ARISTOTLE UNIVERSITY OF THESSALONIKI SCHOOL OF AGRICULTURE FORESTRY AND NATURAL ENVIRONMENT POST GRADUATE STUDIES OF AGRICULTURAL ECONOMICS RURAL MARKETS AS A FACTOR OF RURAL DEVELOPMENT DRIVER IN BANGLADESH MOHAMMAD ISMAIL HOSSAIN SUPERVISOR: DR. ANASTASIOS SEMOS Thesis submitted for the degree of Doctor of Philosophy (Ph.D.) of AGRICULTURAL ECONOMICS THESSALONIKI 2013 SUPERVISOR Dr. Anastasios Semos, Professor, Department of Agricultural Economics, School of Agriculture, Aristotle University of Thessaloniki, Greece. MEMBERS Dr. Eleni Papadopoulou, Associate Professor, Department of Spatial Planning and Development, School of Engineering, Aristotle University of Thessaloniki, Greece. Dr. Evangelos Papanagiotou, Professor, Department of Agricultural Economics, School of Agriculture, Aristotle University of Thessaloniki, Greece. Examiners Dr. Konstadinos Mattas, Professor, Department of Agricultural Economics, School of Agriculture, Aristotle University of Thessaloniki. Dr. Psaltopoulos Dimitrios, Associate Professor, Department of Economics, University of Patra. Dr. Panagiota Sergaki, Assistant Professor, Department of Agricultural Economics, School of Agriculture, Aristotle University of Thessaloniki. Dr. Efthimia Tsakiridou, Assistant Professor, Department of Agricultural Economics, School of Agriculture, Aristotle University of Thessaloniki. © Mohammad Ismail Hossain © Aristotle University of Thessaloniki (AUTH) “RURAL MARKETS AS A FACTOR OF RURAL DEVELOPMENT DRIVER IN BANGLADESH” ISBN <<Η έγκριση της παρούσης Διδακτορικής Διατριβής από την Γεωπονική Σχολή του Αριστοτέλειο Πανεπιστήμιο Θεσσαλονίκης δεν υποδηλώνει αποδοχή των γνωμών του συγγραφέως >> (Ν. 5343/1932, άρθρο 202, παρ.2) ACKNOWLEDGEMENTS The great Bengali poet and Nobel laureate Ravi Tagore wrote “….it is easy to express the words of knowledge, but the words of feeling are far too difficult”. It is indeed hard for me to express my exact feelings of gratefulness to my supervisor Dr. Anastasios Semos who has been untiringly helpful and patient to me throughout all these years of my PhD journey. I am indebted to his for all his support, care and help. I like to express my endless thanks and gratefulness to Dr. Eleni Papadopoulou, my first supervisor (until she joined in 2012 the School of Engineering, AUTh). She was not only an academic guide for me but also a philosophical guru and a true friend. She is for me like a lighthouse in my voyage to the ocean of unknowns. Without her help, support, guidance I would never reached to this stage of my life. I am deeply grateful to the academics and staff of the Department of Agricultural Economics. Special thanks to Dr. Evangelos Papanagiotou, Professor Emeritus and PhD committee member and Dr. Konstadinos Mattas, Professor, who all these years helped me enriching my knowledge with their kind suggestions and advice. I want to express my gratitude to Dr. Nikolas Hasanagas for his assistance to understand the model and organize data analysis with VISONE. I am highly grateful to the Secretariat of the Department of Agricultural Econimics for their kind support and help during my study. I like to thank my country fellow research colleagues. Special thanks to Dr. Tanvir Mahmud Bin Hossian without whose personal support may be I would not have dared to take such an endeavour as doing a PhD. I am personally indebted to my friends Irini, Liton, Shoaibur and Delowar for their encouragement during my study period. Finally, my greatest thanks are to my family; my loving wife Lucy and my wonderful children Tahseen and Zubair for their understanding, support and sacrifice that helped me to reach the end of a new beginning of my life. They are my source of eternal inspiration for today and in the day to come. i ABASTRACT The major objective of this research is to investigate the importance of rural markets in rural development by relating