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Econ4730ResearchPaper_Essay - December 1 2008 Professor...

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December 1, 2008 Professor Henry Wan Economics 4730 Bangladesh, Microcredit and Grameen Bank: Implications of the Catching Up Process Background on Bangladesh Bangladesh, geographical origin of microcredit, had an estimated population of 153,546,896 in July 2008. 1 It remains among the most densely populated countries in the world, struggles with a high poverty rate (average real per capita income is $1,311 on a PPP basis) and suffers an inefficiently governed nation. 2 However, per-capita (inflation-adjusted) GDP has more than doubled since 1975, and the poverty rate has fallen by 20% since the early 1990s. The US Central Intelligence Agency reports that Bangladesh’s economy has grown 5-6% over the past few years despite inefficient state-owned enterprises, delays in exploiting natural gas resources, insufficient power supplies, and slow implementation of economic reforms. 3 The IMF reports: “the initial impact of the end of quotas under the Multi-Fiber Arrangement has been positive for Bangladesh because of continuing investment in the ready-made garment sector,” which has experienced annual export growth in excess of around 20%. 4 Although more than half of its GDP is generated through the service sector, nearly two-thirds of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product. Garment exports and remittances from Bangladeshis working overseas, mainly in the Middle East and 1 “Bangladesh.” The World Factbook . 4 December 2008. Central Intelligence Agency. 7 December 2008 <https://www.cia.gov/library/publications/the-world-factbook/geos/bg.html>. 2 “World Economic and Financial Surveys: World Economic Outlook Database.” International Monetary Fund . October 2008. International Monetary Fund. 7 December 2008 <http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/index.aspx>. 3 “Bangladesh.” The World Factbook . 4 “Background Note: Bangladesh.” U.S. Department of State . March 2008. Bureau of South and Central Asian Affairs. 7 December 2008 <http://www.state.gov/r/pa/ei/bgn/3452.htm>. 1
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East Asia, fuel economic growth . Historically, Eastern Bengal—a predominantly Muslim country (83% Muslim, 15% Hindu and 1% other as of 2008)—produced fine muslin and silk fabric before the British period. 5 Their yarns, dyes and cloths were envied by much of the rest of the pre-modern world; for example, the aristocracy of Asia and Europe wore Bengali muslin, silk, and brocade. However, the introduction of machine-made textiles from England in the late eighteenth century made obsolete handloom process on the account of cost and time efficiency. Consequently, cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Most people who had been earning their living in the textile industry were forced to rely almost
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Econ4730ResearchPaper_Essay - December 1 2008 Professor...

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