Bangladesh News

The East-West divide in Bangladesh, in terms of poverty, is characterised by lack of availability of public infrastructure, integration with growth poles and inadequate market access.

A World Bank report titled “Poverty Assessment for Bangladesh: Creating Opportunities and Bridging the East-West Divide” is expected to be released next week. Severe seasonal deprivation (Monga), ecological factors like river erosion and quality of land contribute to economic deprivation, the report is expected to say.

Household Income and Expenditure Survey, 2005, (HIES) of Bangladesh Bureau of Statistics shows that Dhaka, Chittagong and Sylhet cities have less poverty while Khulna and Barisal have higher poverty levels. The World Bank described it as East-West divide and made a number of recommendations.

Sources said the World Bank would also submit the report to the next elected government so that they can consider this as a policy option to remove regional disparity.

Strong evidence is there that two metropolitan cities–Dhaka and Chittagong–have emerged as the main centres of economic activity of the country. The capital Dhaka with a population of 10 million and the main port city Chittagong with a population of 3.4 million together account for 88 percent of the nation’s metropolitan area population and 41 percent of the total urban population, the report said.

Estimates based on HIES 2000 and 2005 indicate that the average real per capita expenditures in these two cities is about 40 percent higher than in other metropolitan areas.

“The dominant seats of major administrative and economic functions, Dhaka and Chittagong act as the main domestic and international trading hubs, are also attracting large numbers of migrants from other parts of the country. There is also evidence that spatial concentration in Dhaka and its surrounding areas has increased in recent years.”

A substantial part of the economic activities in Bangladesh is clustered around Dhaka and to a lesser extent, Chittagong.

The concentration of economic activity around Dhaka and Chittagong is also seen from the spatial distribution of employment by industries. Employment in the largest category of industry, agro processing industry, is concentrated in Dhaka and to a lesser extent in Chittagong. Dhaka alone accounts for 80 percent of the country’s readymade garments (RMG) output and half of manufacturing sector employment.

Complementary business services, particularly finance and real estate, account for a much higher share of total employment in Dhaka relative to the rest of the country. Most of the medium and small towns/cities do not have significant employment in formal manufacturing sectors.

The major rivers Padma and Brahmaputra slice Bangladesh into three parts. The natural border defined by these two rivers can be used to group regions in terms of their access to Dhaka and Chittagong. Territories lying to the east of the Padma and Brahmaputra are defined as integrated region covering the divisions of Chittagong, Sylhet, and most of Dhaka. Areas to the west of Brahmaputra (Rajshahi division) and south of Padma (Barisal and Khulna divisions, and the greater Faridpur districts of Dhaka division) are separated from Dhaka and Chittagong by one of the two rivers and are defined as less integrated region.

Factors like remoteness from markets and towns and lack of infrastructure, like electricity, are found to be important characteristics of poor areas and are strongly correlated to each other. This in turn suggests that certain areas in Bangladesh have a combination of factors likely to lead to concentration of economic activities, giving rise to the so-called growth poles.

Poverty differs substantially between integrated region and less integrated region, according to the HIES 2005. The poverty rate in the integrated region was 33 percent while less integrated region was 50 percent, a gap of 17 percentage points. In 2000, the poverty headcount rate was 46 percent in the integrated region and 53 percent in the less integrated region, a difference of only seven percentage points.

Spatial characteristics like travel time to Dhaka and access to infrastructure partially account for the effects of location on household expenditures. The average travel time to Dhaka for people living in integrated region is 33 percent lower than that of people in less integrated region. Forty-five percent households in integrated region are connected to electricity compared to 22 percent in less integrated region.

Given the importance of market access and infrastructure for the private sector, difference in these indicators explains why employment in the non-farm sector (including self-employment) grew much more rapidly in the East than in the West between 2000 and 2005.

In recommendations, the World Bank suggested that improving connectivity of remote areas to growth poles, establishing interregional transport and communication systems, investment in infrastructure, bridging the information gaps between integrated region and less integrated region can promote regional development.