Abstract

Gold has always been a traditional business in Bangladesh, like the Indian subcontinent. Due to the proper attention in this sector, the gold and jewellery sector fails to harvest its potential. There is no specific policy and strong base for the development of this sector in the present situation. The raw materials, that is, gold mainly imports illegally. The paper is very much concerned with identifying the existing rules and regulations regarding the availability of  gold. It is also a concern to determine the current problems and recommend appropriate policy for developing this sector. With this suggestion, the country can create more employment and GDP. It will also increase the law order situation and the reputation of the custom, law enforcing authority, and the state’s overall image. The study’s findings are that the market mechanism did not function in this sector. In addition, it can say that the market system leads the industry on the wrong track. The more interesting matter of the sector is - all the imported gold for commercial purposes in Bangladesh is illegal. It should have a positive externality for the producer, which would have more than the optimal output level in the gold and jewellery sector. However, the jewellery production is less than optimal, which is paradoxical to the existing theory of market failure. So, appropriate government intervention became essential. It   is the second-best optimality approach for attaining the economic benefit from this sector. The paper suggests importing gold in a systematic legal way.