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POLICY REFORMS AND TRADE LIBERALIZATION IN BANGLADESH

I. MAIN FEATURES OF BANGLADESH ECONOMY

GDP and its composition. During the fiscal year 2002-2003, the GDP of Bangladesh stood at around $52 billion. The growth rate of GDP has picked up in recent years. Thus, during 1980-90, it grew annually at 3.7 per cent on average, barely above the population growth rate. On the other hand, it approached an average annual rate of 5 per cent during 1991-2002. The relative shares of consumption and savings in the GDP witnessed modest changes during this period. In 1991, consumption accounted for over 86 per cent of the GDP, while in 2002 it fell to nearly 82 per cent. Correspondingly, the shares of savings in GDP rose by a quarter over this period. During the same period, the investment/GDP ratio increased from 17 per cent to 23 per cent. Within this, the ration of public investment to GDP remained stagnant around 7 per cent, while that of private investment increased from 10 per cent to 17 per cent of GDP.

Changing sectoral distribution. As indicated by changes in the sectoral distribution of the GDP, the economy of Bangladesh underwent important structural transformations over the last three decades. At independence in 1971, agriculture was the dominant sectors accounting for over 55 per cent of the total GDP. The industrial sector was small, contributing less than 10 per cent of the GDP. The services including transportation and power accounted for the rest of the GDP. The share of the industrial sector stagnated at around 10 per cent until the mid-1980s. With the

2 remarkable growth in the RMG sector, however, its share began to change. By 1990, the contribution of industry to GDP nearly doubled to nearly 20 per cent. The share of agriculture fell to slightly over 30 per cent that years, while that of the services sector rose to 45 per cent. To the extent