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Bangladesh
Economic Reconstruction after Independence
Bangladesh
Economic Reconstruction after Independence
The economic situation facing Bangladesh as it emerged from the
war of independence in 1971 included the highest rural population
density in the entire world, an annual population growth rate
between 2.5 and 3 percent, chronic malnutrition for perhaps the
majority of the people, and the dislocation of between 8 and 10
million people who had fled to India and returned to independent
Bangladesh by 1972
(see Migration
, ch. 2). The new nation had few
experienced entrepreneurs, managers, administrators, engineers, or
technicians. There were critical shortages of essential food grains
and other staples because of wartime disruptions. External markets
for jute had been lost because of the instability of supply and the
increasing popularity of synthetic substitutes. Foreign exchange
resources were minuscule, and the banking and monetary system was
unreliable. Although Bangladesh had a large work force, the vast
reserves of undertrained and underpaid workers were largely
illiterate, unskilled, and underemployed. Commercially exploitable
industrial resources, except for natural gas, were lacking.
Inflation, especially for essential consumer goods, ran between 300
and 400 percent. The war of independence had crippled the
transportation system. Hundreds of road and railroad bridges had
been destroyed or damaged, and rolling stock was inadequate and in
poor repair. The new country was still recovering from a severe
cyclone that hit the area in 1970 and cause 250,000 deaths. India,
by no means a wealthy country and without a tradition of giving aid
to other nations, came forward immediately with massive economic
assistance in the first months after the fighting ended. Between
December 1971 and January 1972, India committed US$232 million in
aid to Bangladesh, almost all of it for immediate disbursement. The
largest single element in Indian aid was 900,000 tons of food
grains. The United States and the
World Bank (see Glossary)
thereafter became leading foreign aid donors, and the World Bank
organized a consortium known as the Bangladesh Aid Group,
comprising twenty-six international financial institutions and
foreign governments interested in assisting Bangladesh's
development.
Data as of September 1988
