ABSTRACT
This chapter explores one aspect of the process of rural class formation in Bangladesh: the development and expansion of the small and cottage industries sector essential in establishing the conditions for rural industrialization and the consequent transformation of relations among rural nonagricultural producers. It examines the ways in which institutional credit contributes to efforts to transform petty commodity producers into an entrepreneurial class and the contradictory effects of this process on rural producers. The chapter provides an overview of the political economy of Bangladesh and alerts the reader to the importance of foreign assistance in shaping the processes by which the rural economy is increasingly characterized by patterns of capitalist penetration. Bangladesh traditionally has depended on agricultural exports to meet its financial and trade requirements. The chapter shows how particular policy reforms shape and are shaped by extant relations in the countryside.
