Editing Economy of Bangladesh (section)

==Economic history==
===Precolonial period===
[[File:Tribute Giraffe with Attendant.jpg|thumb|left|This African giraffe was imported into Bengal region and [[re-exportation|re-exported]] to China circa 1415.]]
[[File:Maritime links of the Sultanate of Bengal.png|thumb|300px|The major maritime trade routes of the [[Bengal Sultanate]]]]

[[Punch-marked coins]] are the earliest form of currency found in Bangladesh (Bengal region of Ancient India), dating back to the [[Iron Age]] and the first millennium BCE.<ref>{{Cite web|url=https://en.banglapedia.org/index.php/Punch_Marked_Coins|title=Punch Marked Coins |website=Banglapedia}}</ref><ref>{{Cite web|url=https://www.bb.org.bd/museum/collections/ancient.php|title=About Taka Museum|website=www.bb.org.bd}}</ref> 1st century Roman coins with images of [[Hercules]] have been excavated in Bangladesh and point to trade links with the Roman world.<ref>{{Cite web|url=https://www.archaeology.org/issues/112-1311/letter-from/1406-wari-bateshwar-ptolemy-sounagoura-indo-pacific-beads#art_page2|title=A Family's Passion - Archaeology Magazine|website=www.archaeology.org}}</ref> The [[Wari-Bateshwar ruins]] are believed to be the emporium (trading center) of Sounagoura mentioned by Roman geographer [[Claudius Ptolemy]].<ref>{{Cite web|url=https://www.thedailystar.net/news-detail-28431|title=Wari-Bateshwar one of earliest kingdoms|first1=Emran|last1=Hossain|date=19 March 2008|website=The Daily Star}}</ref> The eastern segment of [[Bengal]] was a historically prosperous region.<ref name=hp>Lawrence B. Lesser. "Historical Perspective". [http://lcweb2.loc.gov/frd/cs/bdtoc.html ''A Country Study: Bangladesh''] (James Heitzman and Robert Worden, editors). [[Library of Congress]] [[Federal Research Division]] (September 1988). ''This article incorporates text from this source, which is in the public domain.''[http://lcweb2.loc.gov/frd/cs/about.html About the Country Studies / Area Handbooks Program: Country Studies – Federal Research Division, Library of Congress]</ref> The [[Ganges Delta]] provided advantages of a mild, almost tropical climate, fertile soil, ample water, and an abundance of fish, wildlife, and fruit.<ref name="hp" /> Living standards for the elite were comparatively better than other parts of the [[Indian subcontinent]].<ref name="hp" /> Trade routes like the [[Grand Trunk Road]], [[Tea Horse Road]] and [[Silk Road]] connected the region to the wider neighborhood.<ref name="hp" /> Between 400 and 1200, the region had a well-developed economy in terms of land ownership, agriculture, livestock, shipping, trade, commerce, taxation, and banking.<ref>{{cite thesis|author=Kamrunnesa Islam|title=Economic History of Bengal|url=https://eprints.soas.ac.uk/29147/|location=SOAS, University of London|degree=PhD|doi=10.25501/SOAS.00029147|year=1996}}</ref> Muslim trade with Bengal increased after the fall of the Sasanian Empire and the Arab takeover of Persian trade routes. Much of this trade occurred east of the [[Meghna River]] in southeastern Bengal.<ref name="auto5">{{cite web|url=https://en.banglapedia.org/index.php?title=Arabs,_The|title=Arabs, The – Banglapedia|website=en.banglapedia.org}} {{better source needed|date=December 2022}}</ref> After 1204, Muslim conquerors inherited the gold and silver reserves of pre-Islamic kingdoms.

The [[Bengal Sultanate]] presided over a mercantile empire of its own. Bengali ships were the largest ships in the [[Bay of Bengal]] and other parts of the [[Indian Ocean trade]] network. Ship-owning merchants often acted as royal envoys of the Sultan.<ref>María Dolores Elizalde; Wang Jianlang (6 November 2017). China's Development from a Global Perspective. Cambridge Scholars Publishing. p. 68. {{ISBN|978-1-5275-0417-2}}.</ref> A large number of wealthy Bengali merchants and shipowners lived in [[Malacca Sultanate|Malacca]].<ref name="Habib2011">{{cite book |author=Irfan Habib |title=Economic History of Medieval India, 1200-1500 |url=https://books.google.com/books?id=K8kO4J3mXUAC&pg=PA185 |year=2011 |publisher=Pearson Education India |isbn=978-81-317-2791-1 |page=185 |author-link=Irfan Habib}}</ref> A vessel from Bengal transported embassies from [[Brunei]] and [[Sumatra]] to [[Imperial China|China]].<ref name="auto2b">{{cite book |editor1=Tapan Raychaudhuri |editor1-link=Tapan Raychaudhuri |editor2=Irfan Habib |editor2-link=Irfan Habib |year=1982 |title=The Cambridge Economic History of India |volume=I |publisher=Cambridge University Press |page=130 |isbn=978-0-521-22692-9}}</ref> Bengal and the [[Maldives]] operated the largest [[shell currency]] network in history.<ref>{{Cite book |last=Boomgaard |first=P. |url=https://books.google.com/books?id=TXphAAAAQBAJ |title=Linking Destinies: Trade, Towns and Kin in Asian History |date=1 January 2008 |publisher=BRILL |isbn=9789004253995 |access-date=23 August 2016 |archive-url=https://web.archive.org/web/20170106131821/https://books.google.com/books?id=TXphAAAAQBAJ |archive-date=6 January 2017 |url-status=live |via=Google Books}}</ref> A [[Masai giraffe]] from [[Malindi]] in Africa was shipped to Bengal and later gifted to the Emperor of China as a gift from the Sultan of Bengal.<ref>{{Cite journal|url=http://journals.sagepub.com/doi/10.1177/097194580400700101|title=The Giraffe of Bengal: A Medieval Encounter in Ming China|first=Sally K.|last=Church|date=25 April 2004|journal=The Medieval History Journal|volume=7|issue=1|pages=1–37|doi=10.1177/097194580400700101|s2cid=161549135 }}</ref> The rulers of [[Arakan]] looked to Bengal for economic, political and cultural capital.<ref>{{Cite book|url=https://books.google.com/books?id=rohuAAAAMAAJ|title=Bengal-Arakan Relations, 1430-1666 A.D.|first=Mohammed Ali|last=Chowdhury|date=25 November 2004|publisher=Firma K.L.M.|isbn=9788171021185 |via=Google Books}}</ref> The Sultan of Bengal financed projects in the [[Hejaz]] region of Arabia.<ref>{{Cite web|url=https://en.banglapedia.org/index.php?title=Ghiyasia_Madrasa|title=Ghiyasia Madrasa |website=Banglapedia}}</ref>

