The Rise of Rural Non-farm Sector in Bangladesh: A Distinct Socio-Economic Transformation

Abstract

Structural transformation of South Asian economies shows the growing importance of Rural Non-farm (RNF) sector in the last two decades. As one of the emerging nations in South Asia, Bangladesh’s economy has been going through drastic transition since its independence, in 1971. Nevertheless, in 1990s, with the introduction of neoliberal policies and newly explored (indeed imposed) export sector, the transformation towards a progressive modern economy accelerated rapidly. The secondary data explored in this study show that policies undertaken earlier have failed in fulfilling their objectives. Instead, small and medium enterprises backed by distressed agricultural households have been playing the leading role in development activities. This study deals with the determinants of RNF sector participation for different categories of households. Strong heterogeneity was found within the RNF sector where mostly households with the highest and lowest incomes are mainly disposed to join the RNF sector. The microcredit access, land access, education and social perceptions are the dominant factors. RNF households as a whole, and particularly large landowning RNF households, are found to be better off in terms of education and healthcare expenditure and savings performances.

Keywords: Structural Transformation; RNFA; Bangladesh

Australian Academy of Accounting and Finance Review, vol 2, issue 1, January 2016, page 1-22