Report

10 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
countries. However, this trend was reversed over the
20-year period. The share of agriculture in GDP
decelerated to 7.7% in Nepal, the lowest as compared
to other South Asian countries, however, the contribution
of the manufacturing sector was the highest in this
country. The share of agriculture decelerated in almost
all the economies. While, the manufacturing sector
maintained its share of less than 20% (with Nepal being
an exception). This is indicative of the relatively rapid
expansion of the service sector in almost all the
economies (the exception being Nepal). With respect
to the trade openness, Maldives has remained a
relatively open economy, followed by Sri Lanka and
Bhutan. The share of exports and imports to GDP was
the highest in Maldives in the 1980s and 1990s, while
the share remained low in Bangladesh and India. The
share of imports and exports in GDP has increased in
almost all the South Asian economies over the 20-year
period starting from 1986, reflecting a transition
towards a more open and liberalised economy.
We now examine in greater detail the country-wise
economic and trade profiles.
Bangladesh
At the time of its independence in 1971, Bangladesh
was a low income and overpopulated country. However,
it has progressed rapidly in terms of attaining higher
growth. The per capita GDP has more than doubled
since 1975 (Fig 1.1).
Until 1989, GDP per capita grew at a positive but
mediocre average yearly rate of 1.2%. However, in
1990, various reforms were introduced in the areas of
macro-liberalisation, trade liberalisation and financial
deregulation. These broad-based, market-oriented
reforms and macro-stabilisation measures introduced
in the 1990s propelled both private investment and
technology infusion. Per capita GDP attained a growth
rate of 3.3%. The strong growth is characterized by
high overall GDP growth rate facilitated by a sharp
decline in population growth rate. However, in terms
of the absolute levels of the GDP, Bangladesh still ranks
low. As seen in Table 1.6, growth averaged at 5.4%
over 2001–05, which has been the highest 5-year
average since the country’s independence. This growth
Fig 1.1 Per capita GDP(US $) in Bangladesh
Source: WDI
was underpinned by resurgence in private investment,
large remittance inflows which fueled growth in
construction and service sectors, impressive macroeconomic
stability, relatively high saving and
investments and higher pace of human development.
The economic advances during the 1990s underpinned
and benefited from progress on human
development. Poverty rate has declined by 20% since
early 1990s. Unemployment rate is only 4% and have
been consistently low.
Trade Policy Regime in Bangladesh: Trade liberalisation
has been one of the major policy reforms in Bangladesh.
It has been implemented as part of the overall economic
reform programme, namely the structural adjustment
programme (SAP), which was initiated in 1987 and
formed the component of ‘structural adjustment facility’
(SAF) and ‘enhanced structural adjustment facility’
(ESAF) of the IMF and World Bank.
Bangladesh initially followed a strategy of a highly
restricted trade regime. This was characterized by high
tariff and non-tariff barriers to trade and an overvalued
exchange rate system which was supported by the
import substitution industrialisation strategy of the
government. The trade policy during 1972–80 consisted
of significant import controls. The instruments
employed to implement the import policy were the
Table 1.6 Annual growth rate of GDP in Bangladesh: 1997–2005
Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Annual growth rate of GDP 5.23 4.87 5.94 5.27 4.42 5.26 6.27 5.96 6.63
Source: Statistical Yearbook of Bangladesh, 2006: Bangladesh Bureau of Statistics