Bangladesh has marked considerableprogress since independence in 1971 despite its dire initialconditions. Real per capita income is about 60percent highernow than in 1971. The share of population in povertycurrently stands at about 50 percent, compared with over 70percent in the early 1970s. Even more impressive has beenthe progress in improving the social and human dimensions ofpoverty. Bangladesh's faster gains in human developmentthan in income growth result from public policies that havecomplemented the remarkable energy at the grassroots level.This energy was effectively channeled by the country'snongovernmental organizations and community-basedorganizations, many of which are world leaders in theirinnovative ideas and operational methods. Many challengesremain to be addressed, however, especially in the area ofinstitutions. Remaining gaps in policies and weakinstitutions have impeded a faster pace of development.Inadequate improvement in governance has particularlyconstrained the investment climate and greatly diminishedthe state's ability to deliver basic social services,especially to the poor. The situation requires urgent actionon the bold reform agenda adopted by the new government inthe context of its Interim Poverty Reduction Strategy Paper(I-PRSP) in 2003. The authorities need to accelerate thepace of structural reforms-particularly in the areas ofinfrastructure (physical and financial), macroeconomicmanagement, and overall governance-to improve the investmentclimate and strengthen social inclusion and participation.Unless this is done, Bangladesh will not be able to achievethe goals laid down in the I-PRSP; indeed, the gains alreadyachieved risk being eroded.
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