Introduction
The positive relationship between economic growth and poverty reduction is not automatic. In Bangladesh, development expenditures have been growing in various proportions in agriculture, rural development, water resources, infrastructure, education and health sector. Each of these sectors impacts growth and poverty reduction differently.

Allocation on agriculture, rural development, health, education and social safety net impacts poverty reduction at a higher rate and impacts economic growth too. Investment in infrastructure development, capital intensive industrialization, and some service sectors may boost up economic growth at a higher rate but may not impact poverty reduction at the desired rate.

There is no doubt that faster economic growth is associated with faster poverty reduction. Since domestic/national resources fall short of the requirement, development partners play an important role in Bangladesh's development endeavour.

In case of Bangladesh, in-spite of some remarkable positive performance against some indicators, aggregate poverty rates still remain high. Thus, it is high time to look forward for other options and means to accelerate economic growth and poverty reduction.

Reform is Critical for Growth and Poverty Reduction
The fundamental development constraints in Bangladesh are poor governance, corruption, law and order, public service delivery, and effectiveness of public expenditures to improve human development. It is important to improve the investment climate through supporting sectoral governance reforms and investments in the power sector, water and sewerage, roads, railways and urban development.

The governance reforms and investments in health, education, sanitation, local government strengthening, and safety net approaches are crucial for achieving growth and poverty reduction in Bangladesh.

Fiscal Policy
An analysis of the fiscal trends over the last two decades shows that there has been some progress in increasing the revenue-GDP ratio particularly since 1990s but the ratio is still very low even by the standard of the developing countries. The ratio increased significantly in the mid 1990s which was due to the introduction of the
VAT, but the increase seems to have been once-and-for all phenomenon. While the share of the revenue expenditure as a percentage of GDP increased from 8% in 1985/86 to about 11% in 2007/08, the share of the development expenditure has decreased significantly from 7% to 4%.

TAX
One of most sensitive areas of governance reforms in Bangladesh is reforming the tax administration of the country. The stylized facts of Bangladesh revenue system are inadequate and stagnant revenue yield relative to GDP; high ratio of indirect to direct tax revenue; and low revenue productivity and high administrative cost.

Infrastructure
Infrastructure services are critical to economic growth and poverty reduction in Bangladesh. Access to modern and improved infrastructure services also can directly improve health and education outcomes. Private-sector interventions have helped to extend services to some populations who were not receiving coverage from the public sector. But overall, compared to several of our neighbours in South Asia, Bangladesh has been less able to attract investment in private infrastructure projects. A range of public-private partnerships can be considered, including arrangements that involve some government funding, such as subsidies to private companies to accomplish identified social goals. Bangladesh faces a challenging reform agenda. Broadly, steps that may be considered are:

* Carrying out basic reforms in the governance and corporate structures of existing public service providers * Introducing and facilitating competition * Including competition to provide service to new consumers and, where possible, existing customers * Pricing key services, such as water and electricity, in a way that more closely reflects the costs of service provision * Developing a consensus that favours reforms and addressing the concerns of those groups who will be negatively affected by these necessary changes

Indeed, reforms in all areas will be necessary to facilitate sustainable economic growth and poverty reduction for Bangladesh.

Poverty Situation in Bangladesh
According to IMF and World Bank estimates Bangladesh ranks as the 58th largest economy in the world in terms of GDP. Despite its relatively modest GDP standing, Bangladesh is considered to be a developing country and ranks amongst the poorest in the world.

Real GDP growth in 1974 was minus 4.1%. The periods from 1981 to 1985 and 1986 to 1990, both experienced GDP growth rates of 3.7% annually. The decade from 1991 to 2000 faired considerably better compared to the previous one. The growth rate of GDP averaged 4.8% for the entire period with a growth rate of 5.2% for 1996 to 2000.

The first Household Expenditure Survey (HES) in Bangladesh was carried out in FY1973-74. In subsequent years, a number of HESs was undertaken; the latest one was conducted by Bangladesh Bureau of Statistics (BBS) in 2005.

