Historical background of Bangladesh Economy

Bangladesh has a great economic history. This area was very rich and developed. Some harpy foreign & native people seized this area and made us the middle class.

From the erstwhile, the Indian subcontinent (Bangladesh) was developed in education and natural resources.

Nalanda University was one of the top educational institutes of that time. Many kings rule this Bangla at different times. From them, the English and Pakistani exploit this area excessively. Historical background of Bangladesh Economy

After a long, Bangladesh got independent in 1971 from Pakistan. This confiscated & war-affected economy suffered political instability and over population. Now, this country is good at the apparel industry and human resource export.

Ancient period

From ancient times, the main profession of the people of this area (Bangladesh) was agriculture. At that time people used plow and cows or buffalo to plow lands. The family which has no cows or buffalo, the young men or women work as the cow. There was no urban economic system. People meet their needs which produce in villages and they exchange products with one another. This type of economic system lasts till 1200 A.C.

We can found those descriptions in an ancient Bengali book, names “Charyapada”. We also learned that people produced cloth of silk; a book written by Chanakya (Kautilya) and the name of this book was Arthashastra.

In the time of all monarchy, the economic system was about to same. The Maurya, Gupta, Pala, Sena periods there has no effect on this area’s economic system. King was the one and only owner of lands and people needs to pay tax when they cultivate on certain lands.

In the time of the Gupta age, the cottage industry flourishes with clothes because they have enough craftsmen. People were able to produce sugar from sugarcane and they export that. The people were specialized in the ceramic and bronze industry and know the use of ivory. The beautiful cloth muslin was renowned all over the world for its specialist. 

People also exports pearls and spices. The main transport of that time was the boat and the people of this area were good at making those.

Muslim period

The time of the Muslim period starts after 1200 AC and lasts till 1757 AC. They expand the navy with bigger ships and ships with a sail. They use Chattogram as a port city.

In 1301 AC, Shamsuddin Firoz Shah has introduced to currency system instead of an exchange system. Sher Shah divided his area into government and Parganas. At that time, People had to pay tax, one-fourth of the total production of crops.

The Mughal period

In the time of Akbar, Raja Todar Mal created a system to collect revenues. Akbar first introduced to the Bengali calendar. He made it to collect taxes smoothly.

In the Mughal period, the landlord collects revenues. As a riverine country, it is difficult to make aisles constant. So, it is hard to continue the lessee system.

In the last stage of the Mughal period, the government employee and revenue collectors declared themselves as landlords. The landlord only pays 10 percent of the total collected taxes to the Mughal emperor. Those landlords created a system like feudalism.

 In the time of the Mughals, many foreign merchants visited this area and international trade began. Dutch, English, French was the top of them. They gave gold and other precious metals to those Mughal emperors.

Subedars also gave huge money to those emperors. In the time of Shaista khan, people can buy 8 mounds of rice by one taka. The total saving of Shaista khan was TK 9 corer. This data shows the development picture of Bangla of that time.

Appearances of foreign merchants /Historical background of Bangladesh Economy

The Europeans searched many times to find a waterway to reach this subcontinent. In 1498, Vasco da Gama discovered the waterway of the Indian subcontinent. The Portuguese first appeared on this subcontinent.

But the Dutch first started their business in Bangla in 1615. The British got permission of business in Bangla in 1633. They were the founder of this present city, Kolkata.

The British period

The British won the war of Palashi in 1757 and seized the whole power later. They earned huge profits by business and collecting revenues. They siphoned those money and precious metals to England.

The British collected the revenues using contractors. The collectors exploit farmers to collect revenues. So, a revolution occurs time and again here.

Due to the diarchy of the British ruler and their dual administrative system, Bengali business and industries hampers a lot.

In 1768, the production of crops had decreased a lot because of the drought.  And feminine starts in 1769. That feminine gets extreme in 1770 (1176 Bangla).

One-third of the total population of this area had died because of this feminine. The inflation rate was very high at that time. The price of every kilogram of rice increased three/ four times.

