Agricultural development and the rural economy: The case of Bangladesh

Abstract

Bangladesh is traditionally an agriculture dominant economy. The majority of her population lives in the rural area where the primary means of livelihood is agriculture. This traditional sector has contributed significantly to the rise of the gross domestic product (GDP) of the country before other sectors take its place. Agricultural growth paralleled the GDP growth until the mid-2000s which can be attributed to various agriculture-friendly strategies initiated by the state. The boost of agriculture productivity has been accompanied by a decline in rural poverty. However, agriculture growth has failed to accelerate the structural shift in the recent period due to various constraints. Drawing upon the agriculture demand-lead strategy of a structural shift, this chapter argues that agriculture productivity did not contribute to the rise of farm wage. As a result, the traditional sector has apparently failed to boost the demand for industrial production and hence industrialization of the country. It is argued that a dynamic transformation in Bangladesh can be achieved by adopting ‘agriculture first’ strategy because the country’s natural ambient and its social structure are conducive for agriculture. Policymakers should formulate policies that help break the subsistence farming, which is mostly responsible for the low wage rate of agriculture labor. Adoption of modern technology, proper channeling of formal financing to the agriculture sector, and limiting the decline of arable land are few policy options to be considered.