In advanced economies, on average roughly 80% of the populating lives in urban areas, and are involved in secondary and tertiary activities. Even n rural areas, agriculture accounts for a very small part of economic activity. In developing countries, the reverse is the case.
Most people live in rural areas and many of them are directly involved in agriculture. As the economy develops and industry and manufacturing take off, the share of urbanization increases.
Why do people migrate to urban areas?
But the migration to the urban areas can begin before jobs are created in industry and services in urban areas, as poor people abandon the poverty of rural life and start moving to slum areas in urban conurbations.
Many of them remain poor but manage to make a living in the urban informal sector in activities like small workshops, rickshaw pulling, street vending, and domestic service. Others remain unemployed and find occasional work on construction sites or as day laborers. A few can even engage in begging and crème.
Not all the increase in the urban population is due to the demand of growing industrial and service sectors. A significant part of the growth of the urban population can be due to the excess supply of population from rural areas migrating to the towns, and particularly to the capital city, in search of jobs.
What problems can it cause?
Urban areas in developing countries can therefore have significant problems with poverty and crime. There is also likely to be growing pressure on the urban infrastructure in terms of demand for water, living accommodation, sanitation, and waste disposal.
How does urbanization Bangladesh compare with its neighbors?
The share of urbanization in Bangladesh compared to neighboring countries is shown in the following chart.
Above figure shows that the urban population as a share of total population was significantly lower in Bangladesh compared to both India and Pakistan not only in 1970, but also in 1993.
However, the rate of growth of the urban population was significantly higher in Bangladesh compared to India and Pakistan. As a result, the share of the urban population doubled in Bangladesh between 1970 and 1993 (from 8% to 17% of the total population), while the growth in the share was less dramatic in India and Pakistan.
The higher rates of growth of the urban population in Bangladesh are likely to continue and Bangladesh in likely to reach Indian rates of urbanization in the next decade or so. Note that the rate of growth of population in urban areas in more than twice as high as the growth rate of population in Bangladesh. This suggests that rural-urban migration is a significant factor explaining the rapid growth in the urban population.
The capital city
There is a significant difference between urbanization in Bangladesh from that in neighboring countries. In India and Pakistan, the capital city is a small part of the total urban population. In India the capital city accounts for only 4% of the total urban population.
In contrast, in Bangladesh, Dhaka accounts for 40% of the total urban population and it is the only mega-city in Bangladesh. If most of the urban growth is happening in only one cit in Bangladesh, the pressures on infrastructure in Dhaka city are correspondingly greater.
Apart from rural-urban migration, there is also a considerable amount of rural-rural migration in Bangladesh, as people migrate from their village to neighboring villages in search of jobs.
Migration to other countries
But much more important in the migration from Bangladesh to other countries. It is estimated that in 2003, around 3 million Bangladeshis were working in foreign countries and sending back money to their families in Bangladesh. A further 1 million Bangladeshis were permanently settled in other countries with foreign nationality or residence rights.
The remittances sent bank by Bangladeshi workers through official channels amounted to 3 billion US dollars. It is estimated that at least another 3 billion dollars were remitted through unofficial channels such as the hundi system of money transfer where money is transferred through private moneychangers without going through the formal banking system.
The remittances coming through the formal banking system was almost three times greater than the total amount of foreign aid that Bangladesh received and around half of its total exports.
How does this affect Bangladesh?
Bangladeshis working in the Middle east and in South East Asia are therefore making a significant contribution to Bangladesh’s foreign exchange earnings. Their remittances are also sustaining many poor families in rural areas where the money from family members working abroad is often the only source of income.
However, there is not much evidence that the families in Bangladesh make use of the remittances to go into sustainable business activities. Rather, much of the remittances are used for consumption or for buying land, which does not directly improve the output of the Bangladesh economy.
Nevertheless, the foreign exchange remittances do allow Bangladesh to pay for its imports and to make foreign exchange available for businessmen who need it to import machinery or raw materials. One reason why the families of migrant workers do no directly go into business using their foreign exchange remittances is that most migrant workers from Bangladesh come from very poor rural families.
Almost 2.5 million of the 3 million migrant workers from Bangladesh are unskilled workers who earn very little in relative terms. Their families in Bangladesh share very dependent on their own businesses.
The evidence from India suggests that productive enterprises are usually set up by the families of skilled migrants who can productively invest the money sent back to them, or by the skilled migrants themselves when they return with new skills and capital.
The Indian software sector was significant productive contributions to the Bangladesh economy, even more than the contribution that migrant workers are currently making.
On the other hand, the departure of skilled people also has negative implications, as professional skills are lost to the domestic economy. The departure of doctors, engineers, and other skilled professional is particularly severely felt in Bangladesh because these professionals are in very short supply.
Their departure can only have a positive impact if they eventually return with new capital, or if their remittances allow their relatives to set p productive and employment-generating activities.
Landlessness is one of the most important factors in rural Bangladesh than is driving migrating; particularly from rural to urban areas.
What has caused landlessness?
The pressure of population growth in Bangladesh together with the subdivision of land through inheritance has led to the growth of very small plots of land, many of which are economically unviable.
In 1995, 72.7% of farms in Bangladesh were less than 2.5 acres in size and even these were often made up of several lots of land that no connected to each other.
How does it affect people?
The owners of very small farms often live form hand to mouth, and these poor farmers can easily go bankrupt if the harvest poor or if there is a drought or flood. About 50% of the rural population is already functionally landless, which means that they do not have enough land to engage in farming.
Although landlessness is not growing rapidly, it is already very high, and the number of very small farms is growing as percentage of the total. The implication is that poor people in rural Bangladesh often have to find non-agricultural employment, either in the rural areas in rural non-farm activates, or by migrating to urban areas, or even to other countries.
What can be done?
This type of migration is not necessarily a problem, and similar migrations have happened in other counties in the past. The challenge for Bangladesh is to create non-farm jobs fast enough to absorb this population and create more wealth for the economy.
As we have seen, the transition from an agricultural to a non-agricultural economy is a common pattern n other countries. Moreover, this shift is also desirable since it is a way of moving form low-productivity to high-productivity activities, thereby increasing per capita incomes in the economy.
In the case of Bangladesh, the shift is even more desirable sine the pressure of population on the land is such that the average size of farm is far too small for efficient farming or mechanization that could raised as much as possible through investments in irrigation, new seeds and better fertilizers so that as much labor as possible can be retained in agriculture while other sectors are being developed.
poverty reduction since independence.
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