Bangladesh's new cabinet takes charge at a critical economic crossroads. As the country strives for inclusive growth, it faces the daunting middle-income trap. This is a stage where traditional, labour-heavy growth models lose their edge, yet the economy lacks the high-tech foundation to compete globally.
To push past this barrier and secure long-term prosperity, the new government must view artificial intelligence not just as a niche tech sector, but as the main engine for economic productivity.
Over the next decade, artificial intelligence will separate the countries that grow from those that stall. According to an IMF working paper, the rapid spread of machine learning could boost the global economy by nearly four percent.
However, this wealth will not be shared equally.
Advanced economies with deep pockets, powerful computing infrastructure, and highly skilled workers are positioned to capture most of these gains.
In fact, their economic boost could be double that of low-income countries.
If emerging markets like Bangladesh fail to weave these technologies into their industrial policies, they risk falling on the wrong side of a massive global wealth gap.
To understand the stakes, the cabinet should look at lessons from other emerging markets. An IMF-selected issues paper highlights the middle-income trap using Uruguay as a prime example.
Uruguay has strong institutions and is highly prepared for new technology, yet its economic catch-up with advanced nations has largely stalled.
This paradox shows that simply being ready for digital tools cannot spark explosive growth if deep-rooted market bottlenecks remain.
For Bangladesh, digital ambitions must go hand in hand with real market reforms. Cutting red tape, modernizing trade routes, and expanding credit access are absolutely necessary for local businesses to actually use algorithms effectively.
Perhaps the most urgent threat needing the cabinet's attention is how artificial intelligence will alter global currencies.
Normally, economic theory relies on the Balassa-Samuelson effect, which suggests that when a country makes its export sectors more productive, its currency gets stronger.
But algorithms might flip this rule, triggering an inverse Balassa-Samuelson effect. New technologies will deeply automate high-skill, local services in advanced economies, such as healthcare, education, and law.
As these services become incredibly cheap to provide, overall prices in developed nations will drop. This dynamic will likely force their currencies to depreciate to stay globally competitive.
For Bangladesh, the fallout could be severe.
If Western currencies lose value while emerging market currencies stay the same or get stronger, Bangladesh's exports will suddenly become much more expensive for the rest of the world.
As a country heavily dependent on the ready-made garment sector, a price hike on the global stage could lead to a catastrophic loss of buyers.
To fight off this shift, the new cabinet must actively push our own export sectors to adopt technology.
The only way to protect our export engine is to aggressively cut production costs using automated supply chains and predictive manufacturing.
The RMG sector is already seeing the early stages of this shift. Smart data, predictive analytics, and automated fabric-cutting systems have proven they can drastically improve planning and reduce waste.
On the factory floor, digital monitoring and computer vision for quality control are bringing down defect rates and keeping lines moving.
These tools are no longer just neat ideas; they are survival skills in a fierce global market.
However, these scattered, factory-level upgrades need to be pulled together into a unified national policy to ensure long-term success.
To escape the middle-income trap, the new cabinet must take several immediate steps.
First, the government needs to build a stable, investment-friendly digital environment.
Finalizing a clear national policy that cuts through bureaucracy and outlines strict data rules is the bedrock for attracting foreign tech investments.
Second, the administration must subsidize technology upgrades in our export sectors.
To counter the threat of shifting global currencies, the government should offer tax breaks and special financing for garment and light manufacturing factories to help cover the high costs of buying these new systems.
Third, the state must aggressively invest in local computing power and human skills so we do not become entirely dependent on foreign tech giants.
Building our own digital infrastructure is the only way to keep domestic wealth at home and encourage local start-ups. Neighbouring India offers a great blueprint for this.
Through its national artificial intelligence mission, the Indian government has teamed up with global tech leaders to rapidly build massive, local computing systems. Crucially, they are focusing on building models trained on local languages and tailored to local industries.
By subsidizing high-performance computing, India is successfully creating a self-reliant ecosystem that protects its data while driving economic growth.
Bangladesh needs to follow this lead. The government should partner with private companies to build green, local data centres and fund the creation of Bengali language models. Treating computing power as a vital public utility will allow local start-ups to test out algorithms without facing crushing costs.
At the same time, this tech push must be paired with a massive workforce overhaul. We need to help workers transition smoothly from manual labour to analytical roles by spending more on digital infrastructure and literacy programs.
A national retraining program, aimed directly at factory workers and rural communities, is essential to make sure automation empowers our people instead of replacing them.
Finally, bringing these technologies into public service is equally important.
To cut down on bureaucracy and win back public trust, the government should use algorithms to automate routine paperwork, streamline tax collection, and allocate state resources more predictively. Transparent digital auditing tools can ensure total accountability in government spending and directly fight corruption.
The window to position Bangladesh as a serious competitor in the global digital economy is closing fast. The new government has a historic opportunity to rebuild the country's economic foundations. We cannot make meaningful progress with tiny, cautious steps or outdated industrial strategies. It demands a bold leap into technological transformation.
By treating artificial intelligence as the absolute core of our economic policy, the new government can navigate global currency threats, empower a new generation of digital innovators, and build a truly prosperous and competitive nation.
Benzir Ahammed Shawon is a computer engineer and a graduate student in Applied Mathematics and Computational Science at North South University.
