Traditional Sectors

The industrial sector produces around 10 percent of GDP, and long-term national strategies in the late 1980s did not anticipate a major increase in that percentage. The greatest need and the greatest opportunities remained predominantly in the agricultural sector.

Eastern Bengal was known for its fine muslin and silk fabric before the British period. The dyes, yarn, and cloth were the envy of much of the pre modern world. Bengali muslin, silk, and brocade were worn by the aristocracy of Asia and Europe. The introduction of machine-made textiles from England in the late eighteenth century spelled doom for the costly and time-consuming handloom process. Cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Those who had earned their living in the textile industry were forced to rely more completely on farming. Only the smallest vestiges of a once-thriving cottage industry survived.

At independence, Bangladesh was one of the least industrially developed of the populous nations. Annual per capita consumption of steel and cement was only about one-third that of India, for example, and electric power consumption per capita was less than one-fifth.

Other Industries

Not all industrial growth in Bangladesh was stimulated by anticipation of foreign sales. The national economy stood to benefit equally from domestic production that could eliminate the need for imports of one kind or another. A good example of import substitution manufacturing was the pharmaceutical industry, a field that attracted both foreign and domestic investment in the first decade of independence, based on the large potential domestic market. The Drug Ordinance of 1982 introduced controversy and claims by foreign firms that they were victims of discrimination vis-à-vis local pharmaceutical firms. The foreign firms found that the ordinance restricted the kinds of drugs they could manufacture, import, and sell; specifically, foreign pharmaceutical firms could no longer manufacture drugs that Bangladeshi-owned companies were capable of producing. The difficulties foreign investors have encountered seem to have been limited essentially to this one industry, and even there the foreign firms already established have managed to cope more or less successfully. In 1988 one United States firm announced a decision to expand its Bangladeshi manufacturing operations by moving into production of highly specialized medicines with greater profit margins.

Public sector corporations produced a substantial part of the country's paper and newsprint requirements, as well as carrying on sugar-refining operations at modest-sized mills in several parts of the country. They also produced about 100,000 tons of steel per year, 1 million tons of petroleum products, and gasoline pumps, radios, television sets, bicycles, paints and varnishes, cement, and industrial chemicals.