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Dhaka Tribune

Bangladesh at 50: The story of a rising economic juggernaut

Bangladesh now ranks as world's 41st largest economy and second-largest one in South Asia, and forecasts suggest that size of its economy may double by 2030

Update : 15 Oct 2022, 05:22 PM

In the 50 years since its hard-fought struggle for independence, Bangladesh has transformed itself from being an economic basket case to one of the fastest-growing economies in the world.

Bangladesh now ranks as the world's 41st largest economy and the second-largest one in South Asia, and forecasts suggest that the size of the economy may double by 2030, according to an analysis by a London-based think-tank.

The construction work of the 6.15km multipurpose bridge over the Padma River is almost complete with the country’s own funds — a great sign of the robust state of the economy of the country. A dozen mega projects like the metro rail, the tunnel under the Karnaphuli River and the Payra Seaport are underway to improve connectivity, which will ultimately bolster the economy.

With a 170-million strong population, Bangladesh has achieved milestones in poverty elimination, self-sufficiency in food production and life expectancy at birth, as well as other socio-economic human development indicators like education, health, nutrition and sanitation. The country has also significantly reduced maternal and infant mortality rates compared to many other countries in the world.

Over 80% of the population were living in extreme poverty until 1970 due to two decades of Pakistani exploitation. At the time of victory in 1971, Bangladesh's economy was in shreds — a result of the Liberation War.

Planning Minister MA Mannan recently said Bangladesh was now in development mode.

“Such achievements have been made possible through tackling many conspiracies as there have been efforts to keep the country poor ever since independence,” he told Dhaka Tribune.

According to the Centre for Research and Information (CRI), Bangladesh’s journey after independence was tough as development actions were derailed because of turmoils in the form of assassinations, coups, counter-coups and military rule following the assassination of Bangabandhu Sheikh Mujibur Rahman on August 15, 1975. Since 2009, the country has witnessed an economic turnaround, and growth has been inclusive in major socio-economic and human indices. Bangladesh is now considered a role model for other developing countries.

In the 1970s, it was argued that “if development is possible in a country like Bangladesh, it is possible in any other poorer country," said Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD).

He told Dhaka Tribune that Bangladesh’s economy had seen a growth of 1% in every decade since independence. Growth especially gained momentum in the last decade as the situation had dramatically changed due to planned development, he added.

The emergence of the readymade garment (RMG) sector was a key component of the country’s transformation into an industry-based economy from an agriculture-based one in the 1980s. The sector employs 4 million people, the majority of whom are women, and rakes in over $35 billion a year in exports, which accounts for 84% of total exports.

“The garment sector has not only changed the economy but also women's social status and gender equality in Bangladesh," said Rahman.

According to Bangladesh Bank, remittances also play a major role in the economy, with Bangladeshi workers employed abroad transferring nearly $22 billion in 2020. As a result, foreign exchange reserves reached a new record of over $43 billion. 

According to the Finance Division, Bangladesh started receiving foreign direct investment (FDI) in 1971. In 1972 Bangladesh received $90,000 in FDIs, and in 2019 the number reached a record $3.61 billion.

Eliminating poverty

According to the CRI, the poverty rate in 2019 was 20% and extreme poverty was nearing single-digit, at 10%. The country is expected to halve its poverty rate by 2030 even amid the re-emergence of poverty due to the global Covid-19 pandemic.

“Inclusive growth policies, domestic and overseas employment generation, and broad-arching social security programs have resulted in the reduction of both moderate and extreme poverty,” said Dr M Abu Eusuf, former chairman of the Department of Development Studies at Dhaka University.  

Agriculture and food security

Bangladesh has prioritized the agriculture sector to ensure food security since independence. The country has already achieved self-sufficiency in food.

A government report says total foodgrain production was 9.9 million tons in 1972, while in 2020 total foodgrain production stood at 45.4 million tons. Bangladesh is now the fourth largest rice and the third largest freshwater fish producer in the world.

“Bangladesh has made a significant achievement in food sufficiency. Use of modern technologies and quality seeds in cultivating crops in rural areas can ensure more productivity,” notes Robert D Simpson of the Food and Agriculture Organization (FAO) of the United Nations.

Mega infrastructures

Over the 50 years since liberation, Bangladesh has consistently invested in infrastructure development, including connectivity and electricity.

Spending on mega infrastructure development projects, such as the Padma Bridge, Bangabandhu Tunnel, and the Rooppur Nuclear Power Plant, is sure to strengthen communication and sufficiency in electricity.

According to a survey report, the Padma Bridge alone will contribute to the overall GDP of the country by more than 1%.

Similarly, Bangladesh has made strong headway in terms of access to electricity. In 1991, access to electricity was 14% and in 2021 it reached 99%.

Milestone recognitions

Bangladesh received the recommendation on graduation from the least developed country (LDC) status from the UN’s Committee for Development. The UN will recommend Bangladesh’s graduation by 2026 if the country meets all three criteria to graduate from an LDC. 

Bangladesh has been on the list of LDCs since 1975 when the country’s economy was still recovering from the devastations of the Liberation War.

Earlier, Bangladesh achieved lower middle-income country status in 2015 and is well on its track to leave the LDC list.

The country is now well placed to strive for a poverty-free and advanced economy by 2041.

Amid the achievements, a lack of quality education and inequality remain big barriers to further development.

“Despite more than 98% of children nationwide having finished primary school, the quality of education remains poor, posing a major challenge to the development of a skilled workforce,'' said Dr Rahman.

“The government should address the quality of education to meet the challenges of the fourth industrial revolution,” he added.

Rising income and wealth inequality are also responsible for the slow pace of job creation, according to Rahman.

Bangladesh's per capita income was $134 when it became independent and in 2020 it reached $2,064. But at the same time, the inequality ratio has also increased. 

On the other hand, Bangladesh has closed 73% of its overall gender gap, according to the Global Gender Gap Report 2020. But ensuring gender equality in all sectors remains a big challenge for the development of the country.

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