Economists call for urgent reforms, new political settlement in Bangladesh

Highlights

• Experts warn oligarchic control is stifling economic growth
• Calls made to prosecute mega-crimes and recover stolen assets
• Weak institutions, flawed elections, and state capture blamed for stagnation
• More preparation for LDC graduation urged
• Emphasis placed on fostering SMEs and entrepreneurship.
• Inclusive, adaptive policies stressed for long-term sustainability

Leading economists and policy experts have warned that Bangladesh's economic growth is being stifled by concentrated oligarchic power, urging a fundamental restructuring of the political settlement to enable inclusive and sustainable development.

During a discussion in Dhaka today (29 August), they said the country's economic future depends not only on policy reforms but also on a more equitable distribution of power, accountability, and the creation of a competitive, open economy.

The discussion titled 'Economic Strategies and Political Settlements: Our Current Economic Challenges and Ways Forward' was part of the 'Bengal Delta Conference 2025: Bangladesh at the Crossroads', organised by the Dacca Institute of Research and Analytics (DAIRA) at the InterContinental Dhaka.

Keynote speaker Mushtaq Khan, professor of economics at SOAS University of London, highlighted that Bangladesh's economic success in the 1980s–2000s was driven by a broad-based capitalist class. He said recent years have seen power revert to a narrow oligarchic elite, resulting in growth that primarily benefits the few through inflated infrastructure costs, expensive power projects, and bank looting.

"Breaking the power of these oligarchs requires targeted action: prosecuting mega-crimes, recovering stolen assets, and enforcing strong competition laws similar to the US Sherman Act," Mushtaq Khan said, emphasising that middle class enterprise-driven growth is essential for sustainable industrialisation.

Selim Raihan, executive director of South Asian Network on Economic Modelling (Sanem), underscored that Bangladesh's economic challenges are rooted in weak institutions, informal power networks, and state capture. He pointed to flawed elections since 2013, loss of political legitimacy, and overemphasis on large infrastructure projects built on opaque deals.

Raihan called for comprehensive reforms across taxation, banking, trade policy, and public expenditure, particularly in health and education, which have seen declining quality and inadequate GDP allocation.

From the private sector, Nuria Lopez, chairperson of the European Union Chamber of Commerce in Bangladesh, warned that concentration of economic power has reduced competitiveness. She highlighted unreliable utilities, high financing costs, and logistics expenses that are at least 10% higher than neighbouring countries. 

Lopez stressed the urgency of reforms and recommended extending Bangladesh's LDC graduation timeline to prepare a strong roadmap for sustainable growth.

Economist Mahbub Ullah traced the roots of the oligarchic class to post-1971 "primitive accumulation" and warned against reforms built on unstable socio-economic foundations. He advocated fostering a new productive entrepreneurial class, particularly SMEs, to ensure long-term stability and prevent future uprisings.

Imran Matin, executive director of the BRAC Institute of Governance and Development, highlighted challenges in accountability within the social sector, calling for horizontal and community-based mechanisms to complement traditional oversight and improve service delivery in a weak-rule-of-law context.

Concluding the session, Change Initiative CEO M Zakir Hossain Khan emphasised that Bangladesh's deltaic environment requires adaptive and inclusive policies. He stressed that economic reforms and political restructuring must be dynamic, forward-looking, and sustainable across generations.