gas. Foreign investment in viable manufacturing

Religious institutions Library and science organisations

Private English medium educational institutions including commercial expensive coaching centres and madrasas Public schools/colleges/universities

People under poverty line Sustainable employment opportunity

Urban population Real income/wage

Working women Women’s income/wage/security

Private expensive clinics, diagnostic centres General health opportunities

Degree holder people Scientists, social scientists, physicians...

Crime Security

Rural-urban and outward migration Capacity utilisation of human and material resources

Communication technology General scientific and technological foundation

Consumerism Proportion of locally produced goods

Consultancy Independent research on science, technology and social science

Criminal and hidden (“black”) economy Productive and sustainable initiatives

Source: Revised table earlier presented in Muhammad (2000b).

Economic and Political Weekly April 15, 2006 for the largest share of both the labour force and of GDP. However, by the end of the century, Bangladesh had ceased to have an agricultural based economy. Agriculture’s proportion in the GDP came down from nearly 60 per cent to 18 per cent, with fisheries making up 23 per cent [GoB 2004]. But on the other end, manufacturing has not captured a dominant position either. The service sector, as a whole, has emerged as the single largest sector contributing more than 50 per cent of GDP. The movement of an economy from agriculture to service bypassing or degenerating manufacturing may not match the textbook notion of development but this is very significant in studying the direction of a peripheral economy like Bangladesh. Manufacturing, upward and downward: There had been a traditional existence of a large number of cottage and small industries in Bangladesh. But the manufacturing sector was dominated, in terms of output proportion, by large manufacturing enterprises and the public sector since 1972. This public sector emerged out of the large and medium enterprises abandoned by Pakistani big business houses after the independence of Bangladesh. In the last three decades, the proportionate share of manufacturing in GDP has shown little change. According to the old estimates of GDP, manufacturing was 7.90 per cent in 1972-73, and 8.47 per cent in 2003, less than 1 per cent increase in average over 30 years. With the new estimates, figures rise but the trend remains the same. According to the new estimates, in 1995-96, the share of manufacturing in GDP was 15.43, but it decreased to 14.68 per cent in 2000 and again slightly increased to 15.97 per cent in 2003 [GoB 2001, 2004]. If we compare the share of manufacturing from early 1980s with the figure in 2003 than it would show a clear deindustrialisation trend [Muhammad et al 2003]. Figures in 2004 show little change.

Table 2 reveals different trends of growth for different types of industries. A positive growth is seen for export-oriented ones and construction while a negative growth is recorded for old industries in the country. Since the early 1980s, many old enterprises, public and private, were closed or downsized and gradually replaced by the export oriented ones.3 Due to the closure of many large-scale factories and sickness of medium and small enterprises the number of industrial workforce shrank despite some new opportunities in export-oriented garments and EPZs. Expansion of trade: Bangladesh’s external trade has increased manifold. While total trade was 20.65 per cent of GDP in 1973 it increased to 30.77 per cent of GDP in 2001. Both imports and exports have expanded, although the trade gap remains high as the volume of imports has increased faster than that of exports. The increase in imports took place consistently with reform measures to liberalise imports, i e, lowering import duty and removing trade and non-trade barriers. While in 1992-93 the highest import duty was 150 per cent, it has since been reduced to 30 per cent in 2004. The average import duty comes to 15.65 per cent [GoB 2004].

While jute and jute goods dominated the export trade in early 1970s, ready-made garments have dominated since the late 1980s, capturing more than 60 per cent of export trade. Although major export items shifted from agricultural goods to processed goods, (e g, ready-made garments) it has only 25 per cent of value added components. Women in labour market: Women’s participation in market oriented and income-generating activities was low in the early 1970s. Women in Bangladesh traditionally have been active in both cost saving and income generating activities, i e, in agriprocessing, handicrafts, gardening, poultry and cattle care, management of households, or preparing goods for marketing by male members etc. However, the activities of NGOs in extending microcredit during last two decades have actually added inputs to the traditional activities of women and small-scale businesses of men.