Under [[Mughal Empire|Mughal rule]], Bengal operated as a centre of the worldwide [[muslin]], [[silk]] and [[pearl]] trades.<ref name=hp/> Domestically, much of India depended on Bengali products such as rice, silks and cotton [[textile]]s. Overseas, Europeans depended on Bengali products such as cotton textiles, silks and [[opium]]; Bengal accounted for 40% of [[Dutch East India Company|Dutch imports]] from Asia, for example.<ref name="Prakash">{{cite book |last=Prakash |first=Om |author-link=Om Prakash (historian) |year=2006 |chapter=Empire, Mughal |chapter-url=http://link.galegroup.com/apps/doc/CX3447600139/WHIC?u=seat24826&xid=6b597320 |editor=John J. McCusker |title=History of World Trade Since 1450 |volume=1 |publisher=Macmillan Reference USA |pages=237–240 |access-date=3 August 2017 |via=Gale in Context: World History}}</ref> Bengal shipped [[saltpeter]] to Europe, sold opium in [[Indonesia]], exported raw silk to [[Japan]] and the [[Netherlands]], and produced cotton and silk textiles for export to Europe, Indonesia and Japan.<ref name="richards95">{{cite book |last=Richards |first=John F. |author-link=John F. Richards |year=1995 |title=The Mughal Empire |url=https://books.google.com/books?id=HHyVh29gy4QC&pg=PA202 |publisher=Cambridge University Press |page=202|isbn=9780521566032 }}</ref> [[Real wages]] and [[living standards]] in 18th-century Bengal were comparable to Britain, which in turn had the highest living standards in Europe.<ref name="Parthasarathi38">{{cite book |last=Parthasarathi |first=Prasannan |year=2011 |title= Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600–1850 |url=https://books.google.com/books?id=1_YEcvo-jqcC&pg=PA38 |publisher=Cambridge University Press |pages=39–45 |isbn=978-1-139-49889-0}}</ref>

During the Mughal era, the most important centre of cotton production was Bengal, particularly around its capital city of [[Dhaka]], leading to muslin being called "daka" in distant markets such as Central Asia.<ref>{{cite book |last=Eaton |first=Richard Maxwell |year=1996 |title=The Rise of Islam and the Bengal Frontier, 1204–1760 |url=https://books.google.com/books?id=gKhChF3yAOUC&pg=PA202 |publisher=University of California Press |page=202|isbn=9780520205079 }}</ref> [[Bengali people|Bengali]] agriculturalists rapidly learned techniques of [[mulberry]] cultivation and [[sericulture]], establishing Bengal as a major silk-producing region of the world.<ref name="richards">{{cite book |last=Richards |first=John F. |author-link=John F. Richards |year=1995 |title=The Mughal Empire |url=https://books.google.com/books?id=HHyVh29gy4QC&pg=PA190 |publisher=Cambridge University Press |page=190|isbn=9780521566032 }}</ref> Bengal accounted for more than 50% of textiles and around 80% of silks imported by the Dutch from Asia, for example.<ref name="Prakash"/>

Bengal also had a large [[shipbuilding]] industry. The shipbuilding output of Bengal during the sixteenth and seventeenth centuries was 223,250{{nbsp}}tons annually, compared with 23,061{{nbsp}}tons produced in nineteen colonies in North America from 1769 to 1771.<ref name="ray174">{{cite book |last=Ray |first=Indrajit |year=2011 |title=Bengal Industries and the British Industrial Revolution (1757-1857) |url=https://books.google.com/books?id=CHOrAgAAQBAJ&pg=PA174 |publisher=Routledge |pages=174 |isbn=978-1-136-82552-1}}</ref> The region was also a center of ship-repairing.<ref name="ray174"/> Bengali shipbuilding was advanced compared to European shipbuilding at the time. An important innovation in shipbuilding was the introduction of a [[Flush deck|flushed deck]] design in Bengal rice ships, resulting in [[Hull (watercraft)|hulls]] that were stronger and less prone to leak than the structurally weak hulls of traditional European ships built with a stepped [[Deck (ship)|deck]] design. The English East India Company later duplicated the flushed-deck and hull designs of Bengal rice ships in the 1760s, leading to significant improvements in [[seaworthiness]] and navigation for European ships during the [[Industrial Revolution]].<ref name=":0">{{Cite web|url= http://www.ucd.ie/t4cms/WP17_11.pdf|title=Technological Dynamism in a Stagnant Sector: Safety at Sea during the Early Industrial Revolution}}</ref> Among the oldest businesses from the pre-colonial and Mughal periods, the biryani restaurant Fakhruddin's traces its history to the era of the [[Nawabs of Bengal]].<ref>{{cite web | url=https://archive.dhakatribune.com/bangladesh/2021/01/26/from-a-school-kitchen-to-a-household-name-the-history-of-fakhruddin-biryani | title=From a school kitchen to a household name, the history of Fakhruddin Biryani | date=26 January 2021 }}</ref>

