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Prior to the outbreak of Covid-19, Bangladesh’s economic growth surpassed 7% for four consecutive years — a rate higher than Pakistan, India, and even China. Photo shows a view of the expressway in Dhaka. Syed Zakir Hossain/Dhaka Tribune
Experts revisit the ‘basket case’ analogy that policymakers in Washington had used to describe Bangladesh upon its independence.
In 1971, US Under Secretary of Political Affairs Ural Alexis Johnson referred to Bangladesh as a “basket case.”
Over the last 50 years, however, the country has made significant progress, proving the naysayers wrong.
Bangladesh reports higher GDP per capita than India or Pakistan — the figure is expected to reach $2,138.794 in 2021, according to the International Monetary Fund (IMF).
The country’s economy is projected to reach $516.24 billion in the 2024-25 fiscal year, outperforming advanced economies such as Denmark, Singapore and Hong Kong, along the way.
Bangladesh has also made great strides in female empowerment and representation, and has seen literacy rates soar and infant mortality plunge.
Prior to the outbreak of Covid-19, Bangladesh’s economic growth surpassed 7% for four consecutive years — a rate higher than Pakistan, India, and even China.
“So, how did these very smart people in Washington, these policymakers, get it so wrong?” Dan Mozena, former US ambassador to Bangladesh, asked at a webinar on Monday.
“To me… it lies with the people of Bangladesh,” he said at the event titled Bangladesh: A Development Success Story, organized by the Washington-based think tank Center for Strategic and International Studies (CSIS).
Daniel F Runde, senior vice-president, director of the Project on Prosperity and Development and Americas Program, and the William A Schreyer Chair in Global Analysis at CSIS, moderated the event, while Shahidul Islam, Bangladesh Ambassador to the US, gave the welcome speech.
Also Read - StanChart economists: Bangladesh set to become $500bn economy by 2026
‘A basket case no more’
“I think Bangladesh is one of these overlooked amazing development success stories. I would say Bangladesh is a basket case no more,” said Runde.
“If current trends continue, the country is on track to graduate from the United Nations least developed countries list in 2026, that's the goal of global development is to get off of the lists like that,” he added.
Speaking at the event, Farooq Sobhan, former foreign secretary of Bangladesh, said that one of the most remarkable developments in the case of Bangladesh is not only the self-sufficiency in terms of feeding the country, but Bangladesh is the fourth-largest producer of rice, the third-largest producer of vegetables, and fourth-largest producer of fish in the world.
“When you look back to ‘71, we were 98% dependent on foreign aid — that has come down to less than 3%,” he added.
“So, what explains this is that we have got an extremely robust and active private sector. I think there have been some important policy decisions which facilitated the growth of the RMG industry, and of course, we have an excellent network of NGOs,” Sobhan added.
Rubana Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the resilience of the private sector, along with the thriving civil society, NGO participation, and good governance has helped Bangladesh move forward.
“Bangladesh is a phoenix — we always rise from the ashes. We are the South Asian tiger,” she added.
Tamara Hasan Abed, managing director of Brac Enterprises, said the population density of Bangladesh is a key asset for the country.
“I think it has helped everything, from delivering development programs and interventions to mobile penetration, financial inclusion, microfinance — all of these can be done in a much more cost-effective manner because we are densely populated,” she said.
“The resilience and the entrepreneurial nature of our people have been very strong drivers of Bangladesh's long-term success,” Abed added.
Also Read - Bangladesh and its emerging economy
Rise of the RMG industry
The ready-made garment (RMG) industry has been making crucial contributions to rebuilding the country and its economy since independence, which is now the single biggest export earner for Bangladesh.
The sector accounts for 83% of total export earnings of the country.
There were only 304 factories, when the industry started to take off, and now Bangladesh has more than 4,600, said Huq.
In the beginning, the industry was only exporting goods worth $10 million to $30 million, but that has crossed $30 billion in 30 years, she also said, adding that the industry employed only 120,000 workers when it started, but today it employs more than 4.4 million, she added.
“Significant changes to the apparel industry came about when the MFA [Multi-Fibre Arrangement] was phased out in 2005, and then again in 2011, when the EU changed the rules of origin,” the former BGMEA leader said.
However, Huq admitted to the excessive dependence on RMG, adding that it is time to look at other sectors.
Diversification is key
Noting the importance of diversification, Mozena suggested that Bangladesh could try turning into a software development hub.