The participation of women in economic activities outside the household has been expanding since the early 1980s. Both push and pull factors have contributed to this. On the one hand, family level income has often faced a severe crisis due to decline in real wages and stagnation in the demand for male labour. This double crisis has pushed female members of the family to work outside the family domain. Moreover, there are many instances when the female member is forced to work outside household after the male head of the family left facing an economic crisis. On the other hand, export-oriented industries (e g, garments sector, shrimp farming) and other export-oriented activities, in the informal sector as well as growing urban demand for different types of cottage goods and jobs led to a demand for women labourers [Muhammad 2004]. Rural non-farm activity: Landless labourers constitute a vast majority of the population in rural Bangladesh. Landlessness increased from 33 per cent in 1972 to nearly 60 per cent in 2000 [BBS 2002]. Given this supply agricultural employment is not capable of accommodating all, or even a majority of them. There are months when demand for agricultural labour approaches zero. Non-farm activity has always been a part of rural life, but the population involved in such activities has been always very small in number. Moreover, non-farm activity has remained a family based traditional job. Since 1980, however, non-farm employment has grown fast. The jobs available include: petty trade, small shop, transportation like rickshaws and vans, and other non-farm daily wage labour. Increase in market orientation: Rural works programme in the 1960s contributed to improve road connectivity between rural and urban areas. Although this helped market expansion and market-oriented activities, these latter activities remained modest until the late 1970s. Since then these activities, i e, production and processing for market and profit, grew fast. This happened not only in crop production, but spread to other areas as a result of institutional and financial support. Commercial production related to poultry, dairy and fisheries increased significantly since the early 1980s. Export-oriented production of shrimps expanded. NGO microcredit contributed significantly to market oriented activities of low income rural people.4 From multicrop to monocrop: Bangladesh had a rich diversity of crops. For example, there were hundreds of varieties of rice grown; this too has changed. In the process of “green revolution” rice became the main crop and also effectively the “monocrop” in agricultural landscape. Expansion of monocropping has also been linked to the increasing market orientation of crop production, fertiliser-irrigation equipment marketing, and expansion of the credit market. Urban informal sector: In the early 1970s, the service sector consisted of a small, informal sector that was insignificant in size and employment. Urbanisation was low. But urban migration from the countryside has grown since the early 1980s. The influx of people could not be absorbed into the manufacturing sector, since the sector faced shrinking employment opportunities. So, they secured their livelihoods in self-employment and in the informal sector. Communication: Although rail and water transport, the traditional mode of transport in this land, remain neglected and stagnant till today, road transport has developed rapidly since the mid1980s. Telecommunication also achieved a breakthrough in the early 1990s by linking all “thanas”. By the late 1990s, a good

Economic and Political Weekly April 15, 2006

portion of the rural areas has been brought under mobile and satellite TV network. The expansion of this communication network has helped fuel demands for other consumer items. In the rural areas, many imported consumer items are now readily available. Foreign direct investment: In Bangladesh foreign direct investment (FDI) had been very small and limited in some selected areas till the early 1990s. Successive governments have consistently been expanding incentives for foreign investment. These include: removing the ceiling on foreign equity participation; allowing the repatriation of invested capital, profit, and dividends; allowing foreign investors to obtain working capital from local banks; removing the obligation to sell shares through public issue irrespective of the amount of paid-up capital; providing tax-exemption on royalties, technical know-how and technical assistance fees; and providing tax exemption on the interest on foreign loans and on capital gains from the transfer of shares.

