A few months ago, I was walking under the Shyamoli Footover Bridge when my eyes were drawn to a sparkling clothing store. Right in front of it stood an old, frail woman begging for alms. The contrast between the dazzling luxury of the store and her vulnerable figure struck me deeply.
If you’ve ever visited the tri-state area of Dhaka—Gulshan, Banani and Baridhara—you’d be amazed by the sprawling beauty and sheer opulence of the city. Luxury cars cruise along well-paved roads, trendy eateries welcome diners, and branded clothing stores line the bustling streets.
At first glance, it feels like any other cosmopolitan city in the world. In fact, in many areas of Dhaka, the cost of land can rival prices in New York or London, square foot for square foot.
Alongside this glittering wealth lies stark poverty. No amount of fancy buildings or neon lights can erase this reality. While Bangladesh has made significant progress in reducing poverty, wealth continues to be concentrated in the hands of only a few.
Here’s a thought-provoking perspective: the birth of Bangladesh in 1971 wasn’t just a political or cultural movement. It stemmed from deep economic disparities that had existed for decades between East and West Pakistan.
These inequalities weren’t random—they were the result of systemic exploitation and marginalization of East Pakistan by the central government. Political discrimination and economic disparity combined to sow the seeds of discontent, leading to the struggle for independence.
From its inception in 1947, Pakistan was divided geographically and culturally into two wings separated by 1,200 miles of Indian territory. Despite East Pakistan having a larger population, the political and economic power was concentrated in West Pakistan. The central government dominated by the West systematically allocated the lion’s share of resources and developmental budgets to itself.
East Pakistan contributed 62% of the national revenue, primarily through the export of jute, which was the country’s largest export commodity. However, less than 25% of the national budget was allocated to East Pakistan.
This neglect was particularly evident in industrial and infrastructure investments, which disproportionately favoured West Pakistan. By the 1960s, the per capita income in West Pakistan was 32% higher than in East Pakistan—a gap that widened to 61% by the end of the decade.
The “Two-Economy Theory” and the glaring divide
The “Two-Economy Theory,” popularised by economists like Nurul Islam and Rehman Sobhan, articulated how East and West Pakistan functioned as two distinct economies. Nurul Islam, a Harvard-trained economist, revealed through his research that the central government’s policies created and perpetuated this duality. He shows how West Pakistan was benefiting more through trade policies, currency devaluation strategies, and the centralisation of financial resources, all of which systematically disadvantaged East Pakistan.
The economic disparity was compounded by the political marginalisation of East Pakistan. Despite accounting for more than half of the total population, East Pakistanis were under-represented in key government positions and institutions.
West Pakistani elites dominated the civil service, armed forces and political decision-making processes. This political hegemony ensured that East Pakistan remained economically subjugated.
The famous 22 oligarchic families controlled the Pakistani economy, and it became a rallying point for East Pakistanis discontent. All of the oligarchs were from West Pakistan.
How far have we come?
Fifty-three years after its independence, Bangladesh is often hailed as a development success story. Yes, we are going through a rough patch. But Bangladesh is not a basket case of economic failure anymore. Our economic progress has been commendable compared to what we used to be in 1971.
We are a regional economic powerhouse now; and had it not been for Awami League’s rampant corruption and widespread looting, we would have gone further.
Economic growth, reduction in extreme poverty and advancements in social indicators paint a picture of progress. But, is it being distributed equally?
We have all heard the stories of the Awami oligarchs, who sucked the country dry. We have seen how those oligarchs have amassed their fortunes by looting us. And it is evident in our data as well.
The Household Income and Expenditure Survey (HIES) provides critical insights into the state of income inequality in Bangladesh. The Gini coefficient, a key measure of income inequality, has steadily increased from 0.36 in 1983-84 to 0.499 in 2022. While the richest 10% of households control 41% of the nation’s income, the poorest 10% have access to a mere 1.31%. The wealth is being concentrated among the elite, with two-thirds of national income accruing to the top 30%.
Despite a rise in per capita income to $2,784 in 2022, the benefits of growth remain unequally distributed. Urban areas fare better than rural regions, and male workers enjoy significantly higher incomes than their female counterparts. Economic policies focused on GDP growth have often overlooked equitable wealth distribution, further widening the gap. The Awami League just wanted to flaunt the high, often questionable GDP growth, ignoring the people’s misery.
And if you think income inequality is bad enough, look at wealth inequality.
Wealth inequality surpasses income disparity as an even graver issue. The asset Gini coefficient climbed from 0.67 in 1990 to 0.74 in 2022. It shows the extreme concentration of wealth. A disproportionate share of land, property, and other valuable assets is owned by a small elite.
This concentration is driven by multiple factors. Land ownership, for instance, is skewed towards wealthy families, who benefit from appreciating land values in urban areas. Investments in high-value assets, such as luxury properties and stocks, remain inaccessible to the middle and lower classes. The lack of a robust inheritance tax perpetuates this concentration, allowing wealth to accumulate across generations.
The rise of the mega-rich
Between 2010 and 2019, Bangladesh led globally in creating ultra-rich individuals, growing at 14.3% annually, while wealth concentrated sharply. The poorest 10% saw their share of national income drop from 2% to just over 1%. Sectors like ready-made garments drive wealth, yet workers earn meagre wages, often unpaid. GDP growth of 7.3% hasn’t created equitable opportunities, with “jobless growth” and rising illicit financial flows. Crony capitalism thrives through tax breaks, inflated project costs, and banking scandals. Structural inequalities deepen as wealth remains with a privileged few, defying the “trickle-down” myth and leaving most citizens struggling amid systemic corruption.
Key Drivers of Inequality in Bangladesh
Policy Shortcomings
Bangladesh’s economic policies prioritize growth over equity, with indirect taxes like VAT disproportionately burdening lower-income groups. A lack of progressive taxation and failure to curb wealth accumulation worsen disparities. Additionally, the labour market suffers from skill mismatches, prompting employers to hire foreign professionals while local workers remain underutilised or underpaid.
Urban-Rural Divide
Income and resource disparities between urban and rural areas deepen inequality. Urban hubs like Dhaka and Chattogram receive the majority of investments, leaving rural areas underserved. Urban poverty fell to 14.7% in 2022, but rural poverty persists at 20.5%, exposing the uneven development trajectory.
Diminished Social Mobility
Limited access to quality education and healthcare hampers upward mobility for lower-income groups. Rural schools face shortages of teachers and resources, leaving students unprepared for competitive opportunities. Without adequate skills, these individuals are trapped in low-paying jobs, perpetuating poverty.
What Needs to Change?
A progressive tax system targeting wealth and inheritance, alongside stricter tax compliance and measures to curb illicit financial flows, can reduce disparities. Investments in education, vocational training, and lifelong learning programs, aligned with market needs, are essential. Promoting digital literacy and ensuring the rich pay taxes can empower the workforce.
Targeted rural investments in infrastructure, healthcare, and education can bridge the urban-rural divide. Decentralisation and regional industrialisation policies can foster equitable growth. Strengthened governance, transparency, and accountability are critical to implementing social safety nets effectively.
Intersectionality of Inequality
Gender gaps, with women’s labour force participation at just 36%, exacerbate household income inequality. Meanwhile, rural communities remain stuck in cycles of poverty, highlighting the stark divide between the wealthy elite and the struggling masses. This raises the question: has Bangladesh’s progress truly been equitable, or has exploitation merely taken a new form?
