ACKNOWLEDGEMENT

At first I would like to give my sincere gratefulness to my honorable course teacher Rehana Pervin. I
could not able to complete this kind of difficult task successfully without her contribution. She has
provided me some essential directions and suggestions to formulate this assignment, which provides
useful references.

Also I would like to thank all of my batch mates and friends of BBA who contributed me a lot. I also
grateful to concerned peoples who provided useful services, books, web facilities etc.

Introduction:
Bangladesh, a country of more than 160 million people, is one of South Asias least developed
countries. Bangladesh has an agrarian economy with 22% of GDP coming from the Agriculture
Sector. Major agricultural products are rice, jute, wheat, potato, pulses, tobacco, tea and
sugarcane. . The country is the largest exporter of jute and jute goods in the world. Readymade
garments are among the most exportable items. Tea, frozen shrimp, fish, leather goods and
handicrafts are also major exportable commodities.
The country has under gone a major shift in its economic philosophy and management in recent
years. At Bangladeshs birth, the country embraced socialism as the economic ideology with a
dominant role for the public sector. But, since the mid-seventies, it undertook a major
restructuring towards establishing a market economy with emphasis on private sector-led
economic growth.
Bangladesh achieved good economic progress during the 1990s by adopting a series of
structural and economic reform measures. The stabilization program reduced inflation as well as
fiscal and current accounts deficit and established a healthy foreign exchange reserve position.
Economic performance improved with gross domestic product (GDP) growth averaging 5
percent in the 1990s compared with 4 percent in the preceding decade. The acceleration in
economic growth was accompanied by decreased incidence of poverty and a distinct
improvement of some key social indicators. Rapid growth in food grain production has been a
remarkable feature of the countrys economic performance in recent years. In FY2000,
Bangladesh reached self-sufficiency in food grain production. A combination of factors accounts
for the robust growth of the agriculture sector, and in particular of food grains.
According to a World Bank estimate, Bangladesh has the 36th largest economy in the world in
terms of GNP based on the purchasing power parity method of valuation, and the 55th largest in
terms of nominal GNP in U.S. Dollars.
This report analyses the various aspects of the economy of Bangladesh. Here we are going to
analyses about two year GDP component of Bangladesh.

THEORETICAL FRAMEWORK
Gross domestic product (GDP) is the market value of all officially recognized final goods and
services produced within a country in a given period of time. GDP per capita is often considered
an indicator of a country's standard of living.
GDP per capita is not a measure of personal income. Under economic theory, GDP per capita
exactly equals the gross domestic income (GDI) per capita.
GDP is related to national accounts, a subject in macroeconomics. GDP is not to be confused
with gross national product (GNP) which allocates production based on ownership.

Determining GDP
GDP can be determined in three ways, all of which should, in principle, give the same result.
They are the product (or output) approach, the income approach, and the expenditure approach.
The most direct of the three is the product approach, which sums the outputs of every class of
enterprise to arrive at the total. The expenditure approach works on the principle that all of the

product must be bought by somebody, therefore the value of the total product must be equal to
people's total expenditures in buying things. The income approach works on the principle that
the incomes of the productive factors must be equal to the value of their product, and
determines GDP by finding the sum of all producers' incomes.
The expenditure method:
GDP = private consumption + gross investment + government spending + (exports
imports), or

Components of GDP by expenditure

GDP (Y) is a sum of Consumption (C), Investment (I), Government Spending (G) and Net
Exports (X M).
Y = C + I + G + (X M)
Here is a description of each GDP component:

C (consumption) is normally the largest GDP component in the economy, consisting of

private (household final consumption expenditure) in the economy. These personal
expenditures fall under one of the following categories: durable goods, non-durable
goods, and services. Examples include food, rent, jewelry, gasoline, and medical
expenses but do not include the purchase of new housing.

I (investment) include, for instance, business investment in equipment, but do not

include exchanges of existing assets. Examples include construction of a new mine,
purchase of software, or purchase of machinery and equipment for a factory. Spending
by households (not government) on new houses is also included in Investment. In
contrast to its colloquial meaning, 'Investment' in GDP does not mean purchases of
financial products. Buying financial products is classed as 'saving', as opposed to
investment. This avoids double-counting: if one buys shares in a company, and the
company uses the money received to buy plant, equipment, etc., the amount will be
counted toward GDP when the company spends the money on those things; to also
count it when one gives it to the company would be to count two times an amount that
only corresponds to one group of products. Buying bonds or stocks is a swapping of
deeds, a transfer of claims on future production, not directly an expenditure on products.

G (government spending) is the sum of government expenditures on final goods and

services. It includes salaries of public servants, purchase of weapons for the military, and
any investment expenditure by a government. It does not include any transfer payments,
such as social security or unemployment benefits.

X (exports) represents gross exports. GDP captures the amount a country produces,
including goods and services produced for other nations' consumption, therefore exports
are added.

M (imports) represents gross imports. Imports are subtracted since imported goods will
be included in the terms G, I, or C, and must be deducted to avoid counting foreign
supply as domestic.

Comparative analysis of GDP components for the

financial year 2009-10 and 2010-2011 :
Table : Macroeconomic Framework 200809 to 201011

Indicator
Real Growth ( % )
Agriculture Sector
Crop Sector
Industry Sector
National Saving (% of GDP)
Gross Investment (% of GDP)
ICOR
Total Govt. Expenditure (% of GDP)
ADP (% of GDP)
ADP as % total govt. expenditure
Exports, f.o.b (% change)
Imports, f.o.b (% change)
Remittances (US$ million)
Current Account Balance (%of GDP)
Gross Official Reserve (US$million)
Gross Official Reserve (Months)

FY 2009
5.7
4.1
4.0
6.5
29.6
24.4
4.3
14.3
3.1
21.7
16.5
21.0
9,492
-0.9
6,000
2.6

Source: Budget Documents, PRSP II (draft copy) and Bangladesh Bank

FY 2010
5.8
4.7
5.1
6.0
28.8
25.0
4.3
13.8
3.7
27.2
17.0
21.0
11,862
-1.3
6,350
2.3

In line with global economic trends, Bangladesh has experienced two volatile years (FY200809
and FY200910) when its economic growth was restrained below 6.0 per cent level (see Table)
The first one, FY200809, was the year of global financial and economic crisis. In the face of fall
in global demand commodity prices as well as domestic inflationary trend declined considerably.
Incidentally, during this period, Bangladesh economy not only benefited from low prices of
importable but was also able to avoid negative pressure on its export of goods and services. On
the other hand, in the next year (FY200910), the impacts of the global economic and financial
Crises started to have important consequences for the Bangladesh economy. Export revenues
and remittance income growth started to decelerate, while the domestic inflationary trend took
an upturn in consonance with the international market.
A visible improvement in public investment (in terms of ADP implementation as per cent of
GDP) has also been a promising feature of the last fiscal. However, over these two years
Bangladesh remained an underinvested country. The investable surplus (reflected by the gap
between national savings and total investment) could not be made use of due to the lack of
domestic infrastructure. Growth in manufacturing sector (and hence in industry sector) remained
modest. On the other hand, strong growth in agriculture sector helped maintain the GDP growth
at respectable level and expansion of safety net programs provided some protection to the living
standard of the marginalized groups.