The ICT sector in Bangladesh has been growing incrementally by 40% annually since 2010 and there are currently over 4,500 registered software and Information Technology Enabled Service (ITES) companies in Bangladesh.
The domestic ITES industry in Bangladesh is currently valued at close to $1.1 billion.
The former US ambassador to Bangladesh also said the country can attain global leadership in the pharmaceutical industry.
Bangladesh’s pharmaceutical sector is expected to rake in around Tk13,000 crore in export earnings per year by 2030, and grow to an annual size of Tk100,000 crore within a decade, according to a report by UCB Asset Management.
Speaking about diversification, Huq said that for Bangladesh, reskilling is a major challenge.
“We need to think this through — how we are going to use these workers because, you know, they are not going to become overnight coders because of the literacy level, so that is a reality we must understand,” she explained.
Also Read - USD goes up as economy rebounds, imports rise in Bangladesh
The next chapter in the success story
Bangladesh has to take full advantage of the fact that it is one of the three or four most rapidly-growing countries in the world, said Farooq Sobhan.
“We are targeting some of the companies that are in the process of moving out of China… so, we need to be more attractive and more responsive to foreign investors,” he said.
Noting that Bangladesh has set up several special economic zones (SEZs) and high-tech parks, the former secretary said the country needs to be focusing on skills development, entrepreneurship development, and on creating a better investment climate.
“Regulatory reforms are already in the works; we need a highly trained and highly efficient bureaucracy which is going to reap this advantage,” he added.
Sobhan also highlighted what Goldman Sachs, JP Morgan, or PwC are saying about Bangladesh.
“They are all saying Bangladesh is the country to go to. And I think it is for us — for the private sector, the government, and civil society — to respond to this opportunity,” he said.
Rubana Huq said the country needs to seriously think about education.
“Yes, our literacy rates have gone up, yes, we have done well, but we still face the challenges of eligibility and employability and so you know these are challenges that we need to actually address going forward,” she added.
Income inequality is another problem that Bangladesh has to address in the coming years, according to Tamara Abed.
“We have had growth and prosperity, but that prosperity has not necessarily trickled down to everyone,” she said.
Mozena echoed the need to address inequality, adding that progress is being made through connectivity, which is allowing people in distant parts of the country to better participate in and benefit from the economic success.
“For whatever reason, and I honestly have no idea, the story of Bangladesh does not get told enough, and I often think Bangladeshis themselves sometimes do not appreciate what they have accomplished and are accomplishing, and sometimes feel inferior,” Mozena said.
“I tell my Bangladeshi friends: Do not compare yourself to your immediate neighbours, forget about that. You compare yourself to Southeast Asia — Thailand, Malaysia and Vietnam,” he said.
Also Read - Puzzles in economics
Rule of law crucial for boosting FDI
Foreign Direct Investment (FDI) is going to be extremely important for Bangladesh to move into the next phase of development, according to Farooq Sobhan.
“We really need to gear ourselves and press the right buttons. One very important button which we need to press is our ability to leverage the Bangladeshi diaspora. How can we make use of these people in helping Bangladesh move to the next level?” he said.
Dan Mozena said rule of law is vital for continued investment in Bangladesh.
“This has been a focus of US partnership with the country — judicial reform and strengthening the access of people to the judicial process, and enhancing rule of law,” he added.
Sobhan also stressed investing more in public diplomacy.
“We see a key role being played by the US, Japan, India and China in the development of the country's infrastructure, which is going to be the key, in my view, to our progress and development,” he explained.
“Diplomacy has been something in which Bangladesh has invested heavily and I think we have reaped rich dividends,” he added.
The career diplomat also spoke about regional cooperation, economic integration, and connectivity.
Drawing comparisons to the Association of Southeast Asian Nations (ASEAN) bloc, he said South Asian countries are lagging behind in terms of trade.
“Trade within the region is less than 5% of our total trade. So, there is enormous opportunity for connectivity and integration, and we are seeing that happen, for example, in the energy sector,” Sobhan said.
Bangladesh today is importing power from India, and is looking to do so also from Nepal and Bhutan.
“So having a seamless energy grid cutting through the region could help enormously. In terms of transport, railway, and road links, we could do that not only within South Asia but to connect ourselves with ASEAN,” he suggested.
The former foreign secretary urged breathing fresh life into some of the regional organizations that link the countries of South Asia.