This country was in a better position in exporting cottage industries. First, the British buy those products at a low cost and sell them to their country with high profit.

They also sold their industrial products in this area at high prices. In 1813, the House of Commons passed a law to import certain Indian products and impose higher taxes on the rest of them.

They demolish the handloom industries of this area. They sucked the farmers by enforcing them in cultivating indigo.

But the English have a positive side, they educate the people of this area. Later, those educated people made a movement against the British.

Lord canning introduced this area to paper currency and budget system.

The Pakistani period (1947-1971)

Pakistan got independence from the English on 14th August 1947 and got separated from India with great enthusiasm. All of the people of this area hoped that they will lead a prosperous life after this independence.

 But the people of Bangla was wrong. The Pakistani dynast shows their original character after getting the power. They exploit the Bangladeshi people in all ways during their 24 years of ruling time.

Geographical difference between East Pakistan (Bangladesh) & West Pakistan

East Pakistan was 1600 Kilometers away from West Pakistan. There was no road between two Pakistan. There was an independent country “India” between these two regions.

Population and province

About 54 percent of the total population lives in East Pakistan but the political persons of province Punjab took the power of Pakistan.

They marked East Pakistan as a province. There were five provinces of that time named Punjab, Sindh, Baluchistan, North-west Frontier, and East Pakistan.

Five years of the development plan in the Pakistani period

plan & timeEast Pakistan
West Pakistan% of allotment to Bangladesh
First five year plan
Second five year plan
Third five year plan

On the second and third five year plan, East Pakistan got only 31 percent and 35 percent of total expenditure.

Before the first five-year development plan they siphoned about $210 million to West Pakistan.

The economic inequality made by West Pakistan to East Pakistan are described here:

  1. Agriculture: East Pakistan (Bangladesh) produced and export abundant agricultural products where West Pakistan has a deficit production of products. About 70 percent of foreign currency was earned by exporting jute of Bangladesh.
  2. Banking and finance: After the partition of Pakistan, all Muslim owned banks transferred their main branch to the capital of Pakistan Karachi. All the investment of East Pakistan occurred from West Pakistan on jute and related sectors. Adamji jute mill was established at that time by a west Pakistani family.
  3. National income & per-capita income: In the year1949-50, the per capita income of the people of East Pakistan was TK 305 and West Pakistan was TK 330. In 1969-70 it increased to; east Pakistan TK 339 & West Pakistan TK 500. In the year 1964-65, the total GNI of East Pakistan was TK 1999 and the total GNI of West Pakistan was TK 2379.
  4. Employment: All the post of higher officials of East Pakistan was filled up by the west Pakistani or refugees who took Pakistani citizenship. Although there was an educated and skilled Bangladeshi person. In the 24 years of ruling time, they seized the top official’s post of finance, defense, planning commission & other important corporations.
  5. Growth rate: In the year 1949-50, the GNP growth rate of East Pakistan was 1.7% & it was 3.6% in West Pakistan. In 1964-65 it increases to 4.2% & 6.2% respectively. There was a great disparity between these two areas.

Others: Here is a short discussion of some other discrimination of West Pakistan to present Bangladesh (East Pakistan).

  • East Pakistan (Bangladesh) produces about 70 percent of export items but West Pakistan sends only 25 percent here.
  • In 1948, there were 11 apparel mills in East Pakistan and 9 in West Pakistan. But in 1971, the total apparel mill of West Pakistan increases to 150 where East Pakistan got only 26.
  • They siphoned $2.6 million from East Pakistan.
  • They don’t help the people of the natural disaster-affected areas.
  • They spend all the foreign aids in their area.
  • The investment in East Pakistan never gets any patronage from the government.


First, the English destroy the economy of this area by demolishing the cottage industries of this area. The west Pakistani was the follower of the British and they have also sucked this nation.

As a result of those exploitations, the Bangladeshi people revolted in 1971 and got their independence.


Ranojit Kumar Nath, Economics 2nd paper, class: 11-12th.

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