We are a country that exports ready-made garments to foreign countries, making our economy heavily dependent on this sector, with more than 84% of our total foreign exports being RMG. After Russia began its actions in Ukraine, the United States and its allies imposed heavy sanctions against Russia to freeze its foreign assets (more than 600 billion dollars) and to stop the war. However, this effort did not succeed due to Russian policy-making and the nature of the Russian economy.

In Bangladesh, this dependency on garment exports also poses risks. We produce garments for export to various European and American markets. If our inter-state policies diverge from those of these countries in the future, they could impose sanctions on us, leading to dire consequences for our economy and our people.

It is worth noting that Bangladesh recently held an election, and the United States and its allies fully intended to influence the outcome, but they failed. In the future, they may try to change the order by implementing sanctions. For instance, they have sanctioned Bangladesh's Rapid Action Battalion to signal to the head of state that the U.S. is willing to impose further sanctions if its policies dictate. However, it is true that after the election, the U.S. has remained silent and has not imposed any new sanctions.

However, this kind of situation does not dictate that we should be tension-free. Instead, we should now consider what to do with our economy and national security. The whole country is dependent on other countries; if they impose sanctions on us, we will be exploited and face typical famine if we are unable to export our garments to Europe or North America. Thus, the administration of the state of Bangladesh should be conscious about diversifying its economy to be free from economic pressure or sanctions. As a result, if we produce a variety of products and export them to countries in Africa, Oceania, South America, as well as Europe and North America, we will experience much less tension than we do now.

Diversification entails proficiency in various sectors, rather than reliance on a specific one. India serves as a prime example, as its economy is not reliant on any single sector. They export diverse products, including petroleum goods, pharmaceuticals, textiles (like us), and technology-related items such as parts and hardware. Notably, Indian vehicles, particularly trucks, dominate the Bangladeshi market, showcasing their broad export portfolio.

Similarly, as India has adopted policies to diversify its economy to be strong in terms of economic warfare among polar states, Bangladesh can also adopt Indian or other states' policies that have implemented diversification to their economies to become stronger. Bangladesh has the potential and resources to become a major powerhouse in Asia rather than a state stuck in global power dynamics. To achieve this, we can adopt measures such as:

a) Pharmaceuticals: In recent years, Bangladesh has already demonstrated significant success in pharmaceutical production and exports. However, with further integrated measures such as developing strong and efficient research centres in health and medicine, we can adequately fulfil the country’s overall needs and expand our exports globally, particularly to African nations at a low cost.

b) Technological Hardware and Beyond: Manufacturing various types of technological hardware can grant us freedom and self-reliance in the technology sector, as the whole world is focusing on technological advancement. Meeting our country’s demands and exporting globally can bolster our foreign exchange reserves and create large-scale employment opportunities. Eventually, this could lead our country to become an economy with a surplus. However, the lack of efficient educational institutes and research poses a great threat to the Fourth Industrial Revolution in Bangladesh.

c) Industrialization and Shipbuilding: Bangladesh is one of the countries with the largest number of river channels in the world, often called a riverine country. However, centuries of oppression and environmental degradation have led many rivers in Bangladesh to face destruction. Despite this, there are currently more than seven hundred rivers in Bangladesh, maintaining a significant influence. Historically, the strength or capability of the Bengal naval forces was much higher than any other country a hundred years ago. This was destroyed during British rule, and later efforts to promote this sector were sporadic after the independence of Bangladesh. In such a situation, planning various dry docks in the southern region of Bangladesh could create a strong shipbuilding industry. An example is the Bangladesh Navy warships; two offshore patrol vessels are already under construction in Bangladesh. The Bangladesh Navy's Durjoy patrol craft is a joint production of China and Bangladesh. Additionally, patrol crafts like the Padma class ship BNS Padma (P312), BNS Surma (P313), BNS Aparajeyo (P261), BNS Admya (P262), BNS Atandra (P263), and many others are all built in Bangladesh. Various ships have also been exported to different countries, including the UK. 

