When Bangladesh emerged from a bloody war of independence in 1971, the economy was devastated, institutions were fragile, and resources were scarce. Foreign grants became a lifeline for rebuilding the country.
The situation was so severe that economists Just Faaland and JR Parkinson described Bangladesh in 1976 as a “test case for development”. In their book, they argued that while trade mattered, foreign aid was the most important factor behind the country’s long-term growth. Many observers predicted permanent aid dependence, while some international commentators labelled Bangladesh a “basket case”.More than five decades later, those forecasts have not materialised. In 2012, The Economist published an article titled “Out of the basket” on Bangladesh’s progress, while also noting the “Bangladesh puzzle” of strong social gains despite economic shortcomings.
How Bangladesh reached this point, and where it goes next, is more complex than a simple success story.
