Bangladesh has entered a phase of development marked by jobless growth. Is it a short-term phenomenon that will somehow disappear or a systematic outcome of following the wrong development thesis? According to a recent report, while Bangladesh's productive sector experienced an impressive average annual growth rate of 10 per cent over the decade spanning 2013-2023, the manufacturing sector lost 1.4 million jobs during this period. Due to the adoption of increasingly advanced imported technologies, there has been a decrease in labour-based value-added production. For example, in contrast to the 220 workers needed to produce $1 million in exports in 2013, garment factories needed only 94 workers in 2024. Of course, it has increased labour productivity. But it has happened due to the import of technology. Hence, the benefit of productivity improvement migrated out of Bangladesh. More alarming is that this trend will continue, as technological advancements have been improving the quality and reducing the cost of whatever Bangladesh produces. Such a reality raises a vital question: has Bangladesh been following the wrong development thesis, and how can it exit from it?
There has been a call for striking a balance between growth and job creation. But if Bangladesh continues to follow incorrect economic theories, how can that balance be maintained? On the other hand, as media report indicates, some expert groups have been blaming government policies. Well, how does the government make policies, and who has been advising the government to take those policies? If a wrong thesis guides the policy advisors, should the government continue to seek policy advice from them to find a remedy for jobless growth?
At the core of development thinking, particularly for Bangladesh's industrial economy, there has been a labour-centric replication strategy. It's guided by a neoclassical production function linking economic output to labour, capital, and total factor productivity. There has also been a common belief that labour productivity improvement benefits labour suppliers. Hence, the focus has been on liberalising technology imports (capital) and offering training to factory workers to operate them. As a result, economic output has increased, along with improvements in labour productivity. Unfortunately, the benefit of labour productivity improvement did not benefit Bangladesh. Instead, the country has lost precious jobs.
There has also been an argument that an excessive focus on a single sector, primarily RMG, has left other industries underdeveloped. For this reason, such a reality of jobloss and growth has emerged. If Bangladesh continues to follow a technology-import-led replication economy, will the job reality change due to expansion in other sectors? Unfortunately, theory and data suggest that this is not the case. Regardless of the industry, technological advancements have a natural tendency to reduce labour in copying and using products. Unfortunately, it has not been factored into the development thesis prescribed for Bangladesh.
Experts appear to believe that a credible election, genuine political representation, the establishment of people-centred governance, and a renewed social contract between the state and citizens will help reverse the reality of job loss. Unfortunately, such a change will likely have very little implication on the underlying primary reason affecting the job market.
There could be an argument that a focus on agriculture may reverse the trend. Unfortunately, it will not likely happen. Further growth in the agricultural sector requires far less labour and more technology. For example, the use of precision dispensing of farming inputs, such as pesticides and fertilisers, involves replacing labour on the ground with flying intelligent spraying machines. If the policy is to import those machines, like in manufacturing, the farming sector will also experience the same jobless growth reality.
There has also been an issue of graduate unemployment. Invariably, all studies have indicated that Bangladesh has experienced exponential growth in the production of graduates. As a result, along with the shrinking salary difference between primary school dropouts and university graduates, there has been a rapid growth in graduate unemployment, reaching as high as fifty per cent.This is the unfortunate outcome of Bangladesh's policy of pursuing a technology-import-centric, labour-intensive replication economy, and the belief that there has been a positive correlation between human capital supply and total factor productivity as an exogenous factor.
To get further clarity about the wrong development thesis that is being implemented by borrowing billions, resulting in showing GDP numbers as a success indicator, asking for tax-to-GDP ratio growth, making a few people rich, killing existing jobs, and turning millions of graduates unemployed, we need to go back to the basics of wealth creation. Economic prosperity does not depend solely on the number of units we produce. Most importantly, it depends on how much value we add in each of those produced units. Unfortunately, this value-added aspect is missing from the prescription given to Bangladesh.
In every product, whether it is a shirt, a shoe, or furniture, the role of material and labour in total value has been declining. On the other hand, ideas or technologies in the form of product or process features have been increasing. Unfortunately, the focus on developing technology locally and integrating it into products and processes is missing. Unless this missing element is addressed, no type of change in the political or social sphere will reverse the trend of jobless growth. To make it happen, neoclassical economic theories are not sufficient. Even modern endogenous growth theories are insufficient, as they tend to promote a linear correlation between idea flow or R&D investment and economic growth. We need to have a clear understanding of the evolution of products and processes, and how to add value through innovative ideas to win the global race.
By the way, once we start discussing ideas and innovation, the subject of startups inevitably arises in policy circles. If we arrange an idea competition, offer cozy office space, address intellectual property issues, and allocate risk capital, startups will flourish as a new engine of economic growth. Over the last 25 years, numerous incentives have been introduced to foster this belief. But have we got any success stories? If not, why are we allocating more money behind this belief? Instead of believing that great ideas will inevitably lead to an economic powerhouse, we should focus on the underlying pattern of evolution of inventions and innovations through incremental progression and reinvention, resulting in the rise and fall of firms and the migration of prosperity. Besides, the current startup race appears to be driven by a toxic thesis of inflating valuations out of spreading hype and offering subsidies, as opposed to delivering economic value through innovation.
To sum up, Bangladesh's jobless growth is the outcome of following flawed development thesis based on neoclassical production function-based economic theory. Even endogenous growth theories are not sufficient to offer a prescription for remedy. Besides, rather than being a solution, the toxic thesis of startups has become a barrier to finding a cure. Hence, Bangladesh needs to focus on how to add value to products and production processes using local technological advancements to compete in the global market. Besides, Bangladesh needs to enter industries to pursue idea-based value addition, as opposed to relying on labour and imported capital.
M. Rokonuzzaman, Ph.D is Academic and Researcher on technology, innovation and policy. zaman.rokon.bd@gmail.com
© 2025 - All Rights with The Financial Express
