Bangladesh Ministry of Agriculture

Food grain production in 1992 was about 20 million metric tons, a 5% increase over the previous year. Rice is Bangladesh's principal crop, although yields per hectare are among the lowest in Asia. While rice output rose 3.2% in 1992, much recent growth in food grain output can be attributed to the irrigated spring crop, which has increased steadily due to the greater availability of fertilizer and irrigation equipment. Wheat production also is expected to rise from 900,000 to about 1 million metric tons in 1992. Jute, which historically has accounted for the bulk of Bangladesh's export receipts, faces an uncertain future due to competition from synthetic fiber substitutes. Fishing, especially for shrimp, has become an increasingly important source of export earnings.

Economy: Industry

Although small, the industrial sector contributes significantly to export receipts; it also provides employment and a market for cash crops. Jute products--mainly burlap sacking and carpet backing for export--and cotton textiles for domestic consumption predominate. Since the early 1980s production of ready-made garments for the US market has grown rapidly. Bangladesh is the fifth largest supplier of cotton apparel to the United States, and it has begun exporting to west European markets. Breaking up ships for scrap, using methods that are highly labor intensive, now meets most of Bangladesh's domestic steel needs. Other industries include sugar, tea, leather goods, newsprint, pharmaceuticals, and fertilizer production. The industrial (and foreign exchange) impact of the discovery of modest reserves of oil in 1986 remains to be assessed.

The government continues to court foreign investment. To this end, the United States and Bangladesh signed a bilateral investment treaty which took effect in 1989. Bangladesh also has Established an export processing zone (EPZ) in Chittagong and plans to create additional zones. The government has offered special incentives and simplified procedures for potential investors.

Economy: Aid and Trade

Since independence in 1971, Bangladesh has received more than $22 billion in grant aid and loan commitments from foreign donors, about $15 billion of which has been spent. Major donors include the World Bank, the Asian Development Bank, the UN Development Program, the United States, Japan, Saudi Arabia, and a number of west European countries. As of 1991, the United States had provided more than $3.3 billion in food and development assistance. Food aid provides food, promotes production, and helps stabilize prices. Other US programs target family planning and health, agricultural development, and rural unemployment. In 1991, the US forgave Bangladesh $293 million of development assistance debt.

Bangladesh historically has run a large trade deficit, about $1.5 billion annually during the late 1980s. This was financed largely through foreign assistance. The balance of payments swung into surplus in 1990-91 because of increased exports of garments and depressed domestic demand for imports. In recent years, remittances from workers in the Middle East have been Bangladesh's most important source of foreign exchange earnings. The US trade balance with Bangladesh has been negative since 1986, due largely to imports of ready-made garments.