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Public Disclosure Authorized BANGLADESH MORE AND BETTER JOBS TO ACCELERATE SHARED GROWTH AND END EXTREME POVERTY Public Disclosure Authorized A Systematic Country Diagnostic Public Disclosure Authorized October 25, 2015 South Asia Region Public Disclosure Authorized ABBREVIATION ADM Adaptive Delta Management IRT International Road Transport ADP Annual Development Programme IWT Inland Water Transport AGPs Apprenticeship Grants Programs KCT Key Construction Test AL Awami League KM Kilometer ALMPs Active labor market programs kW Kilowatt ASA Association for Social Advancement LDCs Least Developed Countries BAU Business as usual LFS Labor Force Survey BBS Bangladesh Bureau of Statistics LGED Local Government Engineering Department BDT Bangladesh Taka LNG Liquefied Natural Gas BEPZA Bangladesh Export Processing Zones Authority LPI Logistics Performance Index BERC Bangladesh Energy Regulatory Commission LSCI Liner Shipping Connectivity Index BIWTA Bangladesh Inland Water Transport Authority NBR National Board of Revenue BNP Bangladesh Nationalist Party NGOs Non-governmental organizations BMET Bureau of Manpower, Employment and Training NFP National Food Policy BPDB Bangladesh Power Development Board NMCT New Moorings Container Terminal BR Bangladesh Railways MCF Million Cubic Feet BRAC Bangladesh Rural Advancement Committee MDGs Millennium Development Goals BST Bulk Supply Tariff M&E Monitoring and Evaluation CCT Chittagong Container Terminal MOC Ministry of Commerce CIP Country Investment Plan MoEF Ministry of Environment and Forests COEL Center of Excellence for Leather Skill MOU Memorandum of Understanding CPA Chittagong Port Authority MIC Middle-income Country CPIA Country Performance & Institutional Assessment MICS Multiple Indicator Cluster Survey DNCC Dhaka North City Corporation MRAs Mutual Recognition Agreements DPT Diphtheria-Pertussis-Tetanus MTIR Mid-Term Implementation Review DSCC Dhaka South City Corporation MW Megawatt EPB Export Promotion Bureau PCU Passenger Car Units ERD Economic Relations Division PFM Public Financial Management ETPs Exchange Traded Products POA Price On Application EU European Union PPP Purchasing Power Parity FDI Foreign Direct Investment PPPs Public-Private Partnerships FP Family Planning PPRC Power and Participation Research Centre FTA Free Trade Agreement PWC Pricewaterhouse Coopers FY Fiscal Year RCP Representative Concentration Pathway FYP Five-Year Plan RMG Ready Made Garments GBM Ganges-Brahmaputra-Meghna RTI Right to Information GDP Gross Domestic Product SCD Systematic Country Diagnostic GDW Greater Dhaka Watershed TB Tuberculosis GED General Economics Division TEUs Twenty-Foot Equivalent Units GOB Government of Bangladesh TFP Total Factor Productivity GON Government of the Netherlands TVET Tech. & Vocational Education and Training GNI Gross National Income TWH Terawatt hour GSP Generalized System of Preferences UN United Nations GTZ German Agency for Technical Cooperation UNDP United Nations Development Programme GWH Gigawatt Hour UNCTAD UN Conference on Trade and Development HDRO Human Development Report Office UNIDO UN Industrial Development Organization HIES Household Income and Expenditure Survey UAE United Arab Emirates ICD Inland Clearance Depot UK United Kingdom IDA International Development Association USA United States Of America IGC Intergovernmental Committee USD US dollar IFC International Finance Corporation VAT Value Added Tax IMF International Monetary Fund WDI World Development Indicators IT Information Technology WBG World Bank Group IOCs International Oil Companies WTO World Trade Organization IPPs Independent Power Producers ii Vice Presidents : Annette Dixon (IDA) Karen Finkelston (IFC) Country Director : Johannes Zutt Country Manager (IFC) Kyle Kelhofer Co-Task Leader (IDA) : Salman Zaidi Co-Task Leader (IFC) : M. Masrur Reaz Co-Task Leader (MIGA) : Paul Barbour iii ACKNOWLEDGEMENTS The team leaders for the SCD were Salman Zaidi (Lead Economist, IDA), M. Masrur Reaz (Program Manager, IFC), and Paul Antony Barbour (Senior Risk Management Officer, MIGA). Lin Shi (Consultant, GMFDR) provided invaluable contributions and research support throughout the report preparation process. A multi-sectoral team comprising staff from all Global Practices and CCSAs (please see table below for principal contributors from each GP/CCSA) provided extensive contributions and inputs to the SCD. Global Practice/Cross-Cutting Solution Area Team member(s) Agriculture Madhur Gautam, Patrick Verissimo, Frauke Jungbluth Ayesha Vawda, Yoko Nagashima, Syed Rashed Al-Zayed, Education Mokhlesur Rahman Sheoli Pargal, Jie Tang, Zubair Sadeque, M. Anis, Md. Energy and Extractives Iqbal, M. Bankuti, Debabrata Chattopadhyay Shakil Ferdausi, Sebnem Sahin, Kseniya Lvovksy, Lia Environment and Natural Resources Sieghart, Ernesto Triana, Abdelaziz