Consumption, savings and investment by social class in Bangladesh: Does the rural sector support the Urban sector?

This article employs input-output analysis and information from a social accounting matrix and the concept of net savings to examine savings, consumption and investment behaviour by various social classes in Bangladesh in urban and rural areas. Considerable differences between social classes can be identified in all three respects. A majority of the social classes in the rural sector does not appear to generate enough savings to sustain its consumption whereas the urban social classes do. There seems to be little difference in consumption pattern of the rural rich and the urban rich. There is considerable urban-rural difference in the import intensities of consumption. The findings of this study based on the Hazari model do not establish the existence of urban bias but the problem seems to be one of 'rich-bias' rather than urban-bias per se. However, the Hazari model cannot capture all possible sources of urban bias and circumstantial evidence indicates concentration of advantages in the urban areas.