However, since 1993, foreign direct investment has been increasing. It received a boost with the establishment of the Karnaphuli Fertiliser Company (KAFCO). Since the early 1990s, interests of MNCs for investment in gas and electricity utilities, ports and telecommunication has become visible, and new contracts were signed in gas, telecommunication and electricity sectors. The groundwork for these investments were long prepared by major global institutions. FDI in these cases is proving to be burdensome on the economy.5 NGOs as new corporate bodies: The growth of NGOs in Bangladesh has been spectacular. The NGO model of development in Bangladesh, which has included group formations, the target group approach, participatory development and microcredit, has added a new dimension to development thinking. Global institutions treat the model as a safety-net for the people who are victims of other development measures prescribed by the same institutions. In Bangladesh, “NGOs” mean not merely a non-governmental organisation, the term means a type of development agency funded by foreign agencies. Horizontal expansion as well as qualitative changes in its composition have characterised the last 15 years of their activities. Initially, NGOs appeared with a promise to: work on social issues, struggle against exploitation and discrimination, work outside the domain or influence of local or national power structures.6 Since the early 1980s microcredit operations started getting priority among some NGOs and by early 1990s it became main focus of most of the sectors.

In the process NGOs became polarised between the few very big NGOs and the many small, where the small ones have been reduced to subcontractors of the big. The big NGOs have become corporate bodies.7 A significant number of NGOs led by big ones like BRAC, PROSHIKA are now involved in businesses projects. The big NGOs are also in the process of forming alliances with MNCs. To give a few examples: BRAC works with UNOCAL and Monsanto; the Grameen Bank,8 which initially intended to work with Monsanto but failed due to resistance, is now intensely working with multinational telecommunication companies and is involved also with shrimp cultivation. It should be noted that the involvement of NGOs in business activities became a matter of discussion years before.9 Criminal economy: The share of “black”10 economic activities in the economy is yet to be accurately estimated. However, there are some rough approximations. UNDP finds it to be around 30 per cent of the country’s GDP. But a top leader of the business community found it to be more than 50 per cent of GDP.11 The peculiarities of this particular economy encompasses bribery, crime, arms trade, production of arms, employment of professional criminals, corruption and grabbing, illegal commissions, leakage from different governments projects, specially “foreign aided” ones. Successive governments of Bangladesh have displayed a very lenient attitude towards this stolen money or ‘chora taka’ as well as the mafia lords of the illegal economy who, in fact, now also dominate the political arena. The rise of the superrich and mafia lords and their domination over policy-makers make the task easier for global institutions to sell their agenda without any resistance from the ruling elite. From poverty to poverty: Although poverty alleviation has always been the “top objective” of successive governments and global institutions, and although foreign aided “poverty alleviation” projects are in abundance the poverty scenario has hardly changed. The population living under the income poverty line increased from 50 million in 1972 to 68 million in 2003. Since 1990-91 allocation for poverty alleviation increased more than 700 per cent while GDP increased by nearly 50 per cent, but poverty headcount ratio increased from 47.5 per cent to 49.8 per cent during this period [GoB 2004].12 On the other hand, inequality has also increased during this period. In 1983-84 the lowest 5 per cent of the population held 1.17 per cent of national income but it came down to 0.67 per cent in 2003, while the share increased for the highest 5 per cent, from 18.30 per cent to 30.66 per cent of national income during the same period [GoB 2004]. Class composition: At the time of independence, Bangladesh’s society, both rural and urban, mostly comprised of small owners: petty traders, low and middle-income professionals, small and medium farmers, small entrepreneurs. Except large farmers and ‘jotedars’, a big propertied class based on industry or on trade was almost non-existent. This societal composition has radically changed in the last three decades. Big propertied multimillionaires have grown to number in thousands in this period and new occupations related to the service sector have emerged. However, this super-rich class has either little or negative relations with the growth of manufacturing [Siddiqui 1990; Muhammad 2000a].

In rural areas, business, not land has become the determinant of one’s economic position. The big propertied classes in the rural areas, therefore, are those who along with landownership are involved with business of different kind. Landless people in rural areas have grown in number and proportion. As a class, they have emerged as the single largest majority in the population. A large segment of this, however, has been delinked from farm work. Migration to urban areas has happened mostly from this group.

