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By Shahid Yusuf, Praveen Kumar

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Additional info for Developing the nonfarm sector in Bangladesh: lessons from other Asian countries, Parts 63-340

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Past research has also emphasized the large benefits to rural economy from all-weather roads. Therefore, improving the rural all-weather road network is intrinsic to a strategy aimed at creating conditions for sustained growth of the nonfarm sector. Apart form the benefits mentioned before, it is expected that construction and maintenance of roads, culverts and bridges, which are labor intensive in nature, will also create additional gainful employment. Further, a better transport system can help trigger farm mechanization and diversification into cash crops.

Once this base has been established and has acquired a reputation, it is possible to bid for subcontracting arrangements with urban industries and foreign joint ventures. Location matters. A hypothesis proposed in the 1950s by Theodore Schultz and tested in Brazil, China and elsewhere suggests that rural industry develops most vigorously near an urban-industrial nexus - either on the periurban fringes of major cities or within a 25–30 mile radius of major economic centers. The obvious advantage is urban demand and a good transport network, which stimulates the spread of processing and packaging industries, storage facilities and a wide range of ancillary activities.

Concluding observations To substantially raise its per capita GDP, Bangladesh must take deliberate measures to increase its growth rate well above its current three to four percent per year. This quickening can be induced through from rural development-agricultural modernization and the simultaneous expansion of a few rural industries. Agricultural growth and a change in the composition of output favoring cash crops would stimulate industry through demand and input-output linkages. But in order to turn rural manufacturing into a leading sector with the potential to employ a large number of people and good export prospects, impetus must come from other directions as well.

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