Prior to the outbreak of Covid-19, Bangladesh’s economic growth surpassed 7% for four consecutive years — a rate higher than Pakistan, India, and even China. Photo shows a view of the expressway in Dhaka. Syed Zakir Hossain/Dhaka Tribune
Experts revisit the ‘basket case’ analogy that policymakers in Washington had used to describe Bangladesh upon its independence.
In 1971, US Under Secretary of Political Affairs Ural Alexis Johnson referred to Bangladesh as a “basket case.”
Over the last 50 years, however, the country has made significant progress, proving the naysayers wrong.
Bangladesh reports higher GDP per capita than India or Pakistan — the figure is expected to reach $2,138.794 in 2021, according to the International Monetary Fund (IMF).
The country’s economy is projected to reach $516.24 billion in the 2024-25 fiscal year, outperforming advanced economies such as Denmark, Singapore and Hong Kong, along the way.
Bangladesh has also made great strides in female empowerment and representation, and has seen literacy rates soar and infant mortality plunge.
Prior to the outbreak of Covid-19, Bangladesh’s economic growth surpassed 7% for four consecutive years — a rate higher than Pakistan, India, and even China.
“So, how did these very smart people in Washington, these policymakers, get it so wrong?” Dan Mozena, former US ambassador to Bangladesh, asked at a webinar on Monday.
“To me… it lies with the people of Bangladesh,” he said at the event titled Bangladesh: A Development Success Story, organized by the Washington-based think tank Center for Strategic and International Studies (CSIS).
Daniel F Runde, senior vice-president, director of the Project on Prosperity and Development and Americas Program, and the William A Schreyer Chair in Global Analysis at CSIS, moderated the event, while Shahidul Islam, Bangladesh Ambassador to the US, gave the welcome speech.
Also Read - StanChart economists: Bangladesh set to become $500bn economy by 2026
‘A basket case no more’
“I think Bangladesh is one of these overlooked amazing development success stories. I would say Bangladesh is a basket case no more,” said Runde.
“If current trends continue, the country is on track to graduate from the United Nations least developed countries list in 2026, that's the goal of global development is to get off of the lists like that,” he added.
Speaking at the event, Farooq Sobhan, former foreign secretary of Bangladesh, said that one of the most remarkable developments in the case of Bangladesh is not only the self-sufficiency in terms of feeding the country, but Bangladesh is the fourth-largest producer of rice, the third-largest producer of vegetables, and fourth-largest producer of fish in the world.
“When you look back to ‘71, we were 98% dependent on foreign aid — that has come down to less than 3%,” he added.
“So, what explains this is that we have got an extremely robust and active private sector. I think there have been some important policy decisions which facilitated the growth of the RMG industry, and of course, we have an excellent network of NGOs,” Sobhan added.
Rubana Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the resilience of the private sector, along with the thriving civil society, NGO participation, and good governance has helped Bangladesh move forward.
“Bangladesh is a phoenix — we always rise from the ashes. We are the South Asian tiger,” she added.
Tamara Hasan Abed, managing director of Brac Enterprises, said the population density of Bangladesh is a key asset for the country.
“I think it has helped everything, from delivering development programs and interventions to mobile penetration, financial inclusion, microfinance — all of these can be done in a much more cost-effective manner because we are densely populated,” she said.
“The resilience and the entrepreneurial nature of our people have been very strong drivers of Bangladesh's long-term success,” Abed added.
Also Read - Bangladesh and its emerging economy
Rise of the RMG industry
The ready-made garment (RMG) industry has been making crucial contributions to rebuilding the country and its economy since independence, which is now the single biggest export earner for Bangladesh.
The sector accounts for 83% of total export earnings of the country.
There were only 304 factories, when the industry started to take off, and now Bangladesh has more than 4,600, said Huq.
In the beginning, the industry was only exporting goods worth $10 million to $30 million, but that has crossed $30 billion in 30 years, she also said, adding that the industry employed only 120,000 workers when it started, but today it employs more than 4.4 million, she added.
“Significant changes to the apparel industry came about when the MFA [Multi-Fibre Arrangement] was phased out in 2005, and then again in 2011, when the EU changed the rules of origin,” the former BGMEA leader said.
However, Huq admitted to the excessive dependence on RMG, adding that it is time to look at other sectors.
Diversification is key
Noting the importance of diversification, Mozena suggested that Bangladesh could try turning into a software development hub.