===Colonial period===
[[File:Barkentine Linnet off Hong Kong.jpg|thumb|left|The ''Barkentine Linnet'', a ship built in [[Chittagong]], off the coast of Hong Kong circa 1890]]
The [[British East India Company]], that took complete control of Bengal in 1793 by abolishing Nizamat (local rule), chose to develop [[Calcutta]], now the capital city of [[West Bengal]], as their commercial and administrative center for the [[Company rule in India|Company-held territories in South Asia]].<ref name=hp/> The development of East Bengal was thereafter limited to agriculture.<ref name=hp/> The administrative infrastructure of the late eighteenth and nineteenth centuries focused on East Bengal's function as a primarily agricultural producer—chiefly of rice, tea, [[teak]], cotton, [[sugar cane]] and [[jute]] — for processors and traders in the [[British Empire]].<ref name=hp/> British rule saw the introduction of railways.<ref name="auto7">{{Cite web|url=https://en.banglapedia.org/index.php/Railway|title=Railway |website=Banglapedia}}</ref> The [[Hardinge Bridge]] was built to carry trains across the [[Padma River]]. In the early 20th century, [[Eastern Bengal and Assam]] was established in the [[British Raj]] to promote jobs, education and investment in East Bengal. In 1928, the [[Port of Chittagong]] was declared to be a "Major Port" of British India.<ref name="auto7"/> East Bengal extended its rice economy into [[Arakan Division]] in [[British Burma]].<ref>{{cite book|author=Jacques Leider|editor=Morten Bergsmo|display-editors=et. al.|title=Colonial Wrongs and Access to International Law|year=2020 |publisher=Torkel Opsahl Academic|isbn=978-82-8348-134-1|chapter-url=https://books.google.com/books?id=ncb-zQEACAAJ|chapter=The Chittagonians in Colonial Arakan: Seasonal and Settlement Migrations}}</ref> The river and sea ports of East Bengal, including [[Goalundo Ghat]],<ref>{{Cite web|url=https://www.thedailystar.net/opinion/in-focus/news/the-glorious-history-goalanda-3122711|title=The glorious history of Goalanda|first=Hossain Muhammed|last=Zaki|date=19 September 2022|website=The Daily Star}}</ref> the [[Port of Dhaka]], the [[Port of Narayanganj]], and the Port of Chittagong became [[entrepot]]s for trade between Bengal, Assam and Burma. Some of Bangladesh's venerable and oldest companies were born in British Bengal, including [[A K Khan & Company]], [[M. M. Ispahani Limited]], [[James Finlay Bangladesh]], and [[Anwar Group of Industries]].{{citation needed|date=November 2024}}

===Pakistan period===
[[File:Bengal Tannery 1949.jpg|thumb|[[Tannery]] owners with members of the Directorate of Industries, Government of East Bengal in 1949]]
[[File:Adamjee Jute Mills.jpg|thumb|In the 1950s and 1960s, [[Adamjee Jute Mills]] was the largest jute processing plant in the world.]]
{{Further|East Pakistan#Economy}}

The [[partition of India]] changed the economic geography of the region. The Pakistani government in [[East Bengal]] prioritized industries based on local raw materials like jute, cotton, and leather. The [[Korean War]] drove up demand for jute products.<ref>{{Cite web|url=https://www.thedailystar.net/in-focus/news/unthreading-partition-the-politics-jute-sharing-between-two-bengals-1778560|title=Unthreading Partition: The politics of jute sharing between two Bengals|first=Anwesha|last=Sengupta|date=29 July 2019|website=The Daily Star}}</ref> [[Adamjee Jute Mills]], the world's largest jute processing plant, was built in the Port of Narayanganj. The plant was a symbol of [[East Pakistan]]'s industrialization. Living standards began to gradually improve. Labor reforms in 1958 eventually benefitted a future independent Bangladesh to develop industry.<ref name="auto6"/> Free market principles were generally accepted. The government promoted an industrial policy which aimed to produce consumer goods as quickly as possible in order to avoid dependence on imports. Certain sectors, like public utilities, fell under state ownership.<ref>{{Cite web|url=https://www.britannica.com/place/Bangladesh/Economy|title=Bangladesh - Economy &#124; Britannica|website=www.britannica.com}}</ref> [[Natural gas and petroleum in Bangladesh|Natural gas in Sylhet]] was discovered by the [[Burmah Oil|Burmah Oil Company]] in 1955.<ref>{{Cite web|url=https://en.banglapedia.org/index.php?title=Gas,_Natural|title=Gas, Natural |website=Banglapedia}}</ref> By the late 1960s, East Pakistan's share of Pakistan's exports went down from 70% to 50%.<ref name="auto3"/>

