In a recent special guest lecture hosted by the Sustainable Development Policy Institute (SDPI) and the Embassy of Japan, renowned Japanese development economist Prof. Yamagata Tatsufumi presented a compelling case: Bangladesh, though geographically anchored in South Asia, has adopted an industrial development model strikingly similar to the high-intensity, export-led strategies that propelled East Asian economies. This shift, he argued, offers valuable insights for Pakistan and other South Asian nations grappling with labor abundance, export competitiveness, and the need for sustainable industrialization.
The lecture, titled “Bangladesh as an East Asian Country: Its Pattern of Industrial Development,” took place in late January 2026 and drew policymakers, researchers, and development practitioners—both in-person and online—to explore regional industrialization pathways.
Why Bangladesh’s Trajectory Feels More East Asian Than South Asian
Prof. Yamagata, drawing from his experience as a former visiting fellow at the Bangladesh Institute of Development Studies (BIDS) and his current role at Ritsumeikan Asia Pacific University, highlighted a key structural factor: Bangladesh is a labor-abundant and land-scarce economy—a profile closer to classic East Asian tigers than to many South Asian peers that rely more heavily on natural resources.
This endowment has enabled Bangladesh to excel in labor-intensive manufacturing, particularly through the ready-made garments (RMG) sector. Rather than viewing RMG dominance as a low-road strategy, Prof. Yamagata described it as a strategic entry point and “window for diversification.” The sector has become a foundation for building industrial capabilities, skills, and export infrastructure that spill over into other areas.
Challenging the “Race to the Bottom” Narrative
A common critique of Bangladesh’s apparel boom is that it relies on exploiting cheap labor. Prof. Yamagata directly challenged this view. He pointed out that while minimum wages in the apparel industry declined between 1985 and 2005, they have followed a consistent upward trend since 2005, with real wages continuing to rise through 2023.
The 2013 Rana Plaza tragedy, while tragic, ultimately prompted stronger labor safety regulations and environmental compliance—driven by pressure from international buyers. These improvements have helped sustain competitiveness in a world increasingly sensitive to ethical sourcing.
Garments Still Dominate – But Diversification Is Underway
RMG remains the backbone of Bangladesh’s exports, accounting for around 80–81% of total export earnings in recent years. The country has solidified its position as the third-largest apparel supplier to the United States (after China and Vietnam), with a market share hovering around 10% in 2025 data.
Yet signs of gradual diversification are emerging:
- Assembly of electrical appliances
- Exports of refrigerator and air-conditioner compressors to Europe
- Growth in transport equipment, including shipbuilding and drone manufacturing
- Pharmaceuticals and electronics showing promise
- Bicycle exports to the EU (where Bangladesh ranks among the top non-EU suppliers, with strong revival in 2024–2025 shipments)
Bangladesh has also become a notable exporter to the EU of items like jute products, tea, spices, bicycles, and prepared media (e.g., USBs and memory cards). These emerging sectors indicate a slow but deliberate move beyond garments.
A Natural Reference Point for Pakistan
Dr. Abid Qaiyum Suleri, Executive Director of SDPI, opened the session by noting strong parallels between Pakistan and Bangladesh—similar natural resource profiles, economic structures, and labor abundance. He pointed out that the two countries once competed directly in sectors like bicycle exports, yet Bangladesh has since captured significant market share.
Prof. Yamagata reinforced this relevance, highlighting historical complementarities along the textile value chain: Pakistan’s strengths lie in upstream segments (e.g., cotton, yarn, fabrics), while Bangladesh has developed downstream competitiveness (garment manufacturing and finishing). He suggested that Bangladesh’s experience could serve as a blueprint for Pakistan to expand export share and boost women’s workforce participation—two areas where Bangladesh has made dramatic gains through its RMG-led model.
Ambassador of Japan to Pakistan, Akamatsu Shuichi, echoed this view, emphasizing that South Asian countries share the challenge of productively absorbing large, young labor forces and converting demographic potential into sustained growth. Bangladesh’s path, he noted, provides an instructive reference.
Preparing for LDC Graduation in November 2026
Bangladesh is scheduled to graduate from Least Developed Country (LDC) status on 24 November 2026. This milestone brings both opportunities and risks—especially for the pharmaceutical sector, which has benefited from LDC-specific flexibilities (e.g., TRIPS waivers allowing generic drug production).
Prof. Yamagata noted preparations underway, including discussions with Japan on tariff reductions under a potential Economic Partnership Agreement and rising foreign investment interest (notably from China). While export concentration in textiles remains high, these signals reflect growing confidence in the economy’s resilience post-graduation.
What Can South Asia Learn from Bangladesh’s Journey?
Prof. Yamagata’s lecture ultimately poses a deeper question to policymakers across the region: How can labor-abundant economies best harness export-oriented industrialization without falling into traps of over-specialization or stagnant wages?
Bangladesh demonstrates that a focused, high-intensity approach—starting with garments but using it as a ladder—can yield rapid export growth, rising real incomes, greater female labor participation, and gradual diversification. For Pakistan and others, the challenge is not to copy Bangladesh exactly, but to adapt elements of this model to local strengths—whether upstream textiles, services, or new manufacturing niches.
As South Asia navigates demographic dividends and global trade shifts, Bangladesh’s experience reminds us that strategic choices, not just geography, shape developmental destiny.
