In a recent address at the Annual Baltic Conference on Defence, Indermit S. Gill, Chief Economist at the World Bank, articulated a pressing concern for Bangladesh: the nation risks becoming ensnared in the middle-income trap.
According to a report published in this newspaper on Sunday, this phenomenon, where countries transition from low to middle-income status but struggle to ascend to high-income levels, poses a significant challenge for Bangladesh as it seeks to realise its economic potential.
Gill’s insights underscore Bangladesh’s need to adopt a more open economy. In an era marked by global uncertainties, the call for openness is not merely a suggestion but a vital strategy for sustainable growth.
The economist emphasised that Bangladesh should not confine itself to binary choices — between the US and China, manufacturing and services, or domestic and international reforms. Instead, a holistic approach that embraces all avenues of growth is essential.
The transition from an investment-driven economy to one characterised by innovation and entrepreneurship is crucial. Gill’s assertion that Bangladesh must foster a culture of meritocracy and discipline among incumbents is particularly salient.
By rewarding innovation and adaptability, the nation can harness the potential of its young population and create a dynamic workforce ready to meet the challenges of a rapidly changing global economy.
Moreover, addressing inequality is paramount. In contrast, recent data indicates a slight rise in inequality, Gill’s observation that socioeconomic mobility is improving offers a glimmer of hope. A focus on inclusive growth, where opportunities are accessible to all, will not only enhance social cohesion but also drive economic progress.
The recent white paper on Bangladesh’s economy paints a sobering picture, suggesting that the country has already begun to slip into the middle-income trap. With conflicting employment and productivity data undermining the narrative of high growth, the urgency for reform is palpable. Investment policy, governance, and economic openness must be at the forefront of the national agenda.
As Bangladesh stands at a crossroads, the path to high-income status is fraught with challenges. However, by embracing openness, fostering innovation, and prioritising inclusive growth, the nation can navigate these obstacles and secure a prosperous future. The time for decisive action is now; the stakes have never been higher.
