The Challenges of Structural Transformation, Inequality Dynamics, and Inclusive Growth in Bangladesh

Abstract

Over the past four decades, Bangladesh’s economy has experienced major structural changes. Agriculture’s share of gross domestic product has decreased, while manufacturing and service sectors have grown in importance. These structural changes have been associated with systemic problems such as lack of diversification, poor working conditions, low competitiveness, and a high level of informality, which have hampered progress towards sustainable economic development. Though manufacturing is now the most important component of Bangladesh’s export composition, this is largely due to the rapid growth of the ready-made garments sector, while other sectors have performed poorly. The manufacturing sector must concentrate on extending and diversifying its base in order to become a long-term, inclusive driver of economic growth and job creation. This chapter examines the main policy-induced and systemic challenges to the Bangladesh economy’s structural transition, with the goal of reducing inequalities and promoting inclusive development.