Bangladesh’s economic rise is a unique story. Many people still associate the country with poverty and ineffective governance, and some international institutions and media outlets continue to highlight issues like corruption, unemployment, and a lack of democracy. While these concerns hold some truth, they don’t capture the full picture of Bangladesh’s progress. Despite challenges such as political instability, natural disasters, and weak governance, the Bangladeshi economy has grown significantly. In fact, some now consider it to be the next economic miracle in Asia. In today’s video, we’ll explore key macroeconomic data that shows how Bangladesh’s economy has expanded, as well as the public policies that contributed to this growth.
One basic way to understand an economy is through its gross domestic product (GDP), which measures the total value of all goods and services produced within a country in a year. As GDP increases, it indicates a country’s economic development. According to data from the World Bank, Bangladesh’s GDP was just $8.75 billion in 1971. At that time, Bangladesh was lagging behind countries like Pakistan, whose GDP was $10.6 billion. Even by 2012, Vietnam’s economy was larger, with a GDP of $195 billion compared to Bangladesh’s $133 billion. Yet, over time, Bangladesh surpassed both Pakistan and Vietnam. By 2021, Bangladesh’s GDP reached over $416 billion, outpacing Vietnam’s $366 billion and Pakistan’s $348 billion. With an average growth rate of 6.2% between 1971 and 2021, Bangladesh has steadily climbed the ranks.
However, GDP alone doesn’t tell the whole story. Despite issues like inequality and sustainability, Bangladesh’s economic growth has helped lift millions out of poverty and allowed businesses to flourish. Now, let’s look at another important aspect of GDP: GDP per capita, which divides a country’s total GDP by its population to provide a measure of the standard of living. In 2021, Bangladesh’s GDP per capita stood at $2,475, higher than both Pakistan’s and India’s, though still below Vietnam’s $3,756. What’s remarkable is how far Bangladesh has come since 1971, when its GDP per capita was just $128, lower than both Pakistan and India.
Now let’s turn to perhaps the most critical data point: poverty. For decades, poverty was Bangladesh’s biggest challenge. With a population of over 169 million people, projected to grow to 200 million, the country faced the daunting task of feeding its people, despite an inefficient agricultural sector. Yet, through both food imports and increased agricultural productivity, Bangladesh managed to reduce poverty significantly. In 1991, the poverty headcount ratio was 56.6%, but by 2016, it had fallen to 24.3%. According to the Asian Development Bank, it dropped further to 20.5% by 2019. This reduction means tens of millions of people have been lifted out of poverty, despite international doubts about the country’s ability to improve the lives of its citizens.
The next point to discuss is the government policies that helped drive this transformation. While international institutions and the private sector played a role, much of Bangladesh’s progress can be attributed to government initiatives. Key among these were subsidies for agriculture, maintaining macroeconomic stability, and promoting export-oriented industrialization. Agricultural subsidies were crucial for ensuring food security, which is essential for any growing economy. The government also implemented sound macroeconomic policies that attracted foreign investment. These policies supported the growth of the ready-made garments industry, which became a major export sector for Bangladesh. Export revenues, in turn, allowed the country to import goods and services that further fueled its economic growth.
Bangladesh’s journey from a struggling nation to one of the fastest-growing economies in the world offers valuable lessons. While there are still challenges and imperfections in the country’s governance, it’s undeniable that Bangladesh has made enormous progress, lifting millions out of poverty and setting itself on a path to becoming Asia’s next economic tiger.