Alternative methods for measuring absolute income poverty in Bangladesh

| Direct calorie intake | Food energy intake | Cost of basic needs | Indicator | Calorie intake | Expenditure (or income) | Expenditure (or income) | Threshold | 2,122 kilocalories/ person-day | Expenditure level at which household members areexpected to reach calorie intake threshold | Expenditure level at which household members areexpected to meet basic needs (food and non-food) | Measure | Head-count or other | Head-count or other | Head-count or other | Strengths andweaknesses | Indicator not representative;threshold consistent (for monitoring calorie intake) | Indicator representative;threshold not consistent (for real expenditures) | Indicator representative; thresholdconsistent (for real expenditures) |
Source: World Bank 2002

Bangladesh prepared its first Poverty Reduction Strategy Paper (PRSP) titled as ‘Unlocking the Potential: National Strategy for Accelerated Poverty Reduction (NSAPR)’ for the period July 2004 to June 2007, with the aim of attaining Millennium Development Goals (MDGs) by 2015.

Bangladesh's march towards meeting the MDGs has been possible largely due to its steady economic growth of nearly 5% annually on average in the 1990s, and nearly 6% annually on average in the new millennium. (130)

Public expenditure on education in selected South Asian Countries, 2002 to 2005

Country | Public Expenditure as % of GDP | Maldives | 7.1 | India | 3.8 | Nepal | 3.4 | Bangladesh | 2.5 | Pakistan | 2.3 |
Source: Human Development Report, UNDP 2007/2008

Linkage between Growth Rate and Poverty Reduction
Analysis of the relationship between economic growth and poverty reduction has gone through various phases in the literature on development. For example, an important principle of the very early theories of development was that the benefits of economic growth would trickle down to the poor.
Since then, questions have been raised on the assumption of an automatic link between growth and poverty reduction, and attempts have been made to understand the mechanisms through which the benefits of growth may get transmitted to the poor. Some of the latter categories of studies do also refer to the role of employment; and yet, a rigorous analysis of the role of employment in the linkage between economic growth and poverty reduction appears to be missing.
Following on the Kuznets (1955) hypothesis of an inverted U shape of the relationship between economic growth and income inequality, Adelman and Morris (1973) was one of the earlier studies to question the automaticity of the relationship between economic growth and benefits to the poor. And then came the influential contribution by Chenery, et al. (1974), focusing on the importance of redistribution alongside economic growth.
While growth continued to occupy the centre stage in development literature, there have been studies, especially in recent years, arguing that although growth is necessary for poverty reduction, it is not sufficient.
Thus, a gap in the literature on the linkage between economic growth and poverty reduction is the absence of an analysis of the role of employment in the working of this link.
Bangladesh Scenario
The rising economic growth rate of the 1990s has had a positive impact on poverty reduction. But the increased growth and declining poverty has not brought about a more equitable distribution of income. In fact, the distribution of income has become more unequal over time with the rich getting richer and the poor getting poorer.
Measuring Inequality
The Gini coefficient is the most widely accepted measure of income inequality and is also used here for denoting the level of inequality in Bangladesh. It is defined as a ratio with values between 0 and 1: the higher the value the greater the inequality, with 0 corresponding to perfect equality and 1 to perfect inequality. The trend of the Gini coefficient from 1983 to 2005 for Bangladesh is shown in the following table. Income Distribution | 1983-84 | 1985-86 | 1988-89 | 1991-92 | 1995-96 | 2000 | 2005 | Bottom 5% | 1.2 | 1.2 | 1.1 | 1.1 | 0.9 | 0.9 | 0.8 | Bottom 10% | 2.9 | 2.8 | 2.6 | 2.6 | 2.2 | 2.4 | 2.0 | Bottom 20% | 7.2 | 7.0 | 6.6 | 6.5 | 5.7 | 6.2 | 5.3 | Bottom 50% | 26.3 | 25.1 | 24.5 | 24.5 | 21.9 | 22.1 | 20.3 | Top 5% | 18.3 | 21.3 | 20.5 | 18.8 | 23.6 | 28.3 | 26.9 | Top 10% | 28.3 | 31.5 | 31.0 | 29.2 | 34.7 | 38.0 | 37.6 | Top 20% | 43.4 | 46.1 | 46.2 | 44.9 | 50.1 | 52.0 | 52.7 | Top 50% | 73.7 | 74.9 | 75.5 | 75.5 | 78.1 | 77.9 | 79.7 | Gini Index | 0.360 | 0.370 0.379 0.388 0.432 | 0.379 | 0.388 | 0.432 | 0.451 | 0.467 |
Source: Household Income Expenditure Survey (HIES) 1991/92, 2000, and 2005.
What is most discernible from the Table is the fact that inequality in the distribution of income has increased steadily over time as indicated by the rise in Gini coefficient; it has gone from 0.360 in 1983-84 to 0.467 in 2005.

