State of Bangladesh: BTTI Assessment Report

Executive Summary

The Bangladesh Think Tank Index (BTTI) stands at 55.4/100 (Grade: B), indicating that Bangladesh is a moderate performer with significant potential. This composite score is derived from 33 sector analyzers across 8 policy dimensions, weighted by strategic importance to Bangladesh's development trajectory.

The estimated year-over-year change is +0.5 points, reflecting incremental progress in infrastructure and human capital, partially offset by governance stagnation and external headwinds.

Key strengths: Governance & Institutions, Social Inclusion, Economic Resilience.

Key weaknesses: Environmental Sustainability, External Resilience, Industrial Diversification.

Dimension Analysis

Economic Resilience (60.5/100, weight: 15%)

Bangladesh's economy continues to demonstrate resilience with GDP growth of 4.2%, though below the 8th Five Year Plan target of 7-8%. Foreign exchange reserves provide 3.9 months of import cover (target: 6 months). The banking sector remains burdened by an NPL ratio of 9.6%, well above the 5% prudential threshold. Tax revenue mobilization at 7.4% of GDP is among the lowest in the world, severely constraining fiscal space. Export concentration risk persists with non-RMG exports at just 16% of total.

Human Capital (60.5/100, weight: 15%)

Human capital development shows mixed progress. Public education spending at 1.8% of GDP falls far short of the 4% benchmark. Physician density of 0.72 per 1,000 population is below the WHO minimum of 1.0. Child stunting at 28.0% remains a generational challenge. Female labor force participation at 38.5% lags the 60% target. Learning poverty at 57.0% indicates that most children cannot read and understand a simple text by age 10.

Infrastructure & Connectivity (60.3/100, weight: 12%)

Infrastructure has seen notable gains with 99.5% electrification, one of South Asia's success stories. However, internet penetration at 76.5% limits digital transformation potential. Logistics costs at 20.0% of GDP erode export competitiveness. The renewable energy share of 4.6% is critically low given climate vulnerability.

Governance & Institutions (66.6/100, weight: 13%)

Governance remains Bangladesh's most significant structural constraint. The average WGI score of 3.79 (on a -2.5 to +2.5 scale) places Bangladesh in the bottom quartile globally. The Corruption Perceptions Index score of 28.0/100 reflects persistent institutional weaknesses. Government effectiveness (-0.72), regulatory quality (-0.85), and rule of law (27.0) all score negatively.

Social Inclusion (66.4/100, weight: 12%)

Social inclusion efforts are constrained by limited fiscal space. Social protection spending at 2.5% of GDP covers only a fraction of the vulnerable population. The poverty rate stands at 18.7%, with significant spatial disparities between western and eastern divisions. Financial inclusion at 53.0% of adults with accounts has improved with mobile financial services but lags regional peers.

Environmental Sustainability (50.3/100, weight: 10%)

Environmental sustainability presents growing risks. Forest cover at 14.5% is far below the 25% target. Renewable energy contributes just 25.0% of the mix. Annual mean PM2.5 of 77.0 ug/m3 is over 5 times the WHO guideline of 15 ug/m3, causing an estimated 80,000-120,000 premature deaths annually. Municipal waste collection covers only 55.0% of generated waste.

Industrial Diversification (23.5/100, weight: 10%)

Industrial diversification is critical for post-LDC competitiveness. Non-RMG exports represent only 16% of total exports. Pharmaceutical exports at $220.0M show promise but remain small relative to potential. ICT exports at $800.0M are growing but face infrastructure and talent constraints. Tourism arrivals at 0.32M are negligible for a country of 170 million.

External Resilience (46.2/100, weight: 13%)

External resilience faces headwinds as LDC graduation approaches in 2026. Reserve coverage at 3.9 months remains below the 6-month comfort level. Remittances at 6.1% of GDP provide a crucial buffer. With only 2 FTAs in force, Bangladesh is poorly positioned for the post-preference trade environment. FDI at 0.43% of GDP is among the lowest in emerging Asia.

Peer Comparison

The BTTI enables comparison with regional peers using equivalent composite methodology:

• Malaysia: 70.0/100 ###################################
• Thailand: 65.0/100 ################################
• Bangladesh (Bangladesh): 55.4/100 ###########################
• Vietnam: 55.0/100 ###########################
• India: 52.0/100 ##########################
• Sri Lanka: 50.0/100 #########################
• Cambodia: 40.0/100 ####################
• Myanmar: 30.0/100 ###############

Bangladesh ranks 3 of 8 among the selected peer group.

