This paper demonstrates that an employment-oriented industrialisation strategy which stresses labour-intensive sectors, can bring simultaneously both labour absorption and economic growth in a least developed country like Bangladesh. Labour-intensive industries are found to be efficient users of capital. Exports are concentrated on labour-intensive manufactured commodities in which the country has a comparative advantage and the demand for domestically produced manufactured goods is labour absorbing.

This paper makes an attempt to examine the scope, character and effects of Modified Rationing (MR)—the archetype of rural rationing in Bangladesh. It probes a comprehensive range of issues in that context, including criteria defining eligibility to support under MR; foodgrain allocation modalities; comparative variability of the offtake under MR as distinct from Statutory Rationing, Other Priorities and Essential Priorities; residual character of MR; the incidence of MR with regard to foodgrain supplements entailed by it for beneficiary households; relatives scope of MR within urban as opposed to rural areas; and the leakage in MR. It is inronic that, while MR is the only monetised channel within Bangladesh’s public foodgrain distribution system having the rural poor as its de jure constituency, this has taken the deepest cutback in its scale of operation, has had the greatest volatility in offtake, has evinced a conspicuous degree of urban bias. Using sample survey results, it is shown that MR must be judged to be a very minor player in determining foodgrain intake of even poor rural households. Leakage from MR stream at the level of MR dealers is estimated at about half of what ought to have been distributed among poor beneficiary housholds.

This article develops in linear macroeconomic model of the Bangladesh economy to examine the quantitative impact of aid. The twenty-two equation, two-stage least squares model emphasized the role of aid in relieving constraints on production, which include the availability of food as well as of fertilizer, capital and other imports. Allowance is made for a possible negative effect of aid on government revenue collection efforts, as well as its positive effect on government development expenditures. The composition of aid is affected by food output. Simulation experiments are run to estimate the effect of a reduction in aid levels. It is estimated that with 95 percent confidence the cumulative impact of a halving of aid inflows over the 1960-79 period would have been a drop of between 5.9 and 11.8 percent in GDP.