On the other hand, historically, the southern region has always been prioritised for the development of ports and civilizations. The northern region of Bangladesh was neglected, and to counter this disparity, projects like the Padma Bridge and the Rooppur Nuclear Power Plant were initiated to support industries in the northern region. If heavy industrialization is done in the northern region and people from different regions such as Dhaka and Narayanganj are relocated there, a heavily industrialised zone can be established. This would not only change the fortunes of the people in the northern region but also lead to planned industrialization in Bangladesh, contributing to the diversification and economic growth of the country.

d) Agricultural Revolution; Sonar Bangla: Implementing a green agricultural revolution can alleviate supply shortages. Given the fertility of our soil, proper utilisation can yield significant benefits. Many countries are increasingly reliant on technology, often undervaluing agriculture. By leveraging our agricultural potential, we can extend our influence globally. However, collective action is necessary. Despite substantial agricultural prospects such as fertile land and production, inefficiencies in marketing and maintenance, along with increased costs due to middlemen, leave many citizens and farmers in dire conditions. Consequently, the government resorts to importing goods to stabilise prices and provide efficient agricultural technologies to farmers. Overcoming these challenges and optimising our agricultural resources can position us favourably on the international stage through an agricultural revolution, promising unprecedented transformation.

e) Research and Development: Although various products and goods have been produced, and numerous economic activities have been implemented in Bangladesh over the years, research and development (R&D) remains the most undervalued sector. As a result, Bangladesh is lagging behind in various fields. Systematic and thorough research in education, entertainment, society, culture, and industrialization can significantly impact this sector. To achieve this, the government needs to establish diverse R&D institutions or research centres that will drive development through research on relevant subjects.

For example, the capital's BRT project is one of the most important in the country, with the potential to completely transform the capital. However, due to incompetent contractors and lack of planning, the project duration has been extended, increasing the development cost and causing inconvenience to the public. Therefore, the more research conducted in crucial sectors, including those mentioned, the more significant the development that can be achieved.

Unfortunately, our current situation in development and education falls short of expectations; in fact, it’s quite dire. We ought to establish a range of technical universities akin to those in neighbouring countries. For instance, India has institutions like IIT Bombay and IIT Delhi, which produce a plethora of skilled graduates who go on to hold executive positions in various companies across developed nations. If they can achieve this, why can’t we? 

However, there are numerous other economic sectors, in addition to those previously mentioned, that we can further develop and integrate into our country’s economy. Additionally, there are opportunities within Export Processing Zones (EPZs) or Economic Zones (EZs) in our nation, where both foreign countries and domestic corporations can invest directly or indirectly. This investment system will foster the establishment of various new industries in these zones. The government has already made plans to establish approximately 99 economic zones across different regions of the country. It is expected that substantial success will follow once the infrastructure of these economic zones is completed and sustainable electricity generation to operate them is ensured, though this will take time. Consequently, the establishment and operation of these economic zones will bring about significant transformation in our country.

However, it is also crucial to explore other ways to diversify the economy to strengthen it. We should aim to reduce our reliance on remittances, as in the future, our less efficient workers in the Middle East may be replaced by more efficient humans or robots. If we do not diversify, create more jobs, and improve the skills of our workers, we will face more severe consequences.

On the other hand, economic diversification alone is not enough to maintain our national security unless we strengthen our relationships with important nations on both sides of the globe. Bangladesh should join BRICS as soon as possible and increase development cooperation with countries like China. Although Bangladesh could not join BRICS in the first phase, it has increased mutual understanding by participating in various summits. This participation will play a role in enhancing Bangladesh's national security and prioritising Bangladesh's membership when BRICS expands further.

Moreover, regardless of economic diversification, energy security is a critical issue. Bangladesh is working extensively to become self-sufficient in energy. To strengthen our energy security, we should utilise both our resources and those of countries such as Qatar, Saudi Arabia, and Russia. For instance, Bangladesh has concluded an energy agreement with Qatar in which Qatar will provide one million metric tons of liquefied natural gas to Bangladesh starting January 2026. Given that the Bangladesh Army is engaged in security in Qatar, we expect Qatar to prioritise us in this particular matter. Ultimately, we all have limited influence over the various activities of the country as a whole, so we can only wait for better days.

Suggested Citation: Mahdi, T. (2024, April 22). Driving Growth: The Imperative Need for Diversification in the Bangladeshi Economy. Available at: Sites.google.com/view/t-mahdi/articles-and-reports/driving-growth-the-imperative-need-for-diversification-in-the-bangladeshi