Lfe Report

(1.0)Introduction

Savings and investments are the two major components of any economy. In the era of globalization where free market economy is functioning it is very important for a country to build a sustainable and strong economy to stand upright in the competitive world. Bangladesh as a third world country which economy is considered to be a developing economy, it is important for Bangladesh to build a strong and self depended economy to stay in the competition. The only way to build that type of economy is to create an economical structure from the very root to the top. That refers an overall economic development of a country. If you make a particular area where most of the economic activity happens it will obviously make the economic growth constant at a certain point. The simple reason behind it is you are not utilizing your owned resources properly. So for Bangladesh, developing the rural economy is very important. If we take look at our country‟s economic situation zone wise there are some districts where most of our economic activity took place (e.g. Dhaka, Chittagong, Sylhet etc.) where other potential places in the country is struggling to contribute in that way.

During the LFE I had the opportunity to get to know about Thakurgaon and the people of Singia village. I have found out that Thakurgaon is a very potential place for economic activity. There are certain limitations that are keeping it aback from growing. One of the possible reason and solution to that could be the "Saving and Investment Trend" of the local people.

(1.1) Defining Saving and Investment

Saving refers to the portion the income that was not spent or we can call it differed consumption. After spending from the income whatever is left over on hand is considered as saving. The primary purpose of saving is to make future use of the extra money on hand to meet the uncertainty of future.

Income - Consumption= Saving

In simple term, Investment is use of the resources for further production from where one can expect to get some benefit. That means investment brings future benefits. Such, investment can be buying land, start a new business or keep it in a bank.

However, economist consider saving and investment as same, they do not consider saving means only the differed consumption. Unless the saved money is kept to some financial institution or invested for future production from where one can get future value of money saving is not considered as saving. Here in this report will would see the different forms of saving and investment that used by the villagers of Singia.

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(1.2) Current Economic Condition of Thakurgaon

As I said before Thakurgaon has the potential to become a strong economic zone of Bangladesh. Geo graphically it receives the advantage of being very close to the border of India which opens the door of making easy export to some regions of India and Nepal. But lack of investors and government cooperation is pulling it back. That is why Thakurgaon‟s economy is still struggling a lot to become one of the strong economic zones in Bangladesh.

According to UNDP‟s (2010) report Thakurgaon falls under the medium developed economic zone in Bangladesh. In the terms of calculation of the GDP growth Thakurgaon‟s GDP growth was medium. In comparison of last decade (1999/2000 to 2009/2010) Thakurgaon‟s GDP is given below,

Sector wise GDP trend 1999/2000 2009/2010 Percentage change(%) 2009/10 compeered to 1999/2000

Agricultural GDP

$129

$163

26.6

Industrial GDP

$44

$77

76

Service GDP

$176

$231

31.4

Crop GDP

$86

$110

28.9

Livestock GDP

$21

$18

-13.4

Fisheries GDP

$10

$19

92.4

Forestry GDP

$13

$16

27

Total

$479

$634

32.4

Table 1.1: Trend in GDP of Thakurgaon 1999/00 to 2009/10.

From the above table we can easily say that Tahakurgaon‟s economy largely depend on Agriculture, Service and Crop. Apart from that rest of the other components adds less to its total GDP. The percentage change of GDP growth is also medium compared to Dhaka it is almost half of the growth where Dhaka‟s percentage change is almost 66%.

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In ten years the industrial GDP increased to $44 to $77 which indicates Thakurgaon lacks investment on the industrial sector and lack investors attention. That gives an indication that Thakurgaon needs more investment and for that it needs investors.

(1.3) Importance of Saving and Investment in an Economy

How an economy is functioning is it in a good condition or going through the ups and downs the easiest tool to understand the situation is to know the country‟s GDP.

Gross Domestic Product (GDP) is referred to all the market value of all finished goods and services produced in certain area in certain period of time. Per capita GDP indicates the standard of living of the people of that certain area.

GDP is calculated in three major ways among them we are going to talk about the production approach. In production approach the GDP is calculated by adding the following components.

GDP = private consumption+ gross investment+ government spending+ (export-import)

GDP= C+I+G+(X-M)

Coming back to our main focus here in GDP is „I‟ investment. Investment is a major component of the GDP calculation. It is the indicator of the productive capacity of the economy. Investment