Bangladesh’s economy is often acclaimed for its remarkable resilience despite recurrent global disruptions — pandemics, energy shortages, supply-chain shocks, regional conflicts, and internal political instability. Observers frequently point to four powerful “engines” behind this endurance: the ready-made garments industry (RMG), export processing zones (EPZs), remittances from migrant workers, and the vital role of Chittagong Port in sustaining trade flows (henceforththe four engines are referred as FEEG). Yet while these four engines propel the economy forward, a fifth and darker force relentlessly pulls it backward. That force is corruption.
In economic and engineering terms, national output (GDP) can be represented through a production function that explicitly incorporates corruption-related factors. Instead of writing it only in the conventional functional form, we can express it—consistent with modern growth theory—as: Y (GDP) = A(m) × f(L, K, T); Or, in more descriptive algebraic terms: Y (GDP) = A(m) × [joint contribution of L, K, and T]
This expression applies for a given amount of land, structures, buildings, and all other available resources that are fully and efficiently employed. Here, L, K, and T denote labor, capital, and technology, respectively. The factor A(m) captures the system’s integrity — or lack thereof — by reflecting the prevailing degree of corruption, inefficiency, and mismanagement. When A(m) is low, the same inputs produce less output; when A(m) approaches 1, the economy operates closer to its true potential.
Here, A(m) = Actual GDP/Potential GDP represents the moral, or integrity, multiplier — implying that the same L, K, and T may be producing far less GDP than they should. The value of A(m) lies between 0 and 1. As A(m) approaches 1.0, nearly every unit of effort, capital, and knowledge is translated into real output. When corruption becomes systemic, A(m) may fall to 0.6, 0.4, 0.3, or even lower.In simple terms, an economy capable of producing 100 units of value may realise only 70 in practice, with the remaining 30 units absorbed by bribery, rent-seeking, inefficiency, and institutional decay.
Actual GDP cannot sustainably exceed potential GDP. Therefore, any value of A(m) greater than 1 does not imply “super-efficiency”; it signals an underestimation of potential output, statistical distortion, or unsustainable overextension—like forcing a machine to operate beyond its rated capacity for short-term gain at the cost of long-term stability.
The focus of this article is not the entire economy’s production of GDP. Rather, it is on the output generated by each of the four engines of economic growth (FEEG). Every sector or engine possesses both a measurable potential output, under conditions of efficiency, transparency, and rational management, and an actual realized output, under prevailing conditions of misgovernance and corruption.
In its most accurate and operational form, the corruption-adjusted output of the FEEG can be expressed in a single equation using sector-specific corruption factors, technically referred to as integrity (or corruption) multipliers: Output = A1X1 + A2X2 + A3X3 + A4X4 where X1, X2, X3, and X4 represent the four engines—RMG, EPZs, Remittances, and Chittagong Port, respectively—while each A represents a sector-specific corruption multiplier. The numerical value of each multiplier lies between 0 and 1, depending on the degree of corruption within the respective sector. Some sectors experience deeper leakage, greater rent extraction, and heavier bureaucratic drag than others. Because each sector’s labor skills, capital intensity, technology, and final product differ, the strength of its integrity multiplier also varies. These differences justify assigning a distinct corruption multiplier to each sector.
A1 = Actual output/Potential output in the RMG sector. The same definition applies to the remaining three multipliers.
If A1 = 1 for sector X1, the RMG sector is converting almost all of its resources into real value for society. If A1 = 0.5, half of the sector’s potential output is being lost to corruption, leakage, misallocation, and institutional decay. As A1 falls further below 1, an increasing share of the sector’s output is lost to corruption and mismanagement. The same logic applies to each of the four sectors. The accompanying bar diagram makes this visible by illustrating the gap between potential and realised output in each engine.
The true power of this sector-specific model lies in its diagnostic capacity. By isolating each corruptmultiplier, policymakers can pinpoint where corruption and inefficiency are most severe and where reform would generate the greatest marginal return. The bar diagram depicts the visual alternative – identifying output gap with uncomfortable precision, the institutional pressure points where corruption is most corrosive and where reform is most urgently needed.
