AFTER five decades of growth driven by export-orientated manufacturing, remittances and public investment, the economic model shows signs of rising inequality, persistent unemployment and sluggish private investment. Economists, business leaders and policymakers at the Economic Reform Summit 2025 in Dhaka on October 27 unanimously emphasised structural overhaul. Since independence, successive governments have adopted economic models that were anchored in cheap labour, preferential trade access and centralised decision-making, which resulted in low productivity, increased control of the ruling elite on state resources and an over-reliance on a few sectors such as apparel and construction. In this economic growth model, a fiscal structure is promoted that benefits a few while the majority struggle with stagnating real income. The observations made are substantiated by many recent research. The Centre for Policy Dialogue reports that income inequality has increased, as shown by a rising Gini co-efficient that reached 0.499 in 2022. This uneven growth is driven by significant wealth concentration, with the top 10 per cent controlling most of the wealth, while the bottom 50 per cent hold a very small share. Bangladesh, therefore, needs economic policies that convert growth into tangible opportunities for all, especially for the millions of young people entering the work force each year.
Bangladesh needs a comprehensive reform agenda that is geared towards job creation and restoring investor confidence and emphasises transparency, accountability and competitiveness. Short-term stimulus packages and cosmetic digital initiatives will not suffice. In July鈥揇ecember 2024, private sector credit flow saw a steady decline, indicating a stagnant business environment, which is concerning when the private sector employs about 90 per cent of the work force. Singular reliance on the apparel sector is also a risk export strategy. The export strategy should move beyond labour-intensive industries towards higher-value, innovation-driven sectors to ensure resilience and competitiveness. Accounting for around 25鈥�30 per cent of the gross domestic product and engaging nearly 80鈥�90 per cent of the work force either directly or indirectly, the small and medium-sized enterprises are often considered the backbone of the economy. Strengthening micro, cottage and small industries, particularly those led by women and youth, is not only an employment strategy but also an economic and social necessity. Moreover, a green, knowledge-based and circular economy is essential for long-term sustainability if climate vulnerabilities are considered. Weak governance, policy inconsistency and a culture of rent-seeking also deter investment, innovation and inclusive economic development.
The government should institutionally recognise that short-term stimulus packages and cosmetic digital initiatives will not address the policy gaps. It should develop an economic model that prioritises employment opportunity and focuses on export diversification. Equally important is to ensure good governance and institutional accountability at all levels.
