Path to High-Income Status: ‘Foster entrepreneurship to spur growth’
Staff Reporter :
Bangladesh must embrace a more open economy to escape the middle-income trap, said Indermit S. Gill, Chief Economist at the World Bank, during the Annual Baltic Conference on Defence (ABCD) in the capital on Saturday.
Organised by the Bangladesh Institute of Development Studies (BIDS), the conference provided key insights into how the nation can overcome challenges associated with transitioning from middle-income to high-income status.
The “middle-income trap” describes a situation where a country transitions from low to middle-income status but struggles to achieve high-income levels due to structural and policy constraints.
Gill emphasised that escaping the trap requires two critical transitions-moving from an investment-driven to an infusion-led growth phase, and subsequently to innovation-led development.
“The external environment is making things harder, not easier. To grow quickly through the middle-income stage, countries need to discipline incumbents, reward merit, and capitalise on crises,” he noted.
Gill further highlighted the importance of maintaining an open economy, irrespective of global challenges.
“Bangladesh should not limit itself by choosing between the US and China, manufacturing and services, or international and domestic policy reforms.
Openness is key when shifting from an investment-led to an infusion-led phase,” he remarked.
He also stressed fostering entrepreneurship, prioritising technology, and creating jobs as vital strategies for sustainable growth.
Addressing inequality, he observed, “While inequality has risen slightly, it is not overly concerning if socio-economic mobility is improving.”
His comments come against the backdrop of a recent white paper on Bangladesh’s economy, which suggests the nation has already fallen into the middle-income trap.
According to the report, conflicting employment and productivity data undermine the high-growth narrative of recent years.
It noted that Bangladesh began slipping into the trap during the 2013-14 fiscal year and now faces significant challenges in achieving upward mobility.
Gill’s remarks underline the urgent need for reforms in investment policy, governance, and economic openness to enable Bangladesh to realise its ambitions of becoming a high-income economy.