While the industrial labour pool has shrunk in size, the influx of new workers has changed its gender composition. In addition, the growth of the informal sector has given rise to “floating labourers” who recieve a lower wage than the industrial workers.13 Overall direction: Therefore, after the first three decades, we find Bangladesh is more marketised, more globalised and more urbanised; and, has a good number of super-rich and increased number of uprooted poor people. We also find the increasing role of international agencies in governance, and the increasing presence of funding organisations including NGOs. The role of the state in major policy formulations is rather marginal. Bangladesh is now dominated by a power oligarchy. Criminal activity, including grabbing public resources, has become the main mode of capital accumulation. This has also gained strength in determining mainstream politics. This scenario has been ironically labelled as a “success” of “development” projects

Economic and Political Weekly April 15, 2006 by the global institutions and successive governments. Table 3 summarises this scenario.


In the last 30 years Bangladesh has had plenty of “development” projects and accumulated a huge international debt for attaining this “development”. During this process, a number of consultancy firms, think-tanks and hundreds of NGOs have emerged, and many experts in different fields were born. Different projects have provided opportunities for bureaucrats, consultants to travel to other parts of the world to obtain training from or consult experts in the economic centres. We now have plenty of experts, consultants and researchers in different fields who have become part of an international community hungry for projects and blessings of the global institutions. Poverty alleviation projects have given enough affluence to foreign and local consultants, bureaucrats, NGO owners and researchers. Agriculture and water development projects could ensure enough business to international and national construction firms, bureaucrats, consultants and agribusiness corporate bodies. Energy and power development projects have ensured disastrous investments and quick high profits for the MNCs. Research and education programmes have succeeded in creating an ideological hegemony by encouraging a lot of clone intellectuals and experts. Affluence and poverty have grown in parallel.

The fate of Bangladesh is now being determined not by any elected bodies, not from any initiative from within but by bureaucratic global institutions, which have authority but do not bear any responsibility for their actions. The policies of different governments regarding industry, agriculture, education, health, trade, environment, poverty or women’s issues have only given legitimacy to policies outlined much earlier by bodies not accountable to the people of this land. And through these actions, jointly taken by local governments and global institutions, Bangladesh has been moving towards becoming more and more integrated into the global capitalist system. Since the local ruling class does have strong lumpen features and cannot be characterised as a productive bourgeoisie, Bangladesh is only a blind, mindless follower, and therefore a very vulnerable state. This is one of the faces of peripheral capitalism in late global capitalism. The lumpen ruling class has been fattened and strengthened by the support of global institutions at the expense of the people and the environment.




1 Mahbub ul Haq, chief economist, Pakistan Planning Commission, qouted

in Jahan (1972), p 60.

2 For detail analysis of these programmes and the roles of global institutions

in Bangladesh [Muhammad 2003].

3 Governments have consistently been expanding incentives for export

oriented industries and foreign investment since 1978. For export

oriented industries incentives include: duty free import of capital

machinery by 100 per cent export-oriented industries outside the EPZs,

creation of an export promotion fund (EPF) for product development

and market promotion of new items, exemption from payment of

50 per cent of income tax on income derived from export, exemption

from payment of import license fees by exporters who import raw

materials exclusively for export production, exporters allowed to

retain up to 10 per cent of earnings for general business purposes, rising

to 15-20 per cent soon [see details on manufacturing sector in

Muhammad et al 2003].

4 Main focus of NGO activites now was summarised by one official of BRAC, leading NGO in Bangladesh: ‘We Link the Poor to the Market’ [Roundtable 1997].

5 See analysis of FDI in gas sector Muhammad (2004) and for the assessment of the World Bank on this see World Bank (1999). 6 See discussion on the NGO model working in Bangladesh and its shifts over time, Muhammad (2000).

