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Significance of expanding the manufacturing base
1/23/2006
THE economy of a country encompasses many things. Even the distributors of foreign luxury or durable consumer products in a country can claim that they are helping economic activities in the sense of distributing these goods and employing some people for the purpose. The same can be claimed by the operator of a service such as a cable TV operator or an internet service provider for home computers. But such distributive functions or services can never replace the core contribution of manufacturing in an economy. Manufacturing ensures the real economic growth by employing workers on a large scale, harnessing local resources and adding value in many cases to locally available goods for consumption locally and substituting their imports or earning foreign currency through exports. Thus, the contribution of manufacturing to the economy can be wide ranging and of enduring value to the economy from greater employment creation to economic self sufficiency.
But critical analyses of growth trends in the Bangladesh economy have been presenting the picture of economic growth which is not driven as much by agriculture or manufacturing as it is by growth in services. A report in this paper on Sunday underlined that the country's economy is experiencing a lop-sided growth with a falling share of the real economic sectors meaning industry and agriculture whereas the contribution of the services sectors is seen to be growing relatively higher. The economists of a leading think tank, the Centre for Policy Disalogue (CPD), maintain that the growth of the real economic sectors in financial year 2005 was 3.8 per cent, while the services sectors attained by comparison nearly a doubled growth at 6 per cent. According to them, the contribution of the real economic sectors to incremental growth declined from 33.6 per cent in financial year 2004 to 27.3 per cent in financial year 2005 when the incremental contribution of the services sector to real GDP growth rose from 44.6 per cent to a robust 60.9 during the same period. An assessment by the official body, the Bangladesh Bureau of Statistics (BBS) presents a rather conflicting picture. It highlighted the contrary picture of fast growth in large, medium and small industries in the July-September period of 2005. The BBS assessment for the period noted 10.21 per cent growth in large and medium industries and 9.51 per cent in small ones. But such a claim does not probably negate the longer term study of the CPD about slower growth on the whole in the manufacturing sectors in comparison to the services sectors.
Why manufacturing activities should be specially encouraged in the context of Bangladesh should be obvious. Agriculture has been traditionally the dominant economic sector with the greatest number of people employed in it. But currently this sector is considered to have an excess of people that suggests that many with agricultural occupations are not employed in the optimum sense. The saturated conditions of the agricultural sector and the first growth of the country's labour force have tended to make worse the unemployment situation. Presently, some 30 or 40 million in the population are considered to be unemployed or underemployed and their number is fast rising. Only rapid industrialisation can be an effective response to such vast unemployment and underemployment. Therefore, faster industrialisation ought to be promoted and for this purpose appropriate policies need to be introduced and maintained and also various facilities extended.
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