A closer look at the composition of income distribution makes this more apparent. The share of the bottom 5% of the population has decreased from 1.2% in 1983 to 84 to 0.8% in 2005 whereas the share of the top 5% has increased from 18.3% to 26.9% over the same period.

It is depressing to note that in 2005, the top 20% of the population had over 50% of total income whereas the bottom 20% had just over 5%. However, the disparities in income inequality become more evident when one considers the top 50% and the bottom 50%.

While the bottom 50% had only 20.3% of the share, the top 50% bottom 20% had just over 5%. However, the disparities in income inequality become more evident when one considers the top 50% and the bottom 50%. While the bottom 50% had only 20.3% of the share, the top 50% had almost four times as much as 79.7%.

This proves that the level of inequality has gone up consistently in Bangladesh and economic growth does not necessarily suggest reduction of poverty in the country.

Conclusion
The economy of Bangladesh can be subdivided into three broad sectors which directly contribute to its GDP: agriculture, industry & services. Although Bangladesh still remains predominantly agrarian, the share of the agriculture sector has been declining steadily over the years. The agriculture sector accounted for only 21% of GDP in 2005-06 compared to 25% a decade earlier. This is in sharp contrast to 1975-76 when the agriculture sector contributed to almost half of the total GDP.
The public expenditure of Bangladesh is characterized by: * Low effectiveness of capital spending * Inadequate attention to operations and maintenance * Inappropriate employment and pay policies * Existence of fairly large subsidies.

The budgets are prepared mechanically by making incremental changes in the previous years' allocation and lack medium and longer term strategic objectives. The links between policies, planning and budgeting need to be improved. To ensure the efficiency of public spending, it is highly needed to improve the co-ordination and adjustment of expenditures between revenue and development budgets.

Government of Bangladesh through Department of Youth Development has been working in connection with youth enterprise and entrepreneurship development. For entrepreneurship development, the following factors need attention.

* Ensuring supply of adequate capital for sustenance of the project * Training should be participatory in nature to in still skills among the participants. * Respect for law and order to ensure success of the project * Development of infrastructure, such as, communication, marketing and electrification * Formation of youth co-operatives and clubs for organizing them in groups for engaging in productive purposes * Involving more female youths to bring about gender equality

The following are also suggested to be given higher priority to ensure higher growth and accelerated poverty reduction outcomes.

Monetary Policy * Increase private sector credit to agriculture, SME, and rural economy * Direct increasing amount of remittances towards investment in productive sectors * Develop an active secondary market for government securities * Bringing appropriate changes in government debt management strategy to improve balance between short and long term borrowing

Export Policy * Encourage labour intensive export oriented production * Develop a skilled labour force to manage international trade * Specific facilities to RMGs

Food Policy * Proper allocation of available cultivable land and improved agricultural technologies * Appropriate research and agricultural loan * Investment in roads, canals, irrigation, rural electrification, and market infrastructure

National Youth Policy * Lease out “khas” land and water body among the youth * Set up youth training centre throughout the country with modern training equipment and facilities for training on entrepreneurship. * Provide facilities for marketing of the products of youth co-operative society, voluntary youth organization and self employed youth.

Mere attainment of high GDP growth rate will not serve the purpose of poverty reduction of the people. While a vibrant economy is needed for poverty reduction, an uppish growth in sectors which do not involve poorer sections of the society will not make any dent in poverty reduction efforts for Bangladesh.