Over the past few decades, Bangladesh has achieved remarkable economic progress, with an average GDP growth of 6% since 2000. Consistent increases in per capita income, significant achievements in human development, and strong macroeconomic management have contributed to reduced economic vulnerability. These accomplishments have enabled Bangladesh to qualify for graduation from Least Developed Country (LDC) status by 2026, as recommended by the United Nations Committee for Development Policy (CDP).
Bangladesh has already been classified as a lower-middle-income country by the World Bank. Building on these successes, the nation has set an ambitious goal to become a high-income country by 2041 and remains committed to achieving the Sustainable Development Goals (SDGs) by 2030. While notable progress has been made in meeting some SDG targets ahead of schedule, significant challenges persist.
Currently, millions of people remain unemployed, and nearly two million young people enter the labor market every year. Creating more and better job opportunities to ensure sustainable economic growth and reduce poverty is a significant challenge for Bangladesh.
The country's economic growth has been primarily export-driven, with exports growing at an annual average rate of 13% between 2000 and 2013. Bangladesh remains heavily reliant on the apparel sector, which accounts for 82% of total exports. Within this sector, there is an overdependence on a limited range of low-value-added products.
Additionally, Bangladesh has made little progress in diversifying its export destinations. It has not fully capitalized on opportunities in large and emerging markets, especially in Eastern regions, unlike competitors such as Vietnam.
To achieve high-income status by 2041, Bangladesh must significantly increase local private investment and foreign direct investment (FDI) in productive, high-value-added sectors and their backward linkages. Furthermore, the country needs substantial improvements in human capital, export competitiveness, and global market integration. Diversifying its export basket and successfully integrating into global value chains will also be critical.
Trade has been recognized as a key driver of inclusive economic growth and poverty reduction in the 2030 Sustainable Development Agenda. Given rising unemployment and the relatively small domestic market, Bangladesh must further tap into international markets. Exports remain a primary driver of the $450 billion economy and will continue to play a critical role in GDP growth and employment creation. To achieve export-driven growth and higher employment, Bangladesh must expand its share in the $75 trillion global market by exploring new products and markets.
Barriers to Trade
In the 2019 Global Competitiveness Index by the World Economic Forum, Bangladesh ranked 105th out of 141 countries, significantly behind its major export competitors. Competitiveness in international markets depends largely on factors such as industrial productivity and innovation, workforce technical skills, streamlined trade processes at borders, supportive infrastructure, and more.
Bangladeshi industries face significant shortcomings in productivity and innovation, hindering their ability to produce high-value and complex products. The country’s current business environment is not conducive to supporting its vision of becoming a high-income nation by 2041. Despite recent reform efforts, Bangladesh ranks low in the World Bank's "Ease of Doing Business" index, positioned at 168th out of 190 countries. Its Distance to Frontier (DTF) score is 40.99, much lower than the South Asian regional average of 53.64.
The Need for Trade Infrastructure
Weak infrastructure remains a major barrier to economic growth in Bangladesh. Inadequate infrastructure and trade logistics significantly increase the cost and time of doing business. Traffic congestion, frequent police checks, and inefficiencies in loading and unloading at ports contribute to delays in moving goods from warehouses to borders or ports. These challenges are reflected in the Global Connectivity Index, where Bangladesh ranks 121st out of 140 countries, with a score of only 34.4. In the World Bank’s "Logistics Performance Index" for 2023, Bangladesh ranks 88th.
Building New and Modern Ports
According to research by UN ESCAP, improved infrastructure could generate an additional $35.5 billion in revenue for Bangladesh by 2030. With strong political commitment and continued reform, Bangladesh can diversify its exports, address infrastructure weaknesses, and attract high-value-added FDI from technologically advanced countries.
The country is already advancing plans to establish nearly 100 economic zones around major commercial centers. However, priority should be given to quickly operationalizing specific zones, especially those near ports, while aligning them with sustainable development goals. This approach will send a strong positive signal to potential investors.
The writer is the Chairman, Policy Exchange of Bangladesh
BDST: 1312 HRS, JAN 12, 2025
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