ne of the recent attempts at theorising the causes of rural poverty has pinpointed ‘urban bias’ as the villain. In this paper we try to point out the flaws of ‘urban bias’ theory as put forward by Lipton (1978). We produce evidence from Bangladesh to show that some of the propositions of Lipton’s theory do not have general empirical validity. The objective of this endeavour is to suggest that ‘urban bias’ is not the only reason of rural proverty and its removal in the ways suggested by Lipton may not provide a solution to the problem.

In presenting evidence about long-period changes in the absolute and relative levels of output of the handloom and mill-weaving sectors of the Bangladesh cotton textile industry, this paper makes an attempt to isolate some of the most important influences that conditioned the process of change over a thirty-year period. As would be expected, the level and continuity of assistance is found, in both periods, to be a critical contributory factor, though not the primum mobile, in initiating and sustaining relative growth of any particular sub-sector. It is found that in the preliberation period assistance favouring the handloom activity arising out of differential product taxation, and of liberal and interest-free trade credit, frequently from the owners of private sector mills (themselves recipients of cheap finance from term-finance and commercial banking institutions) made significant contribution to the increase in their relative size within the weaving industry. The real driving force, however, behind the framing of industrial policy and institutions remained, inter alia, the bestowal of massive financial and other assistance of the large scale textile industry, from which a fractional and largely circumstantial fall-out was provided to the mainstream of small producers in hand-weaving. The explanation of that real driving force lay in the web of social and political factors that have interacted with, sometimes over-riden, economic arguments concerning the objectives, nature and ramifications of industrial policies in the pre-liberation Bangladesh. During 1972/73-1976/77, formulation of industrial policy has again been preoccupied with large-scale industry, including an all-out effort to raise, to the greatest extent possible, the own-conversion of yarn spun by the now invariably publicly-owned textile mills. This has not only reduced the marketed surplus of yarn for handlooms but, more importantly, also reduced them to become the ultimate cushion for adjustment to unpredictable, sweeping and sometimes adverse changes involving its composition and costs. Demand conditions, as over, being not exactly helpful, the handloom industry has declined in terms of relative share.  

This paper provides evidence for the existence of inflexibility of employment in the jute spinning industry of Bangladesh. Such inflexibility exists in relation to changes in manufacturing operating capacity at the plant level. Empirical support is obtained by relating the number of employed workers to the level of operating capacity in 40 jute spinning mills over a period extending to 26 years. This inflexibility has important implications for productivity progress in mills and may indicate, as suggested in this article, the existence of ‘overemployment’ (disguised unemployment) in jute mills.

Cobb-Douglas functional form has been widely used in estimating production function in traditional agriculture. However, Cobb-Douglas specification may not always represent the underlying nature of technology in different crop seasons. In this paper, the validity of the restrictions imposed by Cobb-Douglas functional form was tested vis-a-vis more general functional forms in a sample of small-holding farmers in Bangladesh. The test results showed that the Cobb-Douglas restrictions were validated against both transcendental and translog functions for aman rice, pulses, wheat, oilseeds and IRRI rice, but not in the case of aus rice and jute, the major competing crops in the Summer season. This, therefore, raises some doubts as to its ‘indiscriminate’ use in estimating disaggregated production functions in peasant agriculture. Testing of Cobb-Douglas ‘Myths’ : An Analysis with Disaggregated Functions in Bangladesh Agriculture.