Pakistan's rulers launched a so-called "Decade of Development" that "resulted in numerous economic and social contradictions, which played themselves out, not just in the 1960s, but beyond, where Ayub Khan's rule created the social and economic conditions leading to the separation of East Pakistan".<ref>{{Cite web|url=https://www.dawn.com/news/1355171|title=Special report: The Changing of the Guard 1958-1969|first=The Media Group &#124; Publishing|last=Partner|date=2 September 2017|website=DAWN.COM}}</ref> According to the World Bank, [[economic discrimination]] against East Pakistan included diverting foreign aid and other funds to West Pakistan, the use of East Pakistan's foreign-exchange surpluses to finance West Pakistani imports, and refusal by the central government to release funds allocated to East Pakistan.<ref name="google.co.nz">{{cite book |last=Muscat |first=Robert J. |year=2015 |title=Investing in Peace: How Development Aid Can Prevent or Promote Conflict |url=https://books.google.com/books?id=yZ5zCQAAQBAJ&pg=PT72 |publisher=Routledge |isbn=978-1-317-46729-8 |access-date=20 January 2017 |archive-url=https://web.archive.org/web/20170214220121/https://books.google.com/books?id=yZ5zCQAAQBAJ&pg=PT72 |archive-date=14 February 2017 |url-status=live}}</ref> [[Rehman Sobhan]] paraphrased the [[Two-Nation Theory]] into the Two Economies Theory by arguing that East and West Pakistan diverged and became two different economies within one country.<ref>[https://www.thedailystar.net/the-two-economies-thesis-road-to-the-six-points-programme-29679 The Two Economies thesis: Road to the Six Points Programme | The Daily Star<!-- Bot generated title -->]</ref><ref>[https://cpd.org.bd/from-two-economies-to-two-nations-my-journey-to-bangladesh/ Two Economies to Two Nations: Rehman Sobhan's Journey to Bangladesh | CPD<!-- Bot generated title -->]</ref><ref>{{cite web | url=https://www.tbsnews.net/first-anniversary/two-economies-two-nations-revisiting-bangladeshs-economic-transformation-189289 | title=From Two Economies to Two Nations: Revisiting Bangladesh's Economic Transformation | date=21 January 2021 }}</ref><ref>[https://www.goodreads.com/en/book/show/28139259-from-two-economies-to-two-nations From Two Economies To Two Nations: My Journey To Bangladesh by Rehman Sobhan<!-- Bot generated title -->]</ref>

===Post-independence period===
====Socialist era (1972–1975)====
{{See also|Socialism in Bangladesh#Socialist era (1972–1975)}}
After its independence from Pakistan, Bangladesh initially followed a socialist economy for five years, which proved to be a blunder by the [[Sheikh Mujibur Rahman]]-led [[Awami League]] government. During Mujib era, the state development strategy envolved every possible way to the extension of [[protectionism]].<ref name="L&J">{{cite web |title=Bangladesh Awami League and Bangladesh Nationalist Party (BNP) |url=https://www.lawyersnjurists.com/article/bangladesh-awami-league-and-bangladesh-nationalist-party-bnp/ |access-date=March 22, 2025 |website=The Lawyers & Jurists}}</ref> Private companies had to operate under heavy regulation and restrictions. For example, profit limits were imposed on companies. Any company with revenues or profits above the limit were susceptible to [[nationalization]]. The state nationalized all banks, insurance companies, and 580 industrial plants.<ref name="Rahman2012">{{cite book |last1=Rahman |first1=Sheikh Mujibur |translator-last=Alam |translator-first=Fakrul |year=2012 |title=The Unfinished Memoirs |page=xxvi |publisher=Penguin/Viking |isbn=978-0-670-08546-0}}</ref> Many of the nationalized industries were abandoned by West Pakistanis during the war;<ref name="Rahman2012" /> while many pro-Awami League and other Bengali businesses also suffered nationalization of properties and industries. The Awami League initiated work for the Ghorashal Fertilizer Factory and the [[Ashuganj Power Station]]. In spite of restrictions, several of Bangladesh's leading companies in the future were founded during this period, including [[BEXIMCO]] and [[Advanced Chemical Industries]]. Land ownership was restricted to less than 25 ''bighas''. Land owners with more than 25 ''bighas'' were subjected to taxes.<ref name="Rahman2012" /> Farmers had to sell their products at prices set by the government instead of the market.

Since Bangladesh followed a socialist economy, it underwent a slow growth of producing experienced entrepreneurs, managers, administrators, engineers, and technicians.<ref name=eri>{{cite book |author=Lawrence B. Lesser |chapter=Economic Reconstruction after Independence |url=http://lcweb2.loc.gov/frd/cs/bdtoc.html |title=A Country Study: Bangladesh |editor1=James Heitzman |editor2=Robert Worden |publisher=[[Library of Congress]] [[Federal Research Division]] |date=September 1988}} ''This article incorporates text from this source, which is in the public domain. ''[http://lcweb2.loc.gov/frd/cs/about.html About the Country Studies / Area Handbooks Program: Country Studies – Federal Research Division, Library of Congress]</ref> There was hardly any foreign investment. There were critical shortages of essential food grains and other staples because of wartime disruptions.<ref name=eri/> External markets for jute had been lost because of the instability of supply and the increasing popularity of synthetic substitutes.<ref name=eri/> Foreign exchange resources were minuscule, and the banking and monetary systems were unreliable.<ref name=eri/> Although Bangladesh had a large work force, the vast reserves of under trained and underpaid workers were largely illiterate, unskilled, and underemployed.<ref name=eri/> Commercially exploitable industrial resources, except for natural gas, were lacking.<ref name=eri/> Inflation, especially for essential consumer goods, ran between 300 and 400 percent.<ref name=eri/>

The war of independence had crippled the transportation system.<ref name=eri/> Hundreds of road and railroad bridges had been destroyed or damaged, and rolling stock was inadequate and in poor repair.<ref name=eri/> The new country was still recovering from a severe cyclone that hit the area in 1970 and caused 250,000 deaths.<ref name=eri/> India came forward immediately with critically measured economic assistance in the first months after Bangladesh achieved independence from Pakistan.<ref name=eri/> Between December 1971 and January 1972, India committed US$232 million in aid to Bangladesh from the politico-economic aid India received from the US and [[USSR]].<ref name=eri/>

