Economy & development (the Bangladesh model)
The 'Bangladesh model' of development: garments-led growth, microcredit, social indicators, RMG exports, remittances and the structural challenges facing the economy.
From 'basket case' to development surprise
In December 1971 Henry Kissinger's State Department reportedly dismissed the newly independent Bangladesh as an international 'basket case'. The territory that emerged from the Liberation War was a war-ravaged, famine-prone agrarian economy of roughly 75 million people with a per-capita income under US$130. The 1974 famine, which killed an estimated 1.5 million people and contributed to the collapse of Sheikh Mujibur Rahman's government, seemed to confirm the pessimism. Half a century later Bangladesh's trajectory is studied as a development model.
The four pillars
The so-called 'Bangladesh model' rests on four interlocking pillars. First, export-oriented industrialisation led by ready-made garments (RMG). Beginning with Desh Garments' 1979 collaboration with South Korea's Daewoo, the sector exploited the global Multi-Fibre Arrangement (MFA) quota regime, duty-free access to the EU under the Everything But Arms (EBA) scheme, and a vast supply of low-cost female labour. RMG now generates over 80% of merchandise exports and crossed US$47 billion in exports in FY2022-23.
Second, microfinance and NGO-led service delivery. Muhammad Yunus founded Grameen Bank in 1983 (Bangladesh Bank Ordinance / Grameen Bank Ordinance 1983); BRAC, founded by Fazle Hasan Abed in 1972, became the world's largest NGO. Yunus and Grameen shared the 2006 Nobel Peace Prize. These institutions delivered credit, health and education where the state was thin.
Third, labour migration and remittances. Millions of workers in the Gulf, Malaysia and elsewhere remit over US$20 billion annually, financing consumption, the current account and rural construction.
Fourth, investment in human development and family planning. Bangladesh cut its total fertility rate from over 6 in 1971 to roughly 2 today, reduced under-five mortality sharply, and on several social indicators (immunisation, female schooling, life expectancy) overtook richer India and Pakistan — the phenomenon Amartya Sen and Jean Drèze highlighted.
The macro record
GDP growth averaged 6-7% through the 2010s, peaking near 7.9% in FY2018-19 before the COVID-19 shock. The country graduated to lower-middle-income status (World Bank, 2015) and met the criteria to leave the UN's Least Developed Country (LDC) category in 2018 and 2021; the scheduled graduation date is November 2026. Per-capita income rose above US$2,500. Padma Bridge, opened in June 2022 and financed domestically after the World Bank withdrew over corruption allegations, became a symbol of self-financed mega-infrastructure. Candidates should treat the model not as a miracle but as a specific configuration: cheap labour plus trade access plus social investment plus diaspora capital — each pillar now facing pressure as the LDC graduation removes trade preferences.