The ICT sector in Bangladesh has been growing incrementally by 40% annually since 2010 and there are currently over 4,500 registered software and Information Technology Enabled Service (ITES) companies in Bangladesh.
The domestic ITES industry in Bangladesh is currently valued at close to $1.1 billion.
The former US ambassador to Bangladesh also said the country can attain global leadership in the pharmaceutical industry.
Bangladesh’s pharmaceutical sector is expected to rake in around Tk13,000 crore in export earnings per year by 2030, and grow to an annual size of Tk100,000 crore within a decade, according to a report by UCB Asset Management.
Speaking about diversification, Huq said that for Bangladesh, reskilling is a major challenge.
“We need to think this through — how we are going to use these workers because, you know, they are not going to become overnight coders because of the literacy level, so that is a reality we must understand,” she explained.
Also Read - USD goes up as economy rebounds, imports rise in Bangladesh
The next chapter in the success story
Bangladesh has to take full advantage of the fact that it is one of the three or four most rapidly-growing countries in the world, said Farooq Sobhan.
“We are targeting some of the companies that are in the process of moving out of China… so, we need to be more attractive and more responsive to foreign investors,” he said.
Noting that Bangladesh has set up several special economic zones (SEZs) and high-tech parks, the former secretary said the country needs to be focusing on skills development, entrepreneurship development, and on creating a better investment climate.
“Regulatory reforms are already in the works; we need a highly trained and highly efficient bureaucracy which is going to reap this advantage,” he added.
Sobhan also highlighted what Goldman Sachs, JP Morgan, or PwC are saying about Bangladesh.
“They are all saying Bangladesh is the country to go to. And I think it is for us — for the private sector, the government, and civil society — to respond to this opportunity,” he said.
Rubana Huq said the country needs to seriously think about education.
“Yes, our literacy rates have gone up, yes, we have done well, but we still face the challenges of eligibility and employability and so you know these are challenges that we need to actually address going forward,” she added.
Income inequality is another problem that Bangladesh has to address in the coming years, according to Tamara Abed.
“We have had growth and prosperity, but that prosperity has not necessarily trickled down to everyone,” she said.
Mozena echoed the need to address inequality, adding that progress is being made through connectivity, which is allowing people in distant parts of the country to better participate in and benefit from the economic success.
“For whatever reason, and I honestly have no idea, the story of Bangladesh does not get told enough, and I often think Bangladeshis themselves sometimes do not appreciate what they have accomplished and are accomplishing, and sometimes feel inferior,” Mozena said.
“I tell my Bangladeshi friends: Do not compare yourself to your immediate neighbours, forget about that. You compare yourself to Southeast Asia — Thailand, Malaysia and Vietnam,” he said.
Also Read - Puzzles in economics
Rule of law crucial for boosting FDI
Foreign Direct Investment (FDI) is going to be extremely important for Bangladesh to move into the next phase of development, according to Farooq Sobhan.
“We really need to gear ourselves and press the right buttons. One very important button which we need to press is our ability to leverage the Bangladeshi diaspora. How can we make use of these people in helping Bangladesh move to the next level?” he said.
Dan Mozena said rule of law is vital for continued investment in Bangladesh.
“This has been a focus of US partnership with the country — judicial reform and strengthening the access of people to the judicial process, and enhancing rule of law,” he added.
Sobhan also stressed investing more in public diplomacy.
“We see a key role being played by the US, Japan, India and China in the development of the country's infrastructure, which is going to be the key, in my view, to our progress and development,” he explained.
“Diplomacy has been something in which Bangladesh has invested heavily and I think we have reaped rich dividends,” he added.
The career diplomat also spoke about regional cooperation, economic integration, and connectivity.
Drawing comparisons to the Association of Southeast Asian Nations (ASEAN) bloc, he said South Asian countries are lagging behind in terms of trade.
“Trade within the region is less than 5% of our total trade. So, there is enormous opportunity for connectivity and integration, and we are seeing that happen, for example, in the energy sector,” Sobhan said.
Bangladesh today is importing power from India, and is looking to do so also from Nepal and Bhutan.
“So having a seamless energy grid cutting through the region could help enormously. In terms of transport, railway, and road links, we could do that not only within South Asia but to connect ourselves with ASEAN,” he suggested.
The former foreign secretary urged breathing fresh life into some of the regional organizations that link the countries of South Asia.
