Dynamics of Rural Growth in Bangladesh: Sustaining Poverty Reduction

Abstract

The rural economy in Bangladesh has powerfully advanced economic growth and substantially reduced poverty, especially since 2000, but the remarkable transformation and unprecedented dynamism in rural Bangladesh remain an underexplored, underappreciated, and largely untold story. Dynamics of Rural Growth in Bangladesh: Sustaining Poverty Reduction tells that story and inquires what specific actions Bangladesh might take given the residual poverty and persistent malnutrition to accelerate and channel its rural dynamism to sustain the gains in eliminating poverty, achieving shared prosperity, and advancing national aspirations to achieve middle-income status. The central element of this study, undertaken with the Government of Bangladesh Planning Commission to address key questions elicited through extensive consultation, is an empirical analysis that illuminates the underlying dynamics of rural growth, particularly the role of agriculture and its relationship to the nonfarm economy. Using all sources of data available for the macro, meso, and micro household levels, the analysis provides new evidence on changes in the rural economy and the principal drivers of rural incomes. It also examines market performance for high-value agricultural products and agriculture nutrition linkages, based on new surveys and analysis. The resulting evidence, examined in light of the rich knowledge of rural development in Bangladesh, is used to delineate the implications for policy and the strategic priorities for sustaining future rural development, poverty reduction, food security, and nutrition. The effects of policy reforms, changes in technology, and investments in infrastructure and human capital described here, along with the persistent enterprise of rural Bangladeshi households, offer a compelling case study of how mutually reinforcing actions can trigger the highly-sought-after virtuous cycle of rural development. The findings clearly demonstrate the pro-poor nature of agricultural growth and its catalytic role in stimulating the rural nonfarm economy. They show that households have no linear or predictable pathway out of poverty; instead, they wisely employ a combination of farm and nonfarm income strategies to climb out of, and then stay out of, poverty. The results represent a strong contribution to the global thinking on rural transformation and on how agriculture in particular sustains the economic momentum that fosters poverty reduction and more widespread prosperity.