Top Policy Priorities

1. [CRITICAL] Revenue mobilization

Tax-to-GDP at 7.4%, among lowest globally. Expand tax base, digitize collection, reduce exemptions.

Estimated BTTI impact: +15 basis points on composite score.

2. [CRITICAL] Anti-corruption institutions

CPI score 28.0/100. Strengthen ACC independence, judiciary reform, e-procurement expansion.

Estimated BTTI impact: +13 basis points on composite score.

3. [CRITICAL] Banking sector cleanup

NPL ratio at 9.6%. Enforce provisioning, restructure SOCBs, strengthen BB supervisory capacity.

Estimated BTTI impact: +12 basis points on composite score.

4. [CRITICAL] Export diversification

Non-RMG export share at 16%. Invest in pharma, ICT, shipbuilding, leather SEZs.

Estimated BTTI impact: +11 basis points on composite score.

5. [HIGH] Education investment

Education spending at 1.8% of GDP. Double allocation, focus on STEM and TVET.

Estimated BTTI impact: +10 basis points on composite score.

6. [HIGH] Trade agreement expansion

Only 2 FTAs. Negotiate with ASEAN, Japan, UK. Build trade negotiation capacity for post-LDC era.

Estimated BTTI impact: +9 basis points on composite score.

7. [HIGH] Learning quality reform

Learning poverty at 57.0%. Teacher training, curriculum modernization, EdTech.

Estimated BTTI impact: +8 basis points on composite score.

8. [HIGH] Renewable energy transition

Renewable share at 4.6%. Solar/wind auctions, grid modernization, phase out rental power plants.

Estimated BTTI impact: +8 basis points on composite score.

9. [HIGH] Social protection expansion

Social protection spending at 2.5% GDP. Consolidate 100+ programs, implement national social registry, expand coverage.

Estimated BTTI impact: +7 basis points on composite score.

10. [HIGH] Air quality management

PM2.5 at 77.0 ug/m3 (WHO guideline: 15). Brick kiln conversion, vehicle emission standards, industrial relocation.

Estimated BTTI impact: +6 basis points on composite score.

Risks and Outlook (2026-2030)

LDC Graduation (2026): Bangladesh faces the loss of preferential trade access (EU EBA, DFQF) worth an estimated 12% tariff advantage on RMG exports. Without proactive FTA negotiations and export diversification, this represents the single largest economic risk in the medium term.

Climate vulnerability: As one of the most climate-vulnerable nations, Bangladesh faces annual GDP losses of 2-9% from floods, cyclones, and sea level rise. Adaptation investment and renewable energy transition are existential priorities.

Banking sector fragility: The elevated NPL ratio, concentrated in state-owned commercial banks, poses systemic risk. A comprehensive bank recapitalization and governance reform program is overdue.

Demographic dividend window: With 65% of the population of working age, Bangladesh has approximately 15-20 years to capitalize on its demographic dividend. This requires massive investment in education quality, skills training, and productive job creation.

Digital transformation: The convergence of mobile financial services, e-governance, and ICT exports presents a significant opportunity to leapfrog traditional development constraints. However, this requires broadband infrastructure, digital literacy, and regulatory modernization.

Methodology

The BTTI is computed from 33 sector analyzers grouped into 8 weighted dimensions. Each dimension score (0-100) is derived by normalizing key indicators against Bangladesh-appropriate benchmarks drawn from the 8th Five Year Plan, Vision 2041, SDG targets, and international best practices. The composite score is a weighted average with weights reflecting strategic importance: economic resilience and human capital (15% each), governance and external resilience (13% each), infrastructure and social inclusion (12% each), environmental sustainability and industrial diversification (10% each).

Peer country scores are estimated using equivalent methodology applied to World Bank, IMF, UNDP, and Transparency International data.

Bangladesh Think Tank Index (BTTI), produced by the One Man Think Tank (OMTT) at bdpolicylab.com. Data sources: World Bank WDI, IMF Article IV, Bangladesh Bank, BBS, NBR, EPB, UNDP HDR, WHO GHO, UNESCO UIS, ILO ILOSTAT, Transparency International, IRENA, ADB.