Promoting inclusive growth in Bangladesh through special economic zones

Abstract

Eradicating poverty by means of accelerating economic growth and generating employment opportunities is a key policy priority for Bangladesh. There is also an emphasis on achieving inclusive economic growth that will, among other things, help disadvantaged regions and facilitate greater participation of deprived population groups in economic activities.1 The Seventh Five Year Plan of Bangladesh (7FYP) outlines a strategy for manufacturing-sector development that includes export-led growth as a means of achieving these development aspirations (GED, 2015). Following the success of special economic zones (SEZs), especially in China, and export processing zones (EPZs) in Bangladesh, the Government of Bangladesh (GoB) has decided to establish a total of 100 SEZs over the next 15 years. By providing attractive fiscal and financial benefits and serviced industrial plots, these zones are expected to mobilise private investments from both domestic and foreign sources. The 7FYP also intends to use SEZs as a policy tool to generate inclusive growth by means of promoting development in lagging regions. Despite the apparent simplicity of the concept of inclusive growth, it is often not clear what it implies for regional development, and the policy instruments facilitating it are less well articulated. As agglomeration economies become a dominant force in economic development, leading to the concentration of economic activities around certain growth poles, the issue of the need for so-called balanced regional development becomes complex. Against this backdrop, free movement of workers, including women’s greater participation, is characterised as an important criterion of inclusive growth. Along with this, job market participation of other excluded and vulnerable groups represents an essential ingredient. However, regional disparities can have significant social and political consequences here.