This book examines the theory and global evidence on structural transformation along with stylised facts and implications using, among others, a dynamic panel model, for South Asia. The characteristics of the structural transformation process in Bangladesh bring out the relevance of a comprehensive and inclusive South Asian ‘brand’ in view of the challenges of large population size, high burden of poverty, rising inequalities and its compulsion to achieve rapid and sustained inclusive development. The analysis highlights several distinct characteristics of Bangladesh’s structural transformation including changes in value added, trade, employment, productivity, formal-informal jobs, and opportunities for low-skilled workers. The book suggests that the manufacturing sector could not create the required number of jobs and generate rapid absolute and relative productivity gains in the Bangladesh economy. Although the services sector has largely led output and employment growth, services subsectors with strong labour absorptive capacity have low average productivity. Hence, growth-enhancing structural transformation led by these subsectors is likely to be less dynamic than required for rapid employment-creating growth in the economy. The book’s analysis on COVID-19 and cyclone Amphan shows that an integrated disaster and development paradigm is needed for Bangladesh. An inclusive and health and well-being focused structural transformation presents the pathway to advance the people-centred approach to development in Bangladesh through both vulnerability reduction and investments in sustainable development that would offset both known and unknown disaster threats. The key for Bangladesh is to skillfully manage the ‘developer’s dilemma’ of achieving both structural transformation in terms of large productivity gains and inclusive growth for reducing poverty and rising inequalities. This book is relevant to students, academicians and development practitioners and others interested in contemporary development.

Outlining important policy requirements for Bangladesh to become an upper middle-income country, the book presents research work conducted during the project “Changing Labor Markets in Bangladesh: Understanding Dynamics in Relation to Economic Growth and Poverty,” sponsored by the International Development Research Center (IDRC), Canada. Bangladesh has experienced remarkable economic growth rates over the last decade. The country has recently been upgraded from a low-income country (LIC) to a lower-middle-income country (LMIC) as per the World Bank’s classification system. By 2024, the country also aspires to graduate from the United Nation’s list of least developed countries (LDC). The 7th five-year plan sets an ambitious target of 8 percent growth in GDP by 2020. There are also steep development targets to be achieved under the Sustainable Development Goals (SDGs) by 2030. All these will require an enormous leap forward from the current level of economic growth rate and sustaining it in the future. The situation also calls for considerable structural change in the economy, facilitating large-scale economic diversification. Rapid expansion of labor-intensive and high-productivity sectors, both in the farm and nonfarm sectors, is thus crucial for Bangladesh. Further, this should take place in conjunction with interventions to enhance productivity, jobs and incomes in traditional and informal activities where there are large pools of surplus labor. Given its relevance for Bangladesh and applicability to many other developing countries, the book offers a unique and pioneering resource for researchers, industry watchers as well as policy makers.

Existing literature on economic growth and structural change relies on trade data to make pronouncements about a country's competitiveness and long-term growth prospects through the acquisition of capabilities. However, insufficient data give us a limited view of what is happening within the domestic economy, and how the development of manufacturing through links in the production process leads to the export of intermediate or final products. Using input-output data, this paper devises an agglomeration indicator to measure economic diversification and to compare Bangladesh with other key economies. In the process, we shed light on the symbiotic relationship between manufacturing and services as the country develops. Despite Bangladesh's astounding growth over the past 15 years, diversification has been somewhat slower than expected for its level of development.

This book discusses Bangladesh’s economic and social development that may be called a “miracle” since the country has achieved remarkable development progress under several unfavorable situations: weak governance and political instabilities, inequality, risks entailed in rapid urbanization, and exposure to severe disaster risks. The authors examine what led to this successful economic development, and the potential challenges that it presents, aiming to elicit effective policy interventions that can be adapted by other developing countries.

This paper documents stylized facts on the process of structural transformation around the world and empirically analyzes its determinants using data on real value added by sector of economic activity (agriculture, manufacturing and services) for a panel of 168 countries over the period 1970-2010. The analysis points to large differences in sector shares both across and within regions as well as for countries at similar levels of economic development. Using both linear and quantile regression methods, it finds that a large proportion of the cross-country variation in sector shares can be accounted for by country characteristics, such as real GDP per capita, demographic structure, and population size. It also finds that policy and insitutional variables, such as product market reforms, openness to trade, human and physical capital, and finance improve the baseline model’s ability to account for the variation in sectoral shares across countries.