====Military rule and economic reforms (1975–1990)====
After [[Military coups in Bangladesh#1975 coups|1975 coups]], new Bangladeshi military leaders began to promote private industry and turned their attention to developing new industrial capacity and rehabilitating the economy.<ref name=bn>{{cite web |url=https://2009-2017.state.gov/r/pa/ei/bgn/3452.htm |title=Background Note: Bangladesh |date=March 2008 |website=[[Bureau of South and Central Asian Affairs]] |access-date=11 June 2008}} ''This article incorporates text from this source, which is in the [[public domain]].''</ref> The socialist economic model adopted by early leaders had resulted in inefficiency and economic stagnation. Beginning in late 1975, the government gradually gave greater scope to private sector participation in the economy, a pattern that has continued since then.<ref name=bn/>

After Lt. Gen. [[Ziaur Rahman]]'s ascension to the power in 1975, new strategy was taken to encourage [[private enterprise]] with a primary goal of maximization of [[Gross National Product|GNP]] growth rate. Zia's government revised the First Five-Year Plan (1973–1978) taken by the Mujib government and formulated a "Three year hard core plan" for remaining three years. This was followed by the Two-Year Plan (1978-80) and the Second Five Year Plan (1980-85).<ref name="L&J"/> The government also established special economic zones called [[Bangladesh Export Processing Zone Authority|Export Processing Zones]] (EPZs) to attract investors and promote export industries. These zones have played a key role in Bangladesh's export economy. The government also de-nationalized and privatized state-owned industries by either returning them to their original owners or selling them to private buyers.<ref name=bn/> Meanwhile, inefficiency in the public sector gradually increased; and left-wing opposition grew against the export of natural gas.<ref name=bn/>

The 1980s saw the emergence of dynamic local brands like [[PRAN-RFL Group|PRAN]]. [[Muhammad Yunus]] began experimenting with [[microcredit]] in the late 1970s. In 1983, the [[Grameen Bank]] was established. Bangladesh became the pioneer of the modern microcredit industry, with leading players like Grameen Bank, [[BRAC (organisation)|BRAC]] and [[Proshika]].<ref>{{cite web | url=https://www.microsave.net/2021/08/05/bangladesh-the-basket-case-that-taught-microfinance-to-the-world/#:~:text=The%20genesis%20of%20formalized%20microfinance,to%20buy%20their%20raw%20materials. | title=Bangladesh – the Basket Case That Taught Microfinance to the World | date=5 August 2021 }}</ref> In the industrial sector, two policy innovations in the mid-1980s helped exporters. The reforms introduced the back-to-back [[letter of credit]] and duty-drawback facilities through bonded [[warehouse]]s. These reforms removed major constraints for the country's fledgling [[Bangladesh textile industry|garment industry]]. The reforms allowed a garment manufacturer to obtain letters of credit from domestic banks to finance its import of inputs, by showing letters of credit from foreign buyers of garments. The reforms also reimbursed manufacturers the duty paid on imported inputs on proof that the inputs, stored in bonded warehouses, had been used to manufacture the exports. These reforms spurred the growth of industry into the world's second largest textile exporting sector.<ref name="auto4">{{Cite web|url=https://www.brookings.edu/blog/future-development/2021/07/09/bangladeshs-remarkable-development-journey-government-had-an-important-role-too/|title=Bangladesh's remarkable development journey: Government had an important role too|first=Akhtar|last=Mahmood|date=9 July 2021}}</ref>

In the mid-1980s, there were encouraging signs of progress.<ref name="bn" /> Economic policies aimed at encouraging private enterprise and investment, privatising public industries, reinstating budgetary discipline, and liberalising the import regime were accelerated.<ref name="bn" /> The [[IFIC Bank|International Finance Investment and Commerce Bank]] was set up as a multinational bank for Bangladesh, Nepal and the Maldives.

====Economic growth (1991–2022)====
[[File:Bangabandhu Bridge 3.jpg|thumb|[[Jamuna Bridge]] opened in 1998. Between 1988 and 1998, Bangladesh expanded its rural road network from 3000 km to 15,500 km.]]
[[File:Padma Bridge 06.jpg|thumb|Construction of [[Padma Bridge]], which opened in 2022]]

From 1991 to 1993, the government engaged in an [[enhanced structural adjustment facility]] (ESAF) with the [[International Monetary Fund]] (IMF). A series of [[economic liberalization]] measures was introduced by finance minister [[Saifur Rahman (Bangladeshi politician)|Saifur Rahman]], including opening up sectors like telecom to foreign investment.<ref>{{Cite web|url=https://www.thedailystar.net/news-detail-105538|title=Saifur Rahman's legacy|first=Jyoti|last=Rahman|date=12 September 2009|website=The Daily Star}}</ref> The Chittagong Stock Exchange was also set up. The 1990s was a boon for the private sector. [[List of banks in Bangladesh|Banking]], [[Telecommunications in Bangladesh|telecommunications]], aviation and tertiary education saw new private players and increased competition. The  [[pharmaceutical industry in Bangladesh]] grew to meet 98% of domestic demand.<ref>[https://www.arx.cfa/~/media/2A85F9B2CEAB43CFAF325AB54F3EF404.ashx Pharmaceutical Industry of Bangladesh]</ref> The [[ceramics industry in Bangladesh]] developed to meet local demand for 96% of tableware ceramics, 77% of tiles and 89% of sanitary ceramics.<ref>[https://bida.gov.bd/storage/app/uploads/public/616/6c4/a0e/6166c4a0e61d6242961535.pdf Ceramics industry]</ref> The Chittagong-based [[steel industry in Bangladesh]] exploited scrap steel from ship-breaking yards and started contributing to [[shipbuilding in Bangladesh]].

