Industrial activity in Bangladesh is concentrated in a few districts and the picture has not changed much in the past two decades
While Bangladesh’s industrial sector has grown since independence, much of it is concentrated in a few regions within the country.
Consider the following chart, which shows the district-wise distribution of the industrial Labour force in the country.
The data are from the Bangladesh Labour Force Survey of 2017.
It may be noted that the definition of industrial labour force includes even people employed in very small industries such as handlooms.
The chart brings out the concentration quite clearly.
About half of the industrial workforce of the country is injust two out of the eight administrative divisions of Bangladesh, i.e., Dhaka and Chittagong.
In 2017, about 6.9 million people worked in the industrial firms in these two divisions; this is about 55% of the country’s total industrial workforce for that year.
The least industrialized divisions are Barisal and Sylhet, accounting for 4.3% and 3.3% respectively of the industrial labour force in 2017.
It should be noted, of course, that the administrative districts and divisions in Bangladesh vary in their population sizes and this may have a bearing on the numbers quoted above.
Thus, it is also appropriate to look at the share of the industrial workforce in the total workforce of the districts as another indicator of the degree of industrialization.
The second chart, based on the above definition, shows the ten most and the ten least industrialized districts in Bangladesh.
It reveals the wide range in the degree of industrialization in Bangladesh.
Gazipur and Rangamati districts are at the two extremes.
Rangamati is the least industrialized district of Bangladesh with less than 5% of the labour force employed in industry, while in Gazipur one out of two people in the labour force (48%) are employed in such activities.
Gazipur is followed by Narayanganj and Dhaka districts, both of which are in the Dhaka division.
In fact, five of the top 10 industrialized districts in Bangladesh belong to this division (the other two are Narshingdi and Manikganj).
The picture was not much different two decades ago.
In 2000, over two-thirds (65%) of manufacturing GDP originated in just four of the 64 districts in the country.
Of these, Dhaka, and its adjacent districts Gazipur and Narayanganj, accounted for 50%, while Chittagong district contributed another 15%. 50 out of the 64 districts of Bangladesh together contributed only 17% of the country's industrial output.
I could not obtain more up-to-date district level data on manufacturing GDP but the employment data from the 2017 Labour Force Survey indicates a similar picture.
The top 4 districts alone account for 36% of the total industrial labour force of the country.
Incidentally, these are the same four districts that accounted for the bulk of manufacturing GDP in 2000, i.e., Dhaka, Gazipur, Chittagong and Narayanganj.
While the employment-based data cannot be compared with the GDP-based data because these come from two different time periods, it is likely that the share of these four districts in manufacturing GDP will be significantly higher than their share in industrial employment.
This suggests that, on average, industrial workers in these districts are engaged in higher value-added industrial activity than their compatriots in other districts of Bangladesh.
To sum up, the story line is clear. Industrial activity in Bangladesh is concentrated in a few districts and the picture has not changed much in the past two decades.
It is of course possible, that beyond the top 4-5 districts which dominate the industrial landscape, there may have been some churning in the relative positions of different districts, with some districts industrializing faster than others.
I hope to analyze this phenomenon in future once I have district level data on the same variables over time.
But for now, we may note the geographic concentration in industrial activity in the country.
Is this something we should be concerned about?
The answer is yes.
Income levels in regions are often strongly, and positively, influenced by the degree of industrialization given that average productivity is typically higher in industry compared to agriculture or services.
Thus, if we desire a more equitable distribution of incomes across regions in Bangladesh, we must pay attention to this highly skewed regional distribution of industrial activity in Bangladesh.
The other main concern is environmental.
Excessive concentration of industrial activities in an area may have serious environmental implications, especially in a country where environmental management is still poor.
It is, of course, true that we should not expect perfect regional balance in the degree of industrialization, nor should we try to artificially create such balance.
Different parts of a country may have different comparative advantages and industrial activities may thus gravitate more towards some regions than others.
However, it may be safe to say that the current degree of regional concentration of industrial activity is not consistent with the comparative advantages of different regions, and thus a greater spread of industrial activity may make economic sense.
I hope to write more on this important subject in future.
The author is an economist, previously with an international development agency