BANGLADESH inherited a pre-dominantly agro-based economy, characterised by a high density of population and lack of natural resources. The country now ranks 33rd out of 43 low-income countries of the world. Agriculture contributes about 40 per cent of the gross domestic product (GDP). The industrial sector, making up 15 per cent of the GDP, employs only about nine per cent of the country's labour force. The per capita income is only US$210 and most of the people live below the poverty line with inadequate access to basic human needs. Traditionally, Bangladesh suffered from a lack of capital and technical know-how needed for establishing industries. With a low income level, the internal consumer market did not develop satisfactorily. Internal capital formation could not make much headway and the economy suffered serious setbacks during the initial years after liberation. The private sector lagged behind because private capital formation was restricted. Given its inadequate processing facilities the country continued to be an exporter of traditional primary products. The growth in the agriculture sector could not keep pace with population growth. The consequence has been massive unemployment and underemployment. The alarming annual growth of the unemployed (three per cent) is not only a source of grave human misery but also a threat to society, economy and polity. Rapid industrialisation through private investment is a common initiative among developing countries wishing to move out of the poverty trap. It was against this backdrop that the idea of establishing export processing zones was first mooted in 1976 in a meeting between the late president Ziaur Rahman and Mr Robert McNamara, President of the World Bank, when debt servicing and loans were underreview. With a view to establishing a statutory authority for the creation, development, operation, management and control of the zones, the BEPZA Act, 1980, was promulgated on December 26, 1980, with these objectives: To foster and generate economic development in Bangladesh by encouraging and promoting foreign investment. To diversify the sources of foreign exchange earnings by increasing Bangladesh export. To encourage and foster the establishment and development of industries and commercial enterprises in order to widen and strengthen Bangladesh's economic base. To generate productive employment opportunity and to upgrade labour and management skills through acquisition of advanced technology. An export processing zone is primarily an industrial estate having specific characteristics for the purpose of a modern export-led programme, particularly in the developing world. The zones are a development of free ports established during the colonial era in order to encourage entrepot-trade. They go one step further in allowing industrial activities to be undertaken within the boundaries of the duty-free zone. Certain types of goods, in the form of raw materials, component parts, semi-finished or finished products, can be brought to the zone without the payment of customs duties. After the goods have been assembled, processed of manufactured, they can be re-exported without the payment of duties. But manufacturers wishing to set up in the zones are usually provided with other fiscal and physical incentives. These include infrastructural facilities, such as land, electricity, telecommunications, water, gas, sewage and standard factory buildings; fiscal concessions and subsidies, of which tax holidays are the most important; and the absence of restrictions on foreign ownership, foreign exchange remittance and repatriations of dividends. For most developing countries, the objective of attaining rapid economic growth has often been thwarted by limited capacity to mobilise domestic capital and a lack of access to latest technology. Many countries have established zones to set up export-oriented industries with foreign capital and technology. The zones have played a vital role for industrialisation and rapid economic development in the developing world for the past few decades. Bangladesh's first zone in Patenga, Chittagong, began in 1983. It took almost a decade for it to get the right momentum and it has proved its worth and potential for accelerating economic development. The government led by Prime Minister Mr Begum Khaleda Zia has raised new hopes and aspirations among the people. The government's industrial and economic policies have been further liberalised to stabilise an open-door and free-market economic system andattract more foreign investment. New processing zones in Dhaka and Khulna are in the process. As a nation with a high-density of population and limited natural resources, the strategy to generate greater employment opportunities with the help of international capital and technology is the way ahead.