But the government failed to sustain reforms in large part because of preoccupation with the government's domestic political troubles, including tensions between the Awami League, the [[Bangladesh Nationalist Party]] (BNP) and [[Jatiya Party (Ershad)|Jatiya Party]].<ref name="bn" /> Frequent [[hartal]]s and strikes disrupted the economy. In the late 1990s the government's economic policies became more entrenched, and some gains were lost, which was highlighted by a precipitous drop in foreign direct investment in 2000 and 2001.<ref name="bn" /> Many new private commercial banks were given licenses to operate.

Between 2001 and 2006, annual GDP growth touched an average of 5-6%. In June 2003 the IMF approved 3-year, $490-million plan as part of the Poverty Reduction and Growth Facility (PRGF) for Bangladesh that aimed to support the government's economic reform programme up to 2006.<ref name="bn" /> Seventy million dollars was made available immediately.<ref name="bn" /> In the same vein the World Bank approved $536 million in interest-free loans.<ref name="bn" /> The economy saw continuous real GDP growth of at least 6% since 2009. Bangladesh emerged as one of the [[List of countries by real GDP growth rate|fastest growing economies]].

According to economist Syed Akhtar Mahmood, the Bangladeshi government is often seen as the villain in the country's economic story. But government has played an important role in stimulating the economy through building infrastructure, liberalizing regulations, and promoting high yielding crops in agriculture. According to Mahmood, "[m]ost roads linking the villages with one another, and with the cities, were not paved and not accessible throughout the year. This situation was remarkably transformed within a span of 10 years, from 1988 to 1997, with the construction of the so-called feeder roads. In 1988, Bangladesh had about 3,000 kilometers of feeder roads. By 1997, this network expanded to 15,500 kilometers. These "last-mile" all-weather roads helped connect the villages of Bangladesh to the rest of the country".<ref name="auto4"/>

As a result of export-led growth, Bangladesh has enjoyed a [[trade surplus]] in recent years. Bangladesh historically has run a large trade deficit, financed largely through aid receipts and remittances from workers overseas.<ref name=bn/> Foreign reserves dropped markedly in 2001 but stabilised in the US$3 to US$4 billion range (or about 3 months' import cover).<ref name=bn/> In January 2007, reserves stood at $3.74 billion, and then increased to $5.8 billion by January 2008, in November 2009 it surpassed $10.0 billion, and as of April 2011 it surpassed the US$12 billion according to the Bank of Bangladesh, the central bank.<ref name=bn/> The dependence on [[foreign aid]] and imports has also decreased gradually since the early 1990s.<ref>{{cite news |date=22 May 2013 |title=Politics and managing the national economy: How to achieve sustainable economic growth |url=http://thefinancialexpress-bd.com/index.php?ref=MjBfMDVfMjJfMTNfMV8yN18xNzAxMjc= |location=Dhaka |newspaper=The Financial Express |access-date=22 August 2013}}</ref> Foreign aid now accounts for only 2% of GDP.<ref>{{cite web | url=https://www.thedailystar.net/business/role-foreign-aid-bangladesh-1603780 | title=Role of foreign aid in Bangladesh | date=12 July 2018 }}</ref>

In the last decade, poverty dropped by around one third with significant improvements in the [[human development index]], literacy, life expectancy and per capita food consumption. With the economy growing annually at an average rate of 6% over a prolonged period, more than 15 million people have moved out of poverty since 1992.<ref name="WBOverview">{{Cite web|url=https://www.worldbank.org/en/country/bangladesh/overview|title=Overview|website=World Bank}}</ref> The [[poverty rate]] went down from 80% in 1971 to 44.2% in 1991 to 12.9% in 2021.<ref>{{cite web|url=https://www.thedailystar.net/news/bangladesh/news/pre-pandemic-level-poverty-set-drop-further-2193171 |title=Pre-Pandemic Level: Poverty set to drop further |publisher=The Daily Star |date=2021-10-08 |access-date=2022-10-02}}</ref><ref>{{Cite web|url=https://cri.org.bd/2021/03/26/what-milestones-have-bangladesh-crossed-in-50-years/|title=What milestones have Bangladesh crossed in 50 years|date=26 March 2021}}</ref><ref>{{Cite web|url=https://www.worldbank.org/en/results/2018/11/15/bangladesh-reducing-poverty-and-sharing-prosperity|title=Bangladesh: Reducing Poverty and Sharing Prosperity|website=World Bank}}</ref> In recent years, Bangladesh has focused on promoting regional trade and transport links. The [[Bangladesh Bhutan India Nepal]] Motor Vehicles Agreement seeks to create hassle free road transport across international borders.<ref>{{cite web | url=https://aric.adb.org/initiative/bangladesh-bhutan-india-and-nepal-motor-vehicles-agreement | title=Bangladesh, Bhutan, India and Nepal Motor Vehicles Agreement Initiative }}</ref> Bangladesh also signed a coastal shipping agreement with India.<ref>[https://cuts-citee.org/pdf/working-note-india-bangladesh-coastal-shipping-agreement.pdf India-Bangladesh Coastal Shipping Agreement]</ref> While prioritizing food security in the domestic market,<ref>{{cite web | url=https://www.newfoodmagazine.com/news/168283/bangladesh-food-security-increased-by-farmers-30-year-efforts/ | title=Bangladesh food security increased by farmers' 30-year efforts }}</ref> Bangladesh exports more than US$1 billion worth of processed food products.<ref>{{cite web | url=https://thefinancialexpress.com.bd/trade/agro-processed-food-exports-exceed-10b-1668827460#:~:text=Bangladesh%27s%20export%20of%20agro%2Dprocessed,day%20BAPA%20FoodPro%20International%20Expo. | title=Agro-processed food exports exceed $1.0b }}</ref><ref>{{cite web | url=https://www.dhakatribune.com/business/2022/08/13/bangladesh-exported-116bn-agricultural-products-in-fy22 | title=Bangladesh exported $1.16bn agricultural products in FY22 | date=13 August 2022 }}</ref> As the result of a robust agricultural supply chain, supermarkets have sprung up in cities and towns across the country.

