Districts in the countryside lag far behind two big cities, Dhaka and Chattogram, in terms of GDP per capita, indicating that the country's rapid economic growth is not necessarily benefitting all regions and sections of society.
This came up in a paper of the Asian Development Bank (ADB) which was presented at a seminar titled “Spreading equitable development in the countryside” organised by the lender at InterContinental Dhaka yesterday.
It showed that per capita product of districts such as the southeast hill-tract of Khagrachhari was Tk 24,556 in 2010, 36 percent of Dhaka's Tk 66,548 and 42 percent of Chattaogram's.
The GDP per capita of northeast border district Sunamganj was 42 percent of that of Dhaka, said ADB Country Director Manmohan Parkash.
He said Bangladesh's economy grew over 6.5 percent on an average in the last 10 years. It currently grows by nearly 8 percent, making it one of the fastest growing economies in the world.
“The country has also achieved the lower-middle income status and is aspiring to be an upper middle income and higher income country by 2041. This is ambitious and challenging,” he said.
He said as Bangladesh has made rapid progress, it faces several development challenges.
“The higher economic growth may not necessarily be benefitting all regions and sections of the society. The Gini coefficient is increasing and so is the disparity,” said Parkash, adding that almost 20 lakh new faces get added to the labour market annually. At the same time, the country also faces challenges of infrastructure deficit, human capital, urban services, financial inclusion, climate change and resilience.
“The quality of life is getting affected,” he said, adding, “The country needs to have more inclusive growth and reduce poverty by creating jobs and supporting local development. There is a need to diversify its economic base and create new sources of growth.”
The paper presented at the event said the manufacturing sector was largely concentrated among large and medium-sized enterprises located surrounding big cities such as Dhaka and Chattogram.
Meanwhile, micro and small enterprises, which operate mainly in countryside districts, face various constraints such as inadequate utility supply and access to finance, poor infrastructure, tighter competition and higher labour cost, according to the paper.
Parkash said economic diversification requires decentralised industrial development.
“Promoting a well-planned, integrated industrialisation by synchronising the processes of urbanisation in semi-urban towns near rural areas can be a major development agenda. Spreading industries including SMEs in the countryside will also help develop lagging regions,” he said.
The ADB country head said expanding the role of small and medium enterprises (SMEs) in the economy would create jobs in the countryside, stimulate economic development in local economies and strengthen inclusiveness.
“As part of inclusive financing, SMEs' access to finance needs to be enhanced, and this will develop businesses in semi-urban areas,” he added.
Ralf Schuster, head of Bank Non-OECD Countries, Helaba, Germany, presented another paper on how equitable development has been achieved in Germany by decentralised demographic and industrial development, expanding SME financing and providing education, infrastructure and digitisation in local areas.
Parkash said Germany could be a possible model for Bangladesh to promote equitable development.
Md Tajul Islam, local government, rural development and co-operatives minister, and Salman F Rahman, prime minister's adviser for private industry and investment, were present.