their structures, functions and accessibility to indices of rural development. Twenty nine rural communities were selected for the study and data were collected using primary and secondary sources. The data generated were analyzed in stages using appropriate statistical techniques, including centrality co-efficient, network proportions, cluster analysis and factor analysis for the assessment of rural market centrality, structures, and factors influencing rural development respectively. The results of the analyses show that the distribution of rural markets and rural development facilities are concentrated along the Bandarban sadar market and that there are weak linkages between the rural markets in the area. Also, the markets were found to exist in hierarchical organization in a sequence of 1,2,5,21 which approximates Christaller’s Market-Maximizing principle, with the higher order markets enjoying high relative accessibilities. On the basis of the pattern of rural development, four types of rural development were identified as emerging urban, actively developing, of transitional type and slowly developing communities. The factor analysis revealed five underlying factors of rural development, namely, rural market development, accessibility, community development, availability of land resources and relative location. On the basis of the findings, we recommended for the infrastructure accessibility development by improvement of road network, and institutional development through encouragement of the formation of cooperative societies, improvement of innovation diffusion process, improvement of rural markets infrastructures, establishment of more farm settlements, and establishment of National Rural Development Commission. ii ΠΕΡΙΛΗΨΗ Ο κύριος στόχος της έρευνας αυτής είναι να διερευνήσει τη σημαντικότητα των αγροτικών αγορών στην αγροτική ανάπτυξη, σχετίζοντας τις δομές, τις λειτουργίες και τη δυνατότητα πρόσβασης στην αγροτική ανάπτυξη. Για την έρευνα αυτή επιλέχθηκαν είκοσι εννέα αγροτικές κοινότητες και τα δεδομένα συλλέχθηκαν με τη χρήση πρωτογενών και δευτερογενών πηγών. Τα δεδομένα που συλλέχθηκαν αναλύθηκαν σε στάδια με τη χρήση κατάλληλων στατιστικών τεχνικών, συμπεριλαμβανομένων του συντελεστή κεντρικότητας, των αναλογιών των δικτύων, της ανάλυσης διασποράς και της παραγοντικής ανάλυσης για την εκτίμηση της κεντρικότητας των αγροτικών αγορών, των δομών και των παραγόντων που επηρεάζουν την ανάπτυξη της υπαίθρου αντίστοιχα. Τα αποτελέσματα που προέκυψαν από την τρέχουσα ανάλυση καταδεικνύουν ότι η κατανομή των αγροτικών αγορών και οι ευκαιρίες για την αγροτική ανάπτυξη συγκεντρώνονται στη περιοχή Bandarban Sadar και ότι στην περιοχή υπάρχουν ασθενείς δεσμοί μεταξύ των αγροτικών αγορών. Επίσης, οι αγορές βρέθηκαν να κατανέμονται σε ιεραρχική οργάνωση σε μια ακολουθία 1,2,5,21 που προσεγγίζει την Christaller’s Market- Maximizing principle, με τις υψηλότερης τάξης αγορές να απολαμβάνουν σχετικά υψηλή προσβασιμότητα. Στην έρευνα αυτή προσδιορίστηκαν τέσσερις τύποι αγροτικής ανάπτυξης με βάση το πρότυπο αγροτικής ανάπτυξης: οι ανερχόμενες αστικές κοινότητες, οι ενεργά αναπτυσσόμενες κοινότητες,, οι μεταβατικές κοινότητες, και οι λιγότερο αναπτυσσόμενες κοινότητες. Η παραγοντική ανάλυση φανέρωσε πέντε υποκείμενους παράγοντες ανάπτυξης της υπαίθρου, όπως η ανάπτυξη των αγροτικών αγορών, η προσβασιμότητα, η ανάπτυξη της κοινότητας, η διαθεσιμότητα των διαθέσιμων πόρων και η σχετική θέση-τοποθεσία. Με βάση τα ευρήματα της έρευνας, προτείνεται η βελτίωση του οδικού δικτύου, η ενθάρρυνση του σχηματισμού των συνεταιριστικών κοινωνιών, η βελτίωση της διαδικασίας διάχυσης των καινοτομιών, η βελτίωση των αγροτικών αγορών, η ίδρυση περισσότερων αγροτικών οικισμών και η δημιουργία της Εθνικής Επιτροπής Αγροτικής Ανάπτυξης. iii TABLE OF CONTENTS Page Acknowledgement i Abstract ii Table of Contents iv List of Tables ix List of Figures xi List of