Lagnaoui Niraj Verma, Shah Nur Quayyum, Francesca Lo Re, Finance and Markets Priyani Malik, Korotoumou Ouattara Syed Khaled Ahsan, Zafrul Islam, Jorg Nadoll, Sadia Governance Priyanka, Tracey Lane, Suraiya Zannath Bushra Alam, Veronica Vargas, Sameh El-Saharty, Nedim Health, Nutrition, Population Jaganjac Zahid Hussain, Nadeem Rizwan, Afroza Alam, Simon Macroeconomics and Fiscal Management Davies Faizuddin Ahmed, Dean Joliffe, Monica Pagans, Iffath Poverty Sharif, Carlos Sobrado, Nobuo Yoshida Social Protection and Labor Iffath Sharif, Aneeka Rahman Alberto Portugal, AKM Abdullah S. Kathuria, V. Palmade Trade and Competitiveness M. Haththotuwa, M. Azad, Nusrat Nahid, Sigma Shams Transport and ICT Matias Herrera, Diep Nguyen, Shigeyuki Sakaki Ming Zhang, Christopher Pablo, Hyoung Gun Wang, Urban, Rural, Social Development Kyungchul Nam, Zahed Khan Richard Damania, Arif Ahamed, Abed Khalil, Joel Kolker, Water Mrinal Sircar, Tahira Syed, Parmeswaran Iyer Lia Sieghart, Nadia Sharmin, Susmita Dasgupta, David Climate Change Rogers, Navid Rahimi, Ana Bucher Gender Sabah Moyeen, Maitreyi Das, Emcet Oktay Tas Jobs Lin Shi, Iffath Sharif The report was prepared under the guidance of Johannes Zutt (Country Director, Bangladesh) and Kyle F. Kelhofer (IFC Country Manager). The peer reviewers were Messrs./Mdmes. Sadiq Ahmed (Vice Chairman, Policy Research Institute), Shamsul Alam (Member, General Economics Division, Planning Commission), Magdi Amin (Manager, CGECF), and Rinku Murgai (Lead Poverty Specialist, GPVDR). Mehar Akhtar Khan (Program Assistant, SACBD) helped process the report. The SCD team would like to express its appreciation to Martin Rama (Chief Economist, South Asia Region), Hassan Zaman (Sr. Regional Advisor, SARVP), Sereen Juma (Country Program Coordinator, SACBN), Christine Kimes (Operations Advisor, SACBD), Shamsher Singh (Regional Head of Strategy, CGECF), and Kene Ezemenari (Senior Economist, SARCE) for their valuable guidance and inputs throughout the report preparation process. The team would also like to thank the members of the Bangladesh Country Team from all Global Practices and IFC, specialists from Cross Cutting Solutions Areas, as well as all the development partners and stakeholders in Bangladesh, who have contributed to the preparation of this document. We are very grateful to colleagues and reviewers in the Government of Bangladesh, especially those in the Economic Relations Division, for their careful review of an earlier version of this documents and suggestions for changes, and for the generosity exhibited in providing us with substantive inputs, knowledge, and advice throughout the report preparation process. CONTENTS KEY FINDINGS AND RECOMMENDATIONS ............................................................................ 1 EXECUTIVE SUMMARY ......................................................................................................... 3 1. INTRODUCTION AND OUTLINE ....................................................................................... 17 1.1 RATIONALE AND MAIN OBJECTIVES .................................................................................................. 17 1.2 COUNTRY CONTEXT AND DEVELOPMENT ACHIEVEMENTS ................................................................ 17 1.3 CLIMATE CHANGE-RELATED CHALLENGES ....................................................................................... 21 1.4 THE GOVERNMENT'S DEVELOPMENT STRATEGY AND FIVE YEAR PLANS .......................................... 24 1.5 INFORMATION SOURCES .................................................................................................................... 25 1.6 ROADMAP FOR THE REST OF THE REPORT .......................................................................................... 26 2. TWIN GOALS: ASSESSING PROGRESS, CHALLENGES, AND PRIORITIES .......................... 27 2.1 REDUCING EXTREME POVERTY ......................................................................................................... 27 2.2 BOOSTING SHARED PROSPERITY ........................................................................................................ 31 2.3 TWIN GOALS: MAIN CHALLENGES FOR BANGLADESH ....................................................................... 37 2.4 SETTING AND VALIDATING PRIORITIES .............................................................................................. 43 2.5 KNOWLEDGE GAPS ............................................................................................................................ 47 3. FOUNDATIONAL PRIORITIES .......................................................................................... 49 3.1 MACROECONOMIC STABILITY ..........................................................................................................
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