It is the year 2006, the end of the term of the Bangladesh Nationalist Party (BNP) and Jamaat-e-Islami's alliance government and the beginning of a military-backed caretaker government for two years. BNP had left the country in a stagnant state -- being the champion of corruption three times, creating breeding centres for radical groups, decreasing the literacy rate, and failing to add a single megawatt of electricity to the national grid.
The year 2009 was a harbinger of a fresh start for Bangladesh as the Awami League (AL) won the election and formed a government in 2009 with Sheikh Hasina as the prime minister.
Before understanding Bangladesh’s success in development, looking back at the political power shifts in Bangladesh and their relation to Bangladesh’s development will bring a much clearer understanding.
Power shifts
Under the leadership of Khaleda Zia, the BNP regained power in the 1991 elections. In 1991, the parliament overwhelmingly changed the constitution and reestablished the parliamentary system of government, in a rare show of unanimity between the AL and the BNP. Power alternated between the BNP and the AL in elections conducted between 1991 and 2006. In June 1996, the AL was voted to power. The BNP and its coalition allies, including religious-political groups like the Jamaat-e-Islami, won another election in October 2001, handing power to the BNP.
After 1978, parties that supported a blend of religion and politics grew in size and influence. In the late 1990s and early 2000s, Islamist militant organizations developed. The country was thrown into upheaval in late 2006 when the outgoing administration and opposition parties couldn’t agree on a number of topics, including who should lead the interim government until the election. Following months of unrest, bloodshed, and instability, a military-backed technocratic caretaker administration was appointed in January 2007 under a 1996 constitutional clause.
The AL-led alliance won a landslide victory in the December 2008 election, securing a historic majority in parliament. In early 2009, the government was confronted with a revolt by the Bangladesh Rifles (BDR), a border security unit. Since then, the government has maintained control over the broader political situation, and democratic institutions have performed well.
Progress amidst setbacks
Despite a difficult global climate, notably the global financial crisis during the first three years, Bangladesh’s economy performed well. It’s also worth mentioning that the government has made significant progress in a variety of areas, including foreign relations and diplomacy, poverty reduction, and ubiquitous access to electricity, to name a few achievements. Although pervasive corruption and cronyism, as well as resource misallocation, have continued to hamper the country’s progress, there is a rising recognition of the need to confront these issues seriously.
Bangladesh’s per capita income increased manifold since 2008; according to the IMF, the country’s GDP stood at $350 billion in 2021, and had an annual growth rate of 8.2%
The AL manifesto ambitiously declared that Bangladesh, one of the world’s most densely populated countries with a population of over 160 million, would become a middle-income country by 2021. Having succeeded in making Bangladesh a lower middle income country, the target is now set to become an upper middle income country over the next decade.
The readymade garments (RMG) sector has grown to become one of the economy’s primary foundations, employing 4.5 million people. It accounts for 14% of GDP and roughly 80% of the country’s exports. In addition, billions in remittances are further sent home by millions of Bangladeshi expats each year. By managing population growth and substantially lowering infant mortality, Bangladesh has also outperformed India and Pakistan in major human development index metrics.
Bangladesh has a solid track record of development and prosperity. Over the last decade, it has been one of the world’s fastest growing economies, owing to a demographic dividend, robust ready-made garment (RMG) exports, remittances, and stable macroeconomic conditions.
Bangladesh provides a stunning story of poverty reduction and development to the world at large. Bangladesh went from being one of the poorest countries in the world when it was founded in 1971 to being a lower-middle income country less than 50 years later. In 2026, it is expected to be removed from the UN’s list of Least Developed Countries (LDCs).
The Covid-19 pandemic had a severe impact on Bangladesh, as it did on other nations, limiting economic activity and reversing some of the achievements made in the previous decade. As pandemic-related limitations were relaxed, real GDP growth surged to 6.9% in 2021, supported by a comeback in manufacturing and service sector activities. Exports and private consumption-led growth are driving demand. So far, vaccines have been administered to more than 77% of the population. However, rising global commodity prices, along with the uncertainty produced by the Russia-Ukraine conflict, have created additional headwinds for the country’s growth.
Notable initiatives
Prime Minister Sheikh Hasina has taken many initiatives in recent years to not only create a better economy but also to create a better living quality for the people of Bangladesh.
The construction of a new third terminal at Hazrat Shahjalal Airport in Dhaka will make travel much easier and it is expected to be a world class experience and scheduled to be completed as early as December 2023.
Moreover, the project of 20 km elevated expressway in Dhaka is anticipated to reduce the much hated traffic congestion of Dhaka city. Along with the metro rail opening in December 2022, and the expressway under construction, people in Dhaka will be released from the pain they suffer from travelling.
