Aligning Trade and Industrial Policies for Sustainable Export Growth in Bangladesh
Citation: Raihan, S. (2026). Aligning Trade and Industrial Policies for Sustainable Export Growth in Bangladesh. SANEM & Australian High Commission Policy Paper Series. SANEM Publications, Dhaka, Bangladesh.
This paper investigates the model of export growth strategy in Bangladesh at a particular phase of transition and increasing vulnerability. Exports over the past five decades have been at the center of the country’s structural transformation, and nothing epitomizes that better than its rise as an RMG powerhouse, which has been hailed as an extraordinary success in terms of growth, employment, and poverty reduction. However, this success itself has generated extreme concentrations of risk and revealed structural weaknesses that are proving difficult to overlook. As Bangladesh nears transitioning out of its Least Developed Country status, contends with a more competitive world economy, and engages in an increasingly sustainable trade regime, the weaknesses in its export strategy are becoming all too apparent.
The paper suggests that these struggles are more than just the outcome of exogenous shocks or market forces. Instead, they arise from a long-standing misalignment of trade and industrial policies that developed in tandem but seldom in harmony. Trade policy has primarily been reactive and concerned with preserving preferences and managing tariffs, while industrial policy has been based on splintered, input-based incentives that are only weakly correlated to export competitiveness, including upgrading or market access needs. This separation has constrained diversification, slowed movement up global value chains, and left firms unprepared to meet new regulatory and sustainability standards.
Employing a mixed-methods methodology, the paper integrates trade data analysis with policy review and comparative economic experiences to diagnose the nature of such misalignment. It suggests a holistic four-pillar strategic framework that focuses on economic upgrading and diversification, social sustainability and inclusivity, environmental sustainability and circularity, and proactive market access and strategic integration. The paper also describes an institutional structure that can help support this framework, with an emphasis on coordination, accountability, and result-based delivery.
The main message that comes across is that the future potential of Bangladesh’s export success lies not just in getting bigger and cheaper but in being better, sustainable, and resilient. The harmonization of trade and industrial policies is not a technical correction but a strategic necessity in guaranteeing long-term competitiveness in the post-LDC era.
