In Bangladesh, where tobacco use is pervasive, reducing tobacco use is
economically beneficial. This paper uses the latest Bangladesh social accounting
matrix (SAM) multiplier model to quantify the economy-wide impact of
demand-driven changes in tobacco cultivation, bidi industries, and cigarette
industries. First, we compute various income multiplier values (i.e. backward
linkages) for all production activities in the economy to quantify the impact of
changes in demand for the corresponding products on gross output for 86
activities, demand for 86 commodities, returns to four factors of production,
and income for eight household groups. Next, we rank tobacco production
activities by income multiplier values relative to other sectors. Finally, we
present three hypothetical ‘tobacco-free economy’ scenarios by
diverting demand from tobacco products into other sectors of the economy and
quantifying the economy-wide impact. The simulation exercises with three
different tobacco-free scenarios show that, compared to the baseline values,
total sectoral output increases by 0.92%, 1.3%, and
0.75%. The corresponding increases in the total factor returns (i.e.
GDP) are 1.57%, 1.75%, and 1.75%. Similarly, total
household income increases by 1.40%, 1.58%, and
1.55%.