Abstract
The manufacturing sector is considered a growth engine in the two Bengals. When Bangladesh achieved independence, it was an agriculture-dependent country. It started transforming in the 1980s when the service sector’s Gross Domestic Product (GDP) contribution overtook the agriculture sector’s GDP. In the 2010s, the manufacturing sector surpassed the agricultural sector in terms of GDP contribution, thanks to the readymade garments (RMG) industry. This chapter finds that though the worker per capita value added is stagnating, Bangladesh has seen the emergence of other manufacturing areas like leather products, pharmaceuticals, shipbuilding, real estate construction, etc. As for West Bengal, studies show there has been a deceleration of the manufacturing sector. This has impacted employment and output. We find that capital productivity in the manufacturing sector has declined while labour productivity has increased. However, the latter has increased mainly due to a few industry groups, which are highly capital-intensive and have contributed around 85 per cent of the profit of the entire manufacturing sector. More interestingly, the total factor productivity (TFP) of the West Bengal manufacturing sector as a whole has been declining, while it has been increasing in the case of India.
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Notes
- 1.
It is helpful to mention that Gujarat was part of the province of Bombay during 1950–51. For details, see, Ray, S. C. (2011).
- 2.
In 1995, WTO succeeded the General Agreement on Tariffs and Trade (GATT), which came into being in Geneva in 1947, having 23 founding members. Bangladesh is a founding member of WTO.
- 3.
The employment contract in such unorganized sectors is pathetic. The violations of labor laws are rampant. The employees are recruited in the name of “permanent”, but the employers ask them to resign at any point in time, threatening them with termination if it is not followed. They pay only three months’ advance salary in case the concerned employee leaves.
- 4.
Planning Commission op. cit observed that the most common reason one comes across in the mainstream media and certain sections of academia is the issue of labor militancy. It is argued that there has been a flight of capital from the state because of the very strong and militant trade union movement in West Bengal. This is, however, only sometimes true. One of the trade union power indexes is the number of industrial disputes involving strikes. In 1980, the total number of industrial disputes involving strikes was 78. In contrast, industrial disputes involving strikes decreased to only 15 in 2010. The other industrial dispute involving lockouts registered an increase in the same period. In 1980, the total number of dispute-related lock-outs was 130, which increased to 269 in 2010. While the number of strikes decreased in the state, the share of manufacturing in GSDP declined. However, the number of lockouts continued to rise.
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Barai, M.K., Banik, A., Dash, S.K., Uddin, H. (2023). Manufacturing Sector of Bangladesh and West Bengal. In: Banik, A., Barai, M.K. (eds) Two Bengals. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-99-2185-0_4
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