Since the group of least developed countries (LDCs) was identified in 1971, only five countries have graduated from the group, all of which are characterised by small size or population. The projections are that the next decade will see a rapid increase in the pace of graduation, with Bangladesh in particular poised to be one of the largest countries, in terms of its economy and population, yet to leave the group. While previously many LDCs viewed the prospect of graduation with some apprehension, fearing significant erosion of international support, increasingly, the move is being seen as a more positive landmark. This book aims to articulate appropriate strategies and initiatives to help Bangladesh to maintain its developmental momentum and to prepare for a sustainable graduation in 2024. In doing so, the book explores themes such as key analytical issues of the LDC graduation paradigm, smooth transition and structural transformation, and post-graduation challenges and opportunities. Further, against the backdrop of Gross National Income per capita, the Human Assets Index and Economic Vulnerability Index goals required for graduation, the Sustainable Development Goals (SDGs) set by the 2030 Agenda will also be in the process of implementation. Whilst some feel that the two agendas might be in conflict, the book teases out some of the important synergies which can be drawn when LDCs are undertaking the journey of graduation in the era of the SDGs. The book also takes into cognisance the uncertain external environment and the emerging global scenario within which Bangladesh's graduation is to take place. Conceptual discourse around LDC graduation and the particular narrative around Bangladesh's journey towards LDC graduation will be of interest not only to scholars of Bangladesh, but also to researchers and policymakers with an interest in LDC graduation for other countries facing similar challenges.

The book provides a comprehensive conceptual understanding covering major challenges and pathways to progressively promote inclusive development in Bangladesh. Since independence in 1971, Bangladesh has achieved significant economic growth and social progress, but the benefits have not been shared equitably across all groups in society, and there is the demand that inclusive development should be at the core of the country’s development agenda. Analysing inclusive development in Bangladesh, the authors present it as synonymous with improving the well-being of all individuals in a comprehensive manner along with upholding the principles of equity and justice. The book shows that the multidimensionality of inclusive development facilitates the participation of all in society in development through enhancing capabilities and ensuring equal opportunities. The analysis highlights social investments in specific concerns of the marginalised and disadvantaged groups and unequal structural forces that compel the state to remain biased towards the rich and consequent ‘elite capture’ of the state in Bangladesh. Arguing that Bangladesh has moved closer towards applying the inclusive development tenets in policy making, the book’s findings show that the challenge is the absence of any generic formula to ensure that the country is moving towards a more inclusive development path. A valuable contribution to the study of Bangladesh’s changing dynamics of political, economic and social configurations and development economics, the book will be of interest to researchers in the fields of economics, Asian studies and development studies.

Textiles and textile products dominate Bangladesh’s exports and participation in global value chains. However, such concentration poses risks to the economy. This report highlights that diversification into other sectors will be important to promote export-led growth. It explores how Bangladesh can build on its recent economic success by unlocking productivity gains from technology adoption, narrowing the digital divide, and expanding participation in global value chains. It identifies high-potential industries with deeper domestic linkages that offer opportunities to broaden the base of economic growth.

This book focuses on socio-economic developments of Bangladesh by challenging the dominant international narrative of the case being termed as “development surprise”, “development paradox” or “development conundrum,” given the absence of good governance. In doing so, the book examines the political economic dynamics and offers valuable insights into the current state of the Bangladeshi economy in light of stability, transformability and sustainability. Pointing to the ‘high’ rate of growth in gross domestic product (GDP) in Bangladesh, there is wide belief that economic growth can be obtained even without functioning institutions, and is more important than an inclusive political system. Advocates go on to argue that authoritarianism may be condoned as long as a steady course of development is perused. However, the inadequacy of comparative analysis in to the state of the economy of Bangladesh vis-à-vis other relevant economies makes such claims myopic and parochial. This book thus investigates the numbers and narratives to ascertain the validity of such assertions and lamentations by looking at the necessary and sufficient conditions of development. The necessary conditions imply an incisive inquiry into the factors of economic growth— land, labour, capital and technology while sufficient conditions warrant a penetrating incisive inquiry into the factors of economic growth— land, labour, capital and technology. As such, the book explores development by drawing variables of politics and economics to find out a causal relationship, and interjects these variables have on themes such as growth, agriculture, manufacturing industry, financial sector, health, education, poverty and inequality.