Even after being rejected by the World Bank and many other countries to start construction of the multipurpose Padma Bridge, and after no one showing faith in the completion of this project, our PM proved everyone wrong by completing the dream project. Since there were little to no railway connections in the southern part of Bangladesh, the government is also constructing the Padma Bridge Rail Link Project. This 172 km railway line will be constructed from Kamalapur to Jashore across the Padma Bridge.
Furthermore, the Rooppur Nuclear Power Plant (Bangladesh’s largest mega project) will be completed by 2024-25. Upon its completion, Bangladesh will join the elite group of 33 nuclear power generating countries globally.
Policy changes
Bangladesh’s twin policy efforts, “Vision 2021” and “Digital Bangladesh,” aimed to transform the nation into a middle-income country by 2021 and a developed country by 2041. It is expected to be one of the world’s top 24 economies by 2030. Domestic demand is increasing as a result of the emergence of the middle class and the overall improvement in the standard of living of the general public, and this has become a significant driver of economic activity. Bangladesh is presently a major producer of textiles, medicines, completed leathers, jute and jute items, light and medium industries, information technology, light engineering products, and small ocean-going vessels.
The increase in garment exports aided the country’s capacity to generate crucial foreign currency and preserve financial stability. However, because rural women made up the majority of the textile labour, this also resulted in injection of wealth into rural Bangladesh. Increased revenues in rural Bangladesh aided the expansion of rural businesses, which grew in tandem with agricultural prosperity.
In ensuing decades, the story of governmental initiatives leading to revolutionary change has persisted. For example, since the early 1990s, telecommunications liberalization has resulted in mobile phone subscriptions exceeding population size; since 2010, a power sector program has helped increase power generation capacity from 3,700 megawatts in 2007 to 13,000 megawatts in 2019. Between early 2013 and the end of 2020, a regulatory reform allowing mobile financial services has resulted in a fifteen fold increase in the value of mobile monetary transactions.
Bangladesh’s government does not do well on traditional measures of transparency and efficacy. Nonetheless, successive administrations have demonstrated an extraordinary capacity to respond to emerging economic trends with policy moves that have resulted in dramatic change. In many situations, an administration’s liberalizing policy moves undid what preceding administrations had done years, decades, or even centuries before.
In pre-independence days, for example, it was the government that took on the obligation of procuring and distributing agricultural inputs, and it was the government that ended the monopoly in the 1980s. Successive governments’ willingness to depart from well-established policies that they had inherited is admirable.
Some of the Bangladesh government’s policy decisions were impacted by development partners through conditionalities and persuasion, although not always at the speed that the external players wished. This had irked the latter and given the impression that the government was sluggish to reform.
Bangladesh’s successive governments, on the other hand, appeared to have altered their minds and resorted to making things work on their own. There have been no significant reforms in Bangladesh, but neither have there been any dramatic reversals. The strategy has been to implement reforms gradually but progressively. The government took certain steps, waited to see how the market reacted, and then took further steps. Although this method was not always well received, the effects are increasingly being acknowledged.
Bangladesh’s supply response to policy initiatives may set it aside from many other emerging countries. Such supply responses by a range of economic players, including farmers, industrial businesses, and dealers, sparked demand for more governmental initiatives, which were frequently forthcoming. In the previous few decades, we’ve seen this kind of synergy between government policy and economic players’ entrepreneurial activity. This is a crucial, yet underrated, aspect of Bangladesh’s incredible growth narrative.
Challenges and opportunities
Bangladesh needs to develop jobs and employment prospects through a competitive business climate, enhanced human capital, skilled labour force, efficient infrastructure, and a policy environment that encourages private investment to fulfil its objective of being an upper middle-income this decade.
Diversifying exports outside the RMG sector, developing the financial sector, making urbanization more sustainable, and improving public institutions are among the other development goals. Addressing infrastructural gaps will hasten growth and minimize inequities in opportunity across regions and cities. Addressing Bangladesh’s susceptibility to climate change and natural catastrophes can aid the country’s resilience to future shocks. Shifting to green growth would ensure the long-term viability of development outcomes for future generations.
Bangladesh currently proudly stands as a developing trade and investment destination, with an average annual economic growth rate of over 7% over the previous 14 years (2008-2022). Bangladesh is moving toward global business competency thanks to consistent development in exports, a hard working labour force, and dedicated entrepreneurs, all of which are aided by the government’s pro-business, pro-investment policies.
The country’s unwavering commitment to peace and harmony, regional stability, cooperation, and economic development through international and regional trade with its trading partners, as well as an increasing flow of remittances from Bangladeshis living abroad, has helped the country achieve and maintain a strong economic position. The achievement of fast development was ascribed to strong local demand, significant export growth, and continuing construction of infrastructure facilities.
Sadwaan Rabb Majumder is an alumnus of UWC Atlantic College, Wales, UK and a freelance writer.