Bangladesh’s Next Economic Leap: A Strategy for Growth

Bangladesh’s economy has made remarkable progress despite decades of political instability, mass movements, student protests, labour unrest, partisan politics and disruptions across many spheres, including education. Against this challenging backdrop, Bangladesh has transformed itself from a predominantly agrarian economy into an increasingly export-oriented economy, driven largely by labour-intensive manufacturing.

The ready-made garment (RMG) industry is the clearest example. It has created millions of jobs, particularly for women, and become the country’s dominant source of merchandise export earnings. Other sectors, including leather and footwear, light engineering, agro-processing and other labour-intensive industries, have also contributed to industrialisation, employment and economic growth. The service sector, which accounts for more than half of GDP, has also become an important pillar of the economy. Financial services, banking, telecommunications and IT have adopted digital technologies rapidly.

However, Bangladesh has reached a stage where it must look beyond traditional labour-intensive industries and explore technology-driven, higher-value sectors, including semiconductors and other advanced industries. The widespread use of AI, automation and robotics across Asia is changing the industrial landscape. To remain competitive, Bangladesh cannot risk falling behind. This transition requires a carefully designed, evidence-based and pragmatic strategy developed through meaningful consultation among economists, technologists, educationists, business leaders, policymakers and Bangladeshi professionals in industry, research and universities at home and abroad. Without such an approach, Bangladesh risks making costly investments in inappropriate sectors.

Labour-intensive industries have been the foundation of Bangladesh’s economic transformation, but the next phase of growth will require a gradual shift towards higher productivity, technological capability, innovation and greater diversification. The objective should not be to move away from labour-intensive industries, but to progressively shift towards higher-value activities that generate greater productivity, better-paying jobs and stronger technological capabilities.

To attract foreign direct investment and encourage domestic investment in technology-driven industries, Bangladesh must ensure reliable electricity, efficient infrastructure, a skilled and adaptable workforce and a predictable business environment. Stronger links among universities, industry and government will be essential for building the capabilities needed for the next stage of development.

A stable, uninterrupted power supply is a prerequisite for economic development. Considering volatile international fuel prices, pressure on foreign exchange reserves and limited domestic fuel resources, Bangladesh must accelerate renewable energy. At present, it remains far behind comparable Asian economies: in 2025, renewables accounted for only about 2% of its electricity generation, compared with approximately 24% in India, 45% in Vietnam and 21% in Malaysia. However, the strategy should combine energy efficiency, fuel conservation, renewable energy and grid modernisation, rather than rely on renewable energy alone.

Overseas employment is a major source of foreign exchange, but Bangladesh must move beyond its heavy reliance on low-skilled and semi-skilled workers. In the 4IR era, global demand is increasingly shifting towards workers with technical, vocational, healthcare, caregiving, construction, manufacturing and digital skills. Japan, for example, faces persistent labour shortages due to its ageing population and shrinking workforce, and its Specified Skilled Worker programme recruits workers in 16 specified fields. Bangladesh should therefore adopt a national strategy that aligns skills training with the needs of destination countries, combining technical and vocational skills with language proficiency, workplace discipline and internationally recognised certification.

The government should establish labour-market intelligence units in major destination countries to identify future skill shortages and guide Bangladesh’s training institutions accordingly. Bangladesh should move from exporting labour to exporting skills and talent.

Bangladesh’s economic strategy in the 4IR era should begin not with a particular industry or technology, but with a clear understanding of what the country needs to achieve and sustain high economic growth in a rapidly changing global economy. These requirements include a highly skilled and adaptable workforce, technological capabilities, research and innovation capacity, reliable energy, efficient infrastructure, a competitive business environment, access to global markets, strong institutions, and the ability to attract both domestic and foreign investment.

Once these requirements are identified, Bangladesh should objectively assess its strengths and weaknesses. This assessment would reveal the capabilities that can be leveraged, as well as the gaps and constraints that must be addressed. It would also help identify areas where Bangladesh has a realistic and sustainable competitive advantage. Such an assessment must be evidence-based, rather than driven by political priorities, institutional interests, or enthusiasm for particular technologies.

The next step should be to identify sectors and economic activities where Bangladesh can build sustainable competitive advantages by using its strengths while addressing its weaknesses. In this era, the objective should not simply be to adopt advanced technologies, but to develop the human capabilities, infrastructure, institutions and innovation ecosystem necessary to use them productively.

Graduates need 21st-century skills such as critical thinking, complex problem-solving, creativity, technological adaptability and innovation. Our education system must therefore shift from traditional memorisation-based learning towards knowledge application.

Bangladesh should establish a permanent economic strategy commission as an independent, non-partisan body comprising highly respected economists, academics, scientists, engineers, technology experts, business leaders and representatives of the international Bangladeshi community. Its primary responsibility would be to advise the government, not on day-to-day economic management, but on where the economy should be heading over the next 10-20 years.

The commission would continuously monitor major global transformations, including AI and the 4IR, semiconductor technology, automation, renewable energy, climate change, demographic shifts, global trade, supply-chain restructuring, labour-market changes and geopolitical developments. It would identify opportunities and threats for Bangladesh and recommend which industries, technologies, skills and infrastructure the country should develop. We can no longer afford to remain on the back foot. Any delay in implementation risks leaving Bangladesh further behind in an increasingly competitive global economy.

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The writer is Distinguished Professor, Eastern University, and former Vice Chancellor, East West University