Toward a competitive, equitable, & resilient Bangladesh

Bangladesh has emerged as one of Asia's impressive development stories. Once mired in poverty and disaster vulnerability, the country has posted decades of steady economic growth, halved poverty, and made notable gains in human development. Its ascent is particularly striking in a region where inequality, political instability, and structural stagnation remain stubborn challenges.

Yet success is no guarantee of sustainability. As Bangladesh eyes its transition from a lower-middle-income country to a high-income nation, its current growth model-cantered on low-cost manufacturing and labour-intensive exports-is reaching its limits. With rising inequality, mounting climate risks, and global economic uncertainty, the nation stands at a pivotal moment.

The path forward must rest on three interdependent pillars: global competitiveness, equity, and resilience. This next chapter will define whether Bangladesh becomes a global success story or risks being caught in the middle-income trap.

Bangladesh's export-driven growth has been overwhelmingly dominated by a single sector-ready-made garments (RMG)-which constitutes over 80 per cent of its export earnings. While this sector helped fuel rapid job creation and female labour force participation, overdependence on garments is now a structural vulnerability.

To build sustainable competitiveness, Bangladesh must diversify both what it produces and how it produces.

First, sectors such as pharmaceuticals, ICT services, agro-processing, and light engineering offer viable alternatives. Digital transformation-bolstered by mobile connectivity and a young population-could support a thriving tech-enabled services economy, but only with the right regulatory and investment frameworks.

Second, Bangladesh must move from low-cost labour to higher productivity. Automation and AI are already reshaping global supply chains, and future competitiveness will hinge on skills, efficiency, and innovation, not wages alone. This requires investing in research and development, industry-academia linkages, and advanced vocational training.

Third, attracting high-quality foreign direct investment (FDI) is critical. Investors increasingly demand regulatory clarity, contract enforcement, and infrastructure readiness. Bangladesh must simplify taxation, improve dispute resolution mechanisms, and enhance its logistics ecosystem-particularly ports, transport corridors, and digital infrastructure.

Finally, regional trade integration offers untapped potential. Bangladesh's geographic location between South and Southeast Asia positions it as a natural trade and connectivity hub. Active participation in regional frameworks like BIMSTEC, BBIN, and the Indo-Pacific Economic Framework could unlock new growth frontiers.

While Bangladesh has made impressive gains in reducing poverty, inequality-between genders, regions, and classes-is widening.

Gender equity remains one of the country's most critical economic levers. Despite notable progress in education and maternal health, women's participation in formal employment remains low. Systemic barriers-such as limited access to finance, workplace harassment, and unpaid care burdens-continue to limit female economic empowerment. Policies that invest in childcare, safe workspaces, and gender-sensitive financing are not just socially just-they are economically strategic.

Regional disparities are also striking. Dhaka and Chattogram dominate economic activity, while secondary cities and rural districts remain underdeveloped. Infrastructure, healthcare, and education investments must be distributed more equitably across the country to foster regionally balanced growth.

Youth inclusion is essential in a country where over 45 per cent of the population is under 25. Yet the gap between education and marketable skills is growing. Technical and vocational education should be scaled up and tightly aligned with industry demands-particularly in digital skills, renewable energy, logistics, and automation.

At the same time, Bangladesh must rethink social protection in a rapidly urbanising and climate-vulnerable context. Traditional poverty-alleviation programs are no longer sufficient. New safety nets-including health insurance, urban employment schemes, and adaptive social protection-will be necessary to buffer the impacts of economic and environmental shocks.

Inclusion is not merely a social goal. It is a macroeconomic imperative.

Few countries face the climate crisis more acutely than Bangladesh. Rising sea levels, saltwater intrusion, floods, and heatwaves threaten food security, infrastructure, and millions of livelihoods. Yet Bangladesh is also a leader in community-based climate adaptation, early warning systems, and disaster risk reduction.

Still, climate risks are intensifying. Long-term resilience will require Bangladesh to mainstream sustainability into every aspect of policy.

Urban planning must become climate-smart, with greener infrastructure, effective zoning, and public transportation to manage rapid urbanisation. Industrial development must align with environmental safeguards. And a just transition to renewable energy must be prioritised-not only to meet global commitments but to reduce long-term dependency on fossil fuels.

But resilience extends beyond the environment. Institutional resilience-the ability of public systems to manage crises and deliver services fairly-is just as vital. Corruption, weak regulatory enforcement, and poor governance in the financial sector are undermining economic confidence. Non-performing loans, for example, are choking investment and distorting credit markets.

Improving institutional capacity-especially in the judiciary, regulatory agencies, and public financial management-is essential for credible reform and long-term stability. The development story must be supported by effective, transparent institutions that can execute complex reforms at scale.

Bangladesh's domestic ambitions are unfolding within a rapidly shifting regional and geopolitical landscape. As U.S.-China competition deepens, and as South Asia becomes more contested, Dhaka must manage its external relations with strategic dexterity.

China is a major investor in infrastructure; India remains a vital regional partner; and the United States (US) and Europe are key export markets and development allies. Navigating these relationships while preserving strategic autonomy will require Dhaka to strengthen institutional foreign policy capacity and build deeper regional linkages beyond aid or infrastructure.

Bangladesh also has an opportunity to serve as a model for the Global South-a moderate Muslim-majority country demonstrating how inclusive development, climate leadership, and a mixed economy can coexist.

Bangladesh's trajectory over the past 30 years is remarkable. But the world is changing, and the past is no longer a blueprint for the future.

Becoming globally competitive requires diversifying exports, fostering innovation, and improving infrastructure. Achieving equity means investing in youth, women, and rural communities. And building resilience demands institutional reform and climate-smart planning.

These are not sequential goals-they must be pursued together, with urgency and political will.

If Bangladesh succeeds, it will not only achieve its own development vision. It will offer a compelling model for other emerging economies navigating similar crossroads.

The next 10 years will define Bangladesh's place in the world.

Manmohan Parkash is a former Senior Advisor, Office of the President, and Deputy Director General, South Asia, Asian Development Bank (ADB). manmohanparkash@gmail.com