The Role of Service Industry in the Economic Development of Bangladesh

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Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 3, No 5, 2012

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The Comparative Growth of Service Sectors in Bangladesh
Mohammad Shahidul Islam1, Md. Musa2, Rajib Kanti Das3 1. Assistant Professor, School of Business, University of Information Technology and Sciences, 40/1 Jakir Hossain Road, Khulshi, Chittagong, Bangladesh Tel: 88-01190-955692 E-mail:shahidulislam28@yahoo.com 2. Lecturer, School of Business, University of Information Technology and Sciences, 40/1 Jakir Hossain Road, Khulshi , Chittagong, Bangladesh,Tel: 88-01819-619269 . E-mail: musa0999@gmail.com 3. Assistant Professor, Faculty of Business Administration, BGC Trust University Bangladesh * E-mail of the corresponding author: shahidulislam28@yahoo.com Abstract The Economy of Bangladesh is classified into three sectors. Of these, the average contribution of service sector, industry sector, agriculture sector to the GDP are 49.33%, 28.42% and 22.42% respectively. So, the service sectors contribute most of the development of national economy. The research aims are to analyze the comparative contribution of service sector with other sectors, the impact of trade liberalization of service sector and to provide the recommendations for development of service sector. It is taken a sample of ten years data of GDP from 2000-01 to 2009-10 for analyzing the comparison of service sector with other sectors (industry and agriculture). The average growth rates between service sectors and industry sectors or agriculture sector or total GDP are analyzed with‘t’ test. The average growth rate of service sector, inudsty sector, and agriculture sector are 6.17%, 7.49%, 3.21% respectively. The growth of service sector is more than the agriculture sector but less than the industry sector (result of‘t’ test). The paper also reveals that total trade deficit of service is increasing over the year.The average employment of Agriculture, Industry, Service to total employment are 58.89%, 12.39% and 25.36% respectively. The paper emphasizes for the development of Tourism sector, Software, Transportation and Financial srvice, Education with quality, etc. Keywords: GDP, Service, Agriculture, Industry

1. Introduction The Economy of Bangladesh is growing one. It is basically divided into three basic sectors viz. Service, Agriculture and Industry. Among the Economic Sectors in Bangladesh, Service sector is most important. The contribution of service sector to the GDP is about 50% (Bangladesh Economic Review-2010). So, Service sectors influence the development of national economy. There is a latent demand for services in Bangladesh. To specify the need of services for huge population of Bangladesh, such sectors are to be opened for private entrepreneurs with required control. The enormous contribution of service sector and an increasing trend therein have played an important role in high growth of GDP. The analysis of last few years’ data gives a clear idea on the phenomenon. The contribution of the industry sector to the economy of Bangladesh has been increasing day by day. For the purpose of national income accounting, Bangladesh Bureau of Statistics (BBS) divides the economy into fifteen sectors (Bangladesh Economic Review-2010, Ministry of Finance).

2. Problem statement From the growth of overall size of Economy, it is difficult to identify the significance of specific sector. Proper nurturing of significantly contributory sector, the growth of Economy may be resisted. Previously there was no difference between Services and Products. Service concept is the modern issue in the world. The most of the business is related to services. Even the product itself provides the service to the customers. So the services are the vital issue now. The economic sectors classified by Bangladesh Government are Hotel and Restaurant, Retail trade and Wholesale trade, Transportation and Communication, Real state and Renting, Financial...
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