Bangladesh became the second largest textile exporter in the world.<ref>{{cite news | url=https://www.reuters.com/markets/asia/bangladesh-garment-export-growth-seen-slowing-normal-15-this-year-2022-08-10/#:~:text=Bangladesh%2C%20the%20world%27s%20second%2Dbiggest,jump%20in%20about%2025%20years. | title=Bangladesh garment export growth seen slowing to 'normal' 15% this year | newspaper=Reuters | date=10 August 2022 | last1=Paul | first1=Ruma | last2=Das | first2=Krishna N. }}</ref><ref>{{cite web | url=https://rmgbd.net/2022/02/bangladesh-regains-global-position-as-the-second-largest-rmg-exporter/#:~:text=Bangladesh%20is%20back%20to%20being,July%20to%20January%202021%2D22. | title=Bangladesh Regains Global Position as the Second Largest RMG Exporter | date=18 February 2022 }}</ref> An estimated 4.4 million workers are employed in the garments industry, with the majority being women.<ref>{{cite web | url=https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/insights/bangladesh-garment-industry#:~:text=The%20Bangladeshi%20government%20also%20wanted,easy%20after%20the%20deadly%20disasters. | title=Safety First: Bangladesh Garment Industry Rebounds }}</ref> The sector contributes 11% of Bangladesh's GDP.<ref>{{cite web | url=https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/insights/bangladesh-garment-industry | title=Safety First: Bangladesh Garment Industry Rebounds }}</ref> The [[2013 Rana Plaza factory collapse]] caused global concern on industrial safety in Bangladesh, leading to the formation of the [[Accord on Fire and Building Safety in Bangladesh]] and the [[Alliance for Bangladesh Worker Safety]]. The local clothing industry has seen fiercely competitive brands vying for the market, including [[Aarong]], Westecs, [[Ecstasy (clothing)|Ecstasy]], and [[Yellow (clothing)|Yellow]] among many others.

The [[World Bank]] notes the economic progress of the country by stating that "[w]hen the newly independent country of Bangladesh was born on December 16, 1971, it was the second poorest country in the world—making the country's transformation over the next 50 years one of the great development stories. Since then, poverty has been cut in half at record speed. Enrolment in primary school is now nearly universal. Hundreds of thousands of women have entered the workforce. Steady progress has been made on maternal and child health. And the country is better buttressed against the destructive forces posed by climate change and natural disasters. Bangladesh's success comprises many moving parts—from investing in human capital to establishing macroeconomic stability. Building on this success, the country is now setting the stage for further economic growth and job creation by ramping up investments in energy, inland connectivity, urban projects, and transport infrastructure, as well as prioritizing climate change adaptation and disaster preparedness on its path toward sustainable growth".<ref>{{Cite web|url=https://www.worldbank.org/en/news/immersive-story/2021/09/16/country-on-a-mission-the-remarkable-story-of-bangladeshs-development-journey|title=Country on a Mission: The Remarkable Story of Bangladesh's Development Journey|website=World Bank}}</ref>

As of 2022, Bangladesh had the second largest [[List of countries by foreign exchange reserves|foreign-exchange reserves]] in South Asia. In 2021, Bangladesh surpassed both India and [[Pakistan]] in terms of per capita income.<ref>{{cite web |last=Sharma |first=Mihir |date=31 May 2021 |url=https://www.bloomberg.com/opinion/articles/2021-05-31/india-and-pakistan-are-now-poorer-than-bangladesh |title=South Asia Should Pay Attention to Its Standout Star |publisher=Bloomberg |type=Opinion |archive-url=https://web.archive.org/web/20220207162332/https://www.bloomberg.com/opinion/articles/2021-05-31/india-and-pakistan-are-now-poorer-than-bangladesh |archive-date=2022-02-07 |access-date=2022-10-02}}</ref><ref name="scroll.in"/> The country achieved 100% electricity coverage for households in 2022.<ref>{{Cite web|url=https://www.tbsnews.net/economy/how-100-electrification-changed-rural-game-384954|title=How 100% electrification changed the rural game|date=14 March 2022|website=The Business Standard}}</ref><ref>{{cite web |url=https://english.news.cn/20220323/02a1bb98b82b465a9774029ad01797fd/c.html |title=Bangladesh attains full electricity coverage with inauguration of China-funded power plant-Xinhua |publisher=English.news.cn |date=2022-03-23 |access-date=2022-10-02}}</ref><ref>{{cite web|url=https://www.thedailystar.net/news/bangladesh/news/electricity-now-every-house-2987601 |title=Electricity now in every house |publisher=The Daily Star |date=2022-03-22 |access-date=2022-10-02}}</ref> Megaprojects like the [[Padma Bridge]], [[Dhaka Metro]], [[Matarbari Port]], and [[Karnaphuli Tunnel]] have been planned to stimulate economic activity. The completion of Padma Bridge was expected to boost Bangladeshi GDP by 1.23%.<ref>{{cite web | url=https://www.thedailystar.net/business/economy/news/economic-impact-padma-bridge-3092311 | title=Economic impact of Padma Bridge | date=11 August 2022 }}</ref>

