Bangladesh represents a success storyamong developing countries. Poverty incidence, which was ashigh as 57 percent at the beginning of the 1990s, haddeclined to 49 percent in 2000. This trend acceleratedsubsequently, reducing the poverty headcount rate to 40percent in 2005. The primary contributing factor was robustand stable economic growth along with no worsening ofinequality. Respectable GDP growth that started at thebeginning of the 1990s continued into the new millennium andaveraged above 5 percent annually between 2000 and 2005.Inequality, as measured by the Gini coefficient ofconsumption, remained stable between 2000 and 2005. Recentshocks to the Bangladeshi economy in the form of naturaldisasters and rising food prices have partially dampened therapid progress in reducing poverty. The year 2007 saw twonatural disasters, floods and a devastating cyclone within afew months of each other. Another significant shock has beenthe steep rise in food prices, including the main staple,rice, which has revealed the risk posed by global pricevolatility for a net food-importing country like Bangladesh.Estimates in this report suggest that the impact of the foodprice shock has likely negated some of the reduction inpoverty brought about by economic growth between 2005 and2008. Specific areas for policy focus which are elaboratedin the report include measures to: (i) promote growth bysustaining increases in labor productivity and job creationin manufacturing and services; (ii) expand opportunities inlagging regions by improving connectivity with growth polesand investing in human capital; (iii) facilitate migrationfrom poor areas given the poverty-reducing impact ofremittances; (iv) stimulate women's participation inthe labor force (v) sustain Bangladesh's past successesin reducing fertility; (vi) improve poor households accessto and quality of education, health, and nutrition services;and (vii) strengthen the coordination, targeting, andcoverage of safety net programs.
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