Appendix xii Acronyms xiii Chapter Title Page 1 OVERVIEW OF THE THESIS 1 1.1 Introduction 1 1.2 Context of the Research 3 1.3 Statement of the Problem 9 1.4 Significance of the Research 10 1.5 Research Objectives 13 1.6 Research Questions 14 1.7 Research Hypothesis 15 1.8 Definition of Key Concepts 15 1.8.1 Rural areas 16 1.8.2 Development 18 1.8.3 Rural development 21 1.8.4 Rural community 22 1.8.5 Rural market 23 1.9 The Research Approach 26 1.10 The Thesis Structure 28 2 THEORETICAL FRAMEWORK 32 2.1 Introduction 32 iv Chapter Title Page 2.2 The Dualistic Model of Economic Growth 32 2.3 The Basic Resource Model 35 2.4 The Internal Combustion Theory 35 2.5 The Growth Pole Theory 36 2.6 Centre Periphery Model 33 2.7 Diffusion Model of Rural Development 39 2.8 Central Place Model 41 2.9 Conclusion 45 3 RURAL DEVELOPMENT IN BANGALDESH: AN OVERVIEW 46 3.1 Introduction 46 3.2 Bangladesh: Country Background 46 3.3 Development Planning in Bangladesh 51 3.4 Review of Past Development Plans of Bangladesh 53 3.5 Problems in Planning and Project Management 63 3.6 Brief Analysis of Agricultural Sector 68 3.6.1 Achievements in agriculture 70 3.6.2 Constraints in agriculture 71 3.6.3 Policy reforms in agriculture 72 3.6.4 Agricultural landownership 72 3.6.5 Agricultural sustainability 74 3.7 Conclusion 77 4 REVIEW OF LITERATURE 80 4.1 Introduction 80 4.2 Social Network Analysis 80 4.3 Rural Development Policy Network Analysis 81 4.4 Rural Markets and Network Analysis 85 4.5 Conclusion 96 5 BACKGROUND OF THE STUDY AREA AND RESEARCH DESIGN 97 5.1 Introduction 97 v Chapter Title Page 5.2 Locale of Study 97 5.2.1 Area and demography 99 5.2.2 Ecology 101 5.2.3 Economy and livelihood 102 5.2.4 Climate 103 5.3 Research Design and Sampling Method 104 5.3.1 Sample selection 104 5.3.2 Data collection 105 5.3.3 Data analysis 108 6 ANALYSES OF RURAL MARKETS’ EFFICIENCY IN 114 BANGLADESH 6.1Introduction 114 6.2 Rural Market Integration 114 6.2.1 Spatial and temporal distribution 114 6.2.2 Rural market interlinkage 120 6.2.3 Identifying leading communities through social network analysis 127 6.2.3.1 Market status 128 6.2.3.2 Place importance 129 6.2.3.3 Control potential of markets 130 6.2.4 Constraints to rural market interlinkages 141 6.3 Centrality/Functions of Rural Markets 142 6.3.1 Functional hierarchy of rural markets 151 6.4 Relative Accessibility of the Rural Markets 157 7 APPRAISAL OF RURAL DEVELOPMENT STRATEGIES IN 160 BANGLADESH 7.1 Introduction 160 7.1.1 Agricultural development strategy 160 7.1.2 Industrial development strategy 162 7.1.3 Community development strategy 163 7.1.4 Integrated rural development strategy 164 vi Chapter Title Page 7.1.5 Infrastructure development strategy 166 7.1.6 The instrument of local government 167 7.1.7 Comprehensive village development strategy 168 7.1.8 The Chars livelihoods program strategy 169 7.1.9 Participatory rural development project-link model strategy 171 7.1.10 One-house one-farm strategy 171 7.2 The Challenge to Sustainable Rural Development in Bangladesh 172 8 ASSESSMENT OF LEVEL OF THE RURAL DEVELOPMENT IN 1173 BANGLADESH 8.1 Indicators of Rural Development 173 8.2 Spatial Manifestation of Rural Development in Southeast Region 176 8.3 Classification and Mapping of Communities on the Basis of Rural 179 development 9 ANALYSIS OF FACTOR INFLUENCING LEVELS AND PATTERNS 185 OF RURAL DEVELOPMENT IN BANGLADESH 9.1 Introduction 185 9.2 Description and justification for the Variables Investigated 185 9.2.1 Distance to LG Headquarter 186 9.2.2 Distance to the nearest urban centre 187 9.2.3 Road length 187 9.2.4 Road density 187 9.2.5 Land area 188 9.2.6 Farm size 188 9.2.7 Population 188 9.2.8 Education 189 9.2.9 Income of rural dwellers 190 9.2.10 Number of social organizations 190 9.2.11 Access to electronic media (Radio/TV/Video) 190 9.3 Inter-relationships among the Rural Development Variables 191 vii