Bangladesh's first impression is that of a poor and backward country, often hit by natural disasters such as floods, droughts and famines, with low living standards and serious social problems.
But what you may not know is that this young country, which split from Pakistan only in 1971, has created an amazing economic miracle over the past few decades.
According to the International Monetary Fund, in 2021, Bangladesh's per capita GDP surpassed India's to $2,227, while India's per capita GDP was $1,897. Bangladesh's GDP is expected to soon surpass that of Denmark or Singapore.
With life expectancy increasing by more than 50 per cent and infant mortality falling by nearly 90 per cent from 1971, Bangladesh has been hailed by the World Bank as an inspiring example of developing countries.
How did Bangladesh do that, what are the characteristics of its economic model, and what are its economic prospects?
1. The rise of export-oriented industries: the leader of the garment industry
Bangladesh's economic structure has undergone a major transformation, from a backward economy dominated by agriculture to a modern economy dominated by industry and services. Among them, the garment industry is a frontrunner in export-oriented industries and the backbone of Bangladesh's economy.
Today, Bangladesh is one of the world's largest exporters of garments, and the industry accounts for 80% of Bangladesh's exports. The Bangladeshi government predicts that by 2025, Bangladeshi factories will produce 10% of the world's garments.
The development of the garment industry has brought huge economic and social benefits, created a large number of employment opportunities for the country, reduced poverty, and made an important contribution to women's employment. How did Bangladesh's garment industry rise for several reasons:
International and domestic policy support. In the mid-80s of the 20th century, Bangladesh began to implement trade liberalization, reducing tariff and non-tariff barriers, and creating favorable conditions for exports.
At the same time, Bangladesh has benefited from international multilateral trade agreements, such as the Multifibre Fabrics Agreement and the World Trade Organization Apparel Agreement, which have granted preferential market access to LDCs, giving Bangladeshi apparel products a competitive advantage in the European and American markets6.
Low labor costs and abundant labor supply. Bangladesh has one of the lowest labor costs in the world, with an average monthly wage of only around $80, and the labor market is well supplied, especially for female labor. Bangladesh has about 4 million garment workers, more than 80 per cent of whom are women.
These female workers are usually from rural areas, have low levels of education, and have no other employment opportunities, so they are willing to accept low wages and difficult working conditions, providing cheap labor for the garment industry.
Flexible production mode and fast adaptability. The apparel industry in Bangladesh is predominantly made-to-order and customizes products to the needs of international buyers, rather than designing and developing products in-house.
This production model has enabled the garment industry in Bangladesh to respond quickly to market changes, meet different customer needs, and increase market share.
At the same time, Bangladesh's garment industry has also been able to adapt to changes in the international trade environment, such as in the face of environmental protection and social responsibility requirements in the European and American markets, Bangladesh's garment industry has taken a series of measures to improve product quality and safety standards, and improve workers' welfare and rights.
2. Diversification of economic structure: the rise of emerging industries
Although the garment industry is the main driving force of Bangladesh's economy, Bangladesh is not satisfied with this, but actively seeks to diversify its economic structure and develop some emerging export-oriented industries to reduce its dependence on a single industry and improve the economy's ability to resist risks.
According to the Bangladesh government's plan, by 2025, Bangladesh will develop industries such as software, information and communication technology, pharmaceuticals, leather products and footwear, and shipbuilding into key industries with export potential. The development of these industries has the following characteristics:
High value-added and high-tech content. Compared with the garment industry, the products of these emerging industries have higher added value and technical content, which can improve Bangladesh's international competitiveness, increase foreign exchange earnings, and promote economic growth.
Bangladesh's software and ICT industry has developed a certain scale and level, which can provide a variety of services such as software development, data processing, cybersecurity, e-commerce, mobile applications, etc., to create value for domestic and foreign customers.
Support and promotion from the government and society. The Bangladesh government attaches great importance to the development of these emerging industries, and has formulated a series of policies and measures to provide support for these industries in terms of tax incentives, financial subsidies, infrastructure construction, talent training, and technological innovation.
Through cooperation with international organizations and institutions, the Government of Bangladesh has introduced advanced technology and management experience, which has raised the international standard of the industry. In addition, the society of Bangladesh has also given a positive response and participation to these emerging industries, especially the younger generation, who have a strong entrepreneurial and innovative spirit, dare to try and challenge, and inject vitality and potential into these industries.
The market demand and potential are huge. The products and services of these emerging industries can not only meet the needs of the domestic market, but also open up the space of the international market, especially in the emerging Asian market, such as China, India, Southeast Asia and other countries and regions, which have huge market demand and potential.
At the same time, Bangladesh's pharmaceutical industry is also actively expanding its exports, and has now exported to more than 120 countries, including some developed countries, such as the United States, the European Union, Australia, etc., showing the high quality and high standards of the industry. According to the Bangladesh government's projections, the industry's exports will reach $2 billion by 2025, accounting for 1% of the global pharmaceutical market.
Improvement of the economic base: investment in infrastructure and human capital
In addition to developing export-oriented industries, Bangladesh has also focused on improving the basic conditions of the economy and increased investment in infrastructure and human capital, which has ensured sustained economic growth. Bangladesh's investment in infrastructure and human capital is as follows:
construction and improvement of transportation and energy. Bangladesh's transportation and energy are important supporters of economic development, but they are also bottlenecks. To address this issue, the Government of Bangladesh has developed a series of plans and projects to build and improve the supply and quality of transportation and energy.
Bangladesh is building a number of large bridges, roads, railways, ports, airports and other transportation facilities to improve the efficiency and convenience of domestic and international transportation. Bangladesh is also developing and utilizing various energy resources, such as natural gas, coal, hydropower, nuclear power, solar energy, wind energy, etc., to increase the supply and diversity of energy and reduce energy costs and pollution.
Development and promotion of education and health. Education and health in Bangladesh are important foundations and drivers of economic development. In order to improve the quality and capacity of human capital, the Government of Bangladesh has increased investment and reforms in education and health to improve the coverage and quality of education and health.
Bangladesh has implemented a number of policies for universal access and promotion of education, such as free primary education, subsidies for girls' education, school meal schemes, etc., to increase participation and equality in education. Bangladesh has also promoted the diversification and modernization of education, such as vocational education, technical education, distance education, etc., to meet the needs of the economy and society.
Conclusion: Economic prospects and challenges in Bangladesh
From the above analysis, we can see that Bangladesh's economy has made remarkable achievements in the past few decades, growing from a poor and backward country to a middle-income country.
From a country dominated by agriculture to a country dominated by industry and services, from a country that relies on a single industry to a diversified country, from a country lacking infrastructure and human capital to building a country with better infrastructure and human capital.
Bangladesh's economic miracle has not only brought well-being to its own people, but has also contributed to the development of the world. Bangladesh's economic model is worth learning from Xi and learning from.