Bangladesh is undergoing a significant economic transformation, marked by a shift from a manufacturing-driven economy to one led by the service sector. This transition, though unique, brings both opportunities and challenges for sustainable growth and employment creation.
Key Highlights of Bangladesh’s Economic Shift
| Aspect | Key Data |
|---|---|
| Economic Census 2024 | Total economic units: 11.87 million. Service sector dominates with 91.23% of units. |
| Manufacturing Decline | Manufacturing units account for only 8.77% in 2024, down from over 11% in previous censuses. |
| Job Market | 2 million youths enter the labor market annually, but job creation has stagnated in recent years. |
| Past Growth in Employment | Jobs in economic establishments doubled from 2003 to 2013, but growth stagnated in the last decade. |
| Challenges in Manufacturing | Poor infrastructure, energy crises, inconsistent policies, and high land prices deter investment. |
| Policy Concerns | Experts urge reforms to address structural weaknesses and create a favorable investment climate. |
| Comparison with Other Nations | Bangladesh’s transition to services resembles “premature deindustrialization” unlike Japan and China. |
| Investment Trends | Shift towards service and trading sectors due to high operational costs in manufacturing. |
Manufacturing Sector and Job Creation
Historically, manufacturing has been a cornerstone for job creation, as evidenced by the doubling of employment between 2003 and 2013. However, recent years have seen stagnation, raising concerns about the ability of the service sector to absorb the burgeoning workforce. With 2 million young people entering the labor market annually, the current trajectory is insufficient to meet growing employment needs.
Structural and Policy Barriers
Experts attribute the decline in manufacturing to several barriers:
- Infrastructure Deficiencies: Insufficient industrial infrastructure hampers productivity and competitiveness.
- Energy Crises: Unreliable energy supply affects operational efficiency and increases costs.
- Inconsistent Policies: Frequent changes in revenue and industrial policies discourage long-term investments.
- High Land Costs: Rising prices of industrial land deter manufacturing ventures.
A Call for Policy Reform
Economists emphasize the need for urgent policy interventions to revitalize the manufacturing sector. These include:
- Enhancing industrial infrastructure.
- Ensuring reliable energy supply.
- Stabilizing revenue policies to attract foreign and domestic investment.
- Addressing land acquisition challenges.
Comparison with Other Economies
Unlike countries like Japan and China, which transitioned to a service-driven economy only after achieving robust industrialization, Bangladesh’s early pivot to services signals premature deindustrialization. This trajectory could limit long-term economic potential and exacerbate job market challenges.
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