7 World Bank’s recommendations are noteworthy here. It said, “Integrate NGOs with commercial finance markets by: (a) developing an appropriate regulatory framework for the financial operations of the NGO sector;

(b) encouraging large NGOs to establish themselves as banks; (c) encouraging ‘wholesaling’ of credit to established NGOs; and (d) using smaller NGOs as brokers to mobilise self-help savings groups” [World Bank 1996].

8 Grameen Bank is not a registered NGO but it can be bracketed with NGOs since it works in NGO model.

9 Chairman of NBR stated in 1997 that the NGOs that establish factories and run businesses have to be taxed, otherwise they would gain an unfair advantage over other firms in the same industry. The chairman of a business group said that, in industries owned by NGOs, the cost of loans is zero as opposed to the private sector who pay around 25 per cent to the banks [Roundtable 1997].

10 Traditionally “black” economy is generally used to denote illegal, criminal and hidden economic activity.

11 This was stated by the president of Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), TV interview, Ekushey, June 5, 2002.

12 The last figure 50 per cent is found from the prime minister’s statement.

13 See an analysis based on the study of changing class composition

[Muhammad 2000a]. The study findings include emergence of new occupations those are mostly service oriented and highly vulnerable in nature. Low income and unsecured jobs have become inevitable destiny of large numbers of uprooted rural people. High income occupations were found linked with international agencies, foreign banks, NGOs, consultancy firms and big business houses. The decline of the productive sectors and the rise of a “super market” and service oriented economy were linked with the mobility of international capital has been shaping and reshaping the faces of the people in both poles, i e, rich and poor.


BBS (2002): ‘Bangladesh Bureau of Statistics’, Household Expenditure Survey, Dhaka, Bangladesh.

GoB (2001 and 2004): Bangladesh Economic Review, June, Government of Bangladesh.

Jahan, Rounaq (1972): Pakistan Failure in National Integration, Columbia University Press.

Muhammad, Anu (2000): ‘Bangladesher Unnyan Songkot ebong NGO Model’, 2nd edition, Protik, Dhaka.

  • (2000a): ‘Bangladesher Arthinitir Chalchitra’, Sraban, Dhaka.
  • (2001): ‘Occupational Matrix: Dynamics and Direction of a Peripheral Economy: A Case of Dhaka City’, Proshashon Sameekhya, PATC.
  • (2003): ‘Bangladesh’s Integration into Global Capitalist System: Policy Direction and the Role of Global Institutions’ in Matiur Rahman (ed), Globalisation, Environmental Crisis and Social Change in Bangladesh, UPL, Dhaka.
  • (2004): ‘Nari, Purush o Samaj’, Sondesh, Dhaka, first edition, 1998.
  • (2004): ‘Foreign Direct Investment and Utilisation of Natural Gas in Bangladesh’ in fa26_FDI_Gas.htm.
  • Muhammad Anu, Nurul Huq and Amir Hossain (2003): ‘Manufacturing in Bangladesh: Growth, Stagnation and Erosion’, Journal of Economic Review, Jahangirnagar University, June.

    Roundtable (1997): The Daily Star Roundtable in Association with Prince of Wales Business Leaders Forum (PWBLF): Towards a Creative Business-NGO Partnership, Daily Star.

    Siddiqui, Kamal (1995): Social Formation in Dhaka City, UPL, Dhaka.

    Sobhan, Rehman (1982): The Crisis of External Dependence, UPL, Dhaka.

    World Bank (1974): ‘Bangladesh: Development in a Rural Economy’,


  • (1975): ‘Bangladesh: The Current Economic Situation and Short-term Outlook’, May.
  • (1976): ‘Bangladesh: Current Economic Performance and Short-term Prospects’, March.
  • (1996): Agenda for Action, World Bank.
  • (1999): ‘Foreign Direct Investment in Bangladesh: Issues of Long-Run Sustainability’, October.
  • Economic and Political Weekly April 15, 2006

    Dear Reader,

    To continue reading, become a subscriber.

    Explore our attractive subscription offers.

    Click here

    Back to Top