====Economic depression (2022–present)====
Following the [[Russian invasion of Ukraine]], Bangladesh experienced pressure on its foreign exchange reserves due to rising import costs; this affected the country's electricity sector which relies on imported fuel; rising import prices also contributed to inflation.<ref>{{cite news | url=https://www.ft.com/content/a9b8d051-a126-469c-b1ad-b0d29a8d53eb | title=Bangladesh is being 'killed by economic conditions elsewhere in the world' | newspaper=Financial Times | date=24 August 2022 }}</ref> [[International Monetary Fund]] (IMF) had forecasted Consumer Price Index (CPI) in Bangladesh to rise to 5.9% by the year 2022. According to the [[Bangladesh Bureau of Statistics]], general inflation climbed to 6.17% by February 2022.<ref name=":15">{{cite news |date=29 March 2022 |title=Bangladesh in economic turmoil over soaring commodity prices |work=[[Deutsche Welle]] |url=https://www.dw.com/en/bangladesh-in-economic-turmoil-over-soaring-commodity-prices/a-61290191 |access-date=12 May 2022 |archive-date=12 May 2022 |archive-url=https://web.archive.org/web/20220512144850/https://amp.dw.com/en/bangladesh-in-economic-turmoil-over-soaring-commodity-prices/a-61290191 |url-status=live }}</ref><ref>{{cite web |last=Hussain |first=Zahid |date=22 March 2022 |title=Inflation: more to come |url=https://www.thedailystar.net/business/economy/news/inflation-more-come-2987861 |access-date=22 March 2022 |website=[[The Daily Star (Bangladesh)|The Daily Star]] |archive-date=21 March 2022 |archive-url=https://web.archive.org/web/20220321214055/https://www.thedailystar.net/business/economy/news/inflation-more-come-2987861 |url-status=live }}</ref>

Due to the [[Student–People's uprising|mass uprising]] and [[Bangladesh post-resignation violence (2024–present)|subsequent violence]] of July–August 2024, Bangladeshi economy witnessed a huge loss. Bangladesh's economy suffered losses of over $1.2 billion as a result of the nationwide curfew and protests.<ref>{{cite web|title=Bangladesh curfews, internet blackout batter economy amid quota protests|website=Al Jazeera|url=https://www.aljazeera.com/news/2024/7/23/bangladesh-curfews-internet-blackout-batter-economy-amid-quota-protests|date=23 July 2024}}</ref> As per the South Asia Development Update, the World Bank revised its economic growth forecast from 5.7% in April 2024 to 4% in October for the financial year 2025. Political instability exacerbated preexisting inflation. Food inflation under the incumbent [[Yunus ministry|interim government]] reached 14% and general inflation 11%. A sudden sharp rise in inflation in July 2024 was mostly attributed to the political turmoil facing Bangladesh; after momentary stabilization, inflation once again begun to increase. The general inflation rate in Bangladesh reached 10.87%, up from 9.92% in September 2024.<ref>{{Cite web |date=15 October 2024 |title=A bumpy road ahead for the economy amid risks and reform |url=https://www.thedailystar.net/opinion/views/news/bumpy-road-ahead-the-economy-amid-risks-and-reform-3727251 |access-date=16 December 2024 |website=The Daily Star |language=en}}</ref><ref>{{Cite web |date=16 September 2024 |title=The steep economic challenges that the interim government faces |url=https://www.thedailystar.net/opinion/views/news/the-steep-economic-challenges-the-interim-government-faces-3704266 |access-date=16 December 2024 |website=The Daily Star |language=en}}</ref><ref>{{Cite web |title=Inflation in Bangladesh went up in Oct |url=https://unb.com.bd/category/Bangladesh/inflation-in-bangladesh-went-up-in-oct/146514 |access-date=16 December 2024 |website=[[United News of Bangladesh]] |language=English}}</ref>{{synthesis inline|date=January 2025}} In November 2024, the [[International Crisis Group]] (ICG) said "early signs suggest that policymakers can avoid a Sri Lanka-style [[Sri Lankan economic crisis (2019–present)|economic crash]]" and added exchange rate reforms helped improve foreign reserves while inflation had declined from its peak, although it warned that "serious economic risks remain". The crisis group also said that long-term economic reform was "far longer" than the interim governments "likely lifespan", stating that the government was focused on "short-term macro-economic priorities" such as inflation, foreign reserves and economic stability.<ref>{{Cite web |date=14 November 2024 |title=A New Era in Bangladesh? The First Hundred Days of Reform |url=https://www.crisisgroup.org/asia/south-asia/bangladesh/344-new-era-bangladesh-first-hundred-days-reform |access-date=14 December 2024 |website=Crisis Group |language=en}}</ref>

On April 2025, the [[Second Trump administration|Trump administration]] imposed 37% [[Liberation Day tariffs|"reciprocal" tariff]] on Bangladesh, which is second highest in [[South Asia]] just after Sri Lanka (44%).<ref>{{Cite web |date=2025-04-02 |title=Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits |url=https://www.whitehouse.gov/presidential-actions/2025/04/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and-persistent-annual-united-states-goods-trade-deficits/ |access-date=2025-04-03 |website=The White House}}</ref> ''[[New York Times]]'' described it a major blow particularly for the garments industry of Bangladesh.<ref>{{cite web|title=ট্রাম্পের শুল্ক বাংলাদেশ-শ্রীলঙ্কার পোশাকশিল্পে বড় ধাক্কা|url=https://www.kalerkantho.com/print-edition/first-page/2025/04/05/1500186|website=Kaler Kantho|date=5 April 2025}}</ref> Many US buyers started to halt orders saying that it was to costly to bear the import tariffs.<ref>{{cite web|url=https://www.france24.com/en/live-news/20250407-major-garment-producer-bangladesh-says-us-buyers-halting-orders-1|title=Major garment producer Bangladesh says US buyers halting orders|website=[[France24]]|date=8 April 2025}}</ref>