MACROECONOMIC headlines — GDP growth, export earnings and fiscal shifts — show what Bangladesh has achieved over decades. Yet, beneath the national progress lies a quieter revolution: the strengthening of the local economic development systems to make growth inclusive and resilient. As national growth moderates and climate threats intensify, empowering local economies has become essential to sustaining livelihood and unlocking the next phase of transformation.
The urgency of this shift is clear. According to provisional estimates, the gross domestic product growth for the 2024–25 financial year slowed to 3.97 per cent, down from 4.22 per cent in the 2023–24 financial year, the lowest in the post-Covid era. Some multilateral forecasts are even more cautious: the World Bank now projects 3.3 per cent growth for the 2025 financial year amid rising costs and investment decline. Against this backdrop, local economic development is no longer a side strategy. It is a frontline tool to stabilise incomes, generate jobs and buffer local economies against macro or climate shocks.
A functioning local economic development system begins with empowered institutions. Upazila and union councils, as elected bodies in the grass roots, must evolve from passive implementers to proactive planners. In pilot programmes, donor support has enabled digital taxation systems, improved fiscal transfers and more transparent procurement. But many local councils still battle staff shortage, technical weakness and jurisdictional uncertainty, limiting their ability to mobilise investments or coordinate across departments.
Parallel to institutional reform, place-based investment models are tested.
The Prabriddhi initiative stands out as Bangladesh’s flagship local economic development vehicle, aiming to build municipal competitiveness, strengthen private-public linkage and customise economic strategies aligned to district-level comparative advantage. This signals a shift away from blanket policies towards locally tailored growth paths so that a coastal upazila, for instance, invests in fisheries, cold storage and resilient supply chains while a border town strengthens cross-border trade facilitation.
Finance remains the linchpin of local transformation. With constrained budgets, many union councils and cities struggle to translate ideas into projects. Recent efforts to digitise property tax, modernise business licensing, work out participatory budgeting and expand local revenue bases are promising. Blended financing structures, municipal bonds and concessional loans are emerging tools to support capital-intensive infrastructure. Concurrently, MSMEs require more than capital. They need targeted training, mentorship and integration into value chains. Local chambers and women-led enterprise networks have showed early success in amplifying impact.
Climate resilience now sits at the heart of local economic development. A recent World Bank assessment estimates that rising heat alone cost Bangladesh about $1.78 billion in lost productivity in 2024, equal to around 0.4 per cent of gross domestic product. When floods or storms disrupt roads, markets and supply lines, micro-entrepreneurs, small traders and informal workers suffer first. Embedding adaptation in local planning, from climate-smart agriculture and drainage upgrades to green infrastructure and resilient logistics, is no longer optional. It is essential to protect local economic continuity.
Human capital is another critical lever. Bangladesh’s youth unemployment remains a challenge. According to the Bureau of Statistics, the unemployment rate across the economy stood at 4.63 per cent in the second quarter of the 2025 financial year, with youth joblessness disproportionately concentrated among graduates. Among tertiary-educated youth, unemployment rose to 13.5 per cent in 2024, with female graduates facing rates up to 16.8 per cent. Local economic development efforts that tie vocational curriculums, apprenticeship and entrepreneurship to local industry needs, especially in agro-processing, light manufacturing or digital services, can reduce the mismatch and help to retain talent in non-metropolitan centres.
Even as local economic development shows promise, headwinds abound. Fiscal constraints, rising interest and borrowing costs, fragmented administrative coordination and shifting donor priorities create a challenging terrain. International partners are now focusing their support on local economic development programmes that can demonstrate job outcomes, resilience gains and measurable impact, heightening the need for transparency, data systems and local accountability frameworks.
Yet across Bangladesh, modest success stories offer hopes. In some municipalities, simplified business registration and market facility upgrades have improved small-business survival. Cold-chain and logistics improvements in rural districts have enabled small agro-entrepreneurs to reach regional markets. Union councils that invested in better market places, drainage and waste management have boosted incomes for women vendors and small traders. When replicated across hundreds of localities, the incremental gains could coalesce into a nationwide movement for inclusive growth.
As Bangladesh re-calibrates its development strategy, local economic development must become the backbone of resilience and equity. The nation’s aspiration to graduate into higher income status hinges not only on macro policy or export growth, but on enabling every upazila, municipality and union to contribute and thrive. Strengthening local institution, predictable finance, private-community partnerships and climate-smart planning will be the levers that transform policy ambition into lived prosperity. The next chapter of Bangladesh’s growth will be written not only in Dhaka’s budget halls, but in vibrant local markets, empowered towns and resilient grassroots economies.
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Dr Makhan Lal Dutta, an irrigation engineer, is chair and chief executive officer of Harvesting Knowledge Consultancy.