The unpleasant corruption arithmetic, however, is not entirely one-directional. Some of the largest beneficiaries of corruption — the “big sharks” — do not simply hoard their illegal wealth in cash vaults. A significant portion is transferred to foreign banks, concealed in offshore accounts, or converted into properties in London, Dubai, Toronto, or other global cities. Some finance the elite education of their children abroad, quietly exporting not only capital but future loyalty and allegiance away from the country.
At the same time, a portion of this corruptly acquired wealth is recycled domestically. It is invested in local real estate, luxury apartments, shopping malls, hotels, transport companies, and speculative land projects. It fuels consumption of imported goods, high-end construction, and visible urban opulence. In a narrow accounting sense, this type of spending may create a limited feedback effect within the economy — generating some employment, stimulating certain service sectors, and adding superficial vibrancy to urban landscapes.
But this “compensation” is both distorted and deceptive. It does not represent productive investment in innovation, manufacturing capability, education, or long-term economic transformation. Rather, it deepens inequality, inflates asset bubbles, distorts land and housing markets, crowds out honest entrepreneurs, and reinforces a dangerous illusion of prosperity. What appears as growth is in fact misallocated capital — circulating not according to merit, productivity, or national priority, but according to proximity to stolen power.
In terms of this framework, even if a fraction of leaked wealth returns in the form of local spending, the value it creates is still far less than the value destroyed. The corruption multiplier may be marginally cushioned at the surface, but its structural core remains damaged. What the economy loses is sovereign capacity — the ability to direct its own surplus toward equitable, productive, and future-oriented development. Corruption may generate the illusion of motion, but it is the motion of a wheel stuck in mud — spinning, splashing, showing energy, yet going nowhere.
In the RMG sector, Bangladesh commands one of the world’s largest garment workforces and enjoys preferential market access, yet factories are burdened by unofficial payments at every administrative step — from safety certification to export documentation. Substandard compliance is sometimes overlooked through bribery, while honest producers must pay “speed money” to meet shipment deadlines. The result is a sector forced to operate beneath its capacity. Here, A1 is lowered not by labor or technology, but by invisible tolls that drain value before it reaches workers or reinvestment.
Within EPZ sector, corruption appears through land acquisition, tax exemptions, utility contracts, and licensing. Rule-based incentives are often converted into personal privileges, while firms without political backing face delays, unpredictable inspections, and demands for “facilitation.” Every delay, inflated procurement, or informal payment lowers A2 — not because the zones lack capacity, but because their operating environment undermines efficiency.
Remittances should be among the cleanest inflows, yet systemic leakage occurs. Migrants pay excessive recruitment fees to middlemen, borrow at predatory rates, and face corrupt bureaucracy at home and abroad. Informal Hundi networks flourish due to inefficiency and mistrust in official channels. Each illegal fee and undocumented transfer reduces the benefit reaching families and the national reserve, quietly lowering A3.
At Chittagong Port, corruption is measured in time as much as in money. Congestion, artificial delays, misdeclared containers, bribed officials, and politically controlled contracts turn a logistical artery into a bottleneck. Each daydelays raise costs and weakens competitiveness. The port does not lack infrastructure or labor; it lacks insulation from interference and rent extraction, causing A4 to fall due to institutional decay, not physical limits.
Across all four sectors, capacity exists and demand persists, yet value is bled away through tolls, favors, embezzlement, and delay. The FEEG continue to run, but with friction and chronic underperformance.
Bangladesh economy suffers from the systematic erosion of value as that effort moves through corrupted channels of power and administration. Corruption is an invisible tax on productivity, an internal tariff on trade, and an undeclared transfer of income from the many to the few. Until this arithmetic is confronted, Bangladesh’s celebrated resilience will remain impressive in appearance, yet deeply limited in its realized potential.
Dr Abdullah A Dewan, Professor Emeritus of Economics, Eastern Michigan University (USA) and Former Physicist and Nuclear Engineer, Bangladesh Atomic Energy Commission. aadeone@gmail.com