【世界银行】孟加拉国的边境企业和创造就业机会-2025_78页_3mb

Summary: Frontier Firms and Job Creation in Bangladesh

Core Content

This report examines the role of frontier firms in Bangladesh's economic development and their implications for job creation, particularly in the context of the country's growing labor force and the challenges it faces in sustaining inclusive growth. It explores the performance of frontier firms—defined as the top 10 percent of firms in terms of productivity—and contrasts them with non-frontier firms. The analysis is based on data from the World Bank Enterprise Surveys (2013 and 2022), the Survey of Manufacturing Industries (2019), and the Investment Climate Assessment (ICA) 2.0 framework.

Main Points

Economic Growth and Job Creation

• Bangladesh has achieved significant economic growth and poverty reduction over the past two decades.
• However, job creation has not kept pace with GDP growth, especially since 2013.
• The working-age population has grown faster than employment opportunities, creating a mismatch.
• Youth unemployment has risen sharply, particularly for those aged 15–24.
• Labor's contribution to growth has declined, and the share of income for the bottom 80 percent of earners is shrinking.
• Job quality remains low, with many jobs offering limited skills and low wages.

Structural Transformation and Productivity

• Job creation has not occurred in the most productive parts of the economy.
• Productivity in the services sector has stagnated since 2016.
• Bangladesh's firms are significantly less productive than their South Asian peers, with an average of 66 percent lower productivity.
• Productivity growth is largely due to within-sector improvements rather than cross-sector reallocation of resources.
• More productive firms do not necessarily employ more workers, indicating a lack of labor expansion in high-productivity areas.

Frontier Firms and Their Characteristics

• Frontier firms are the top 10 percent most productive firms and dominate exports (70% of total exports).
• They are concentrated in the garments sector and often operate in export processing zones (EPZs).
• These firms are more capital-intensive, pay higher wages, and employ more skilled workers.
• Despite their productivity, they account for only 15% of formal employment in the country.
• The garments sector, which is central to frontier firms, has seen a decline in its employment-to-export ratio over the last decade.
• Female employment in the sector has also dropped from 90% in the 1980s to 50% today.

Business Environment Challenges

• Bangladesh ranks low in the World Bank's Doing Business index.
• Firms face long waiting times and inconsistent implementation of regulatory services.
• Corruption in regulatory services is high, with firms reporting significant bribes to secure government contracts.
• Power outages are more frequent and costly for non-frontier firms, reducing their productivity and investment.
• Frontier firms experience fewer and shorter electricity cuts, leading to lower revenue losses.
• The business environment is more favorable for frontier firms due to their resources and ability to navigate regulations.

Key Policy Insights

Selective Interventions

• Current policies favor frontier firms (e.g., lower corporate tax rates, preferential credit, and interest rate subsidies).
• These interventions have led to a concentration of growth in the RMG sector, which is now under pressure due to the country's impending graduation from LDC status.
• The export promotion strategy has been successful for RMG, but it is no longer sufficient to sustain long-term growth and job creation.
• Import substitution policies have protected non-frontier firms but limited their productivity and competitiveness.

Policy Recommendations

Reforming the Business Environment

• Reduce transaction costs: Simplify firm registration, licensing, and annual audit requirements, especially for new firms.
• Lower entry costs: Reduce the cost of starting a business from approximately US$10,000 to a more manageable level.
• Improve public services: Invest in energy infrastructure, upgrade the national grid, and expand access to alternative energy sources.
• Enhance competitiveness in procurement: Implement transparent and competitive procurement practices for transport, utilities, and construction.
• Standardize regulation: Streamline regulatory processes, ensure consistent implementation, and increase transparency through digitization and performance audits.

Reorienting Industrial Policy

• Adopt a strategic and data-driven approach: Focus on diversification and sectors with high growth and job creation potential.
• Evaluate existing interventions: Assess the effectiveness of current policies like the Export Development Fund and duty drawback systems.
• Introduce performance metrics and sunset clauses: Ensure that policies are time-bound and based on measurable outcomes.
• Support innovation and experimental ventures: Shift focus from sector-specific support to activities that foster productivity and growth.

Strengthening State Capacity

• Improve regulatory quality and government effectiveness: Address low scores in regulatory quality and government effectiveness.
• Enhance rule of law: Strengthen legal frameworks and ensure fair enforcement.
• Build institutional capacity: Invest in training and capacity-building for regulatory officials to ensure impartial and efficient implementation of policies.
• Ensure political and institutional neutrality: Avoid clientilistic relationships and ensure that state-business interactions are fair and transparent.

Conclusion

The report argues that the current policy regime, which focuses on export promotion for frontier firms and import substitution for non-frontier firms, is no longer effective in addressing the country's job creation challenge. A more inclusive strategy is needed that supports the growth and productivity of all firms, not just the most productive ones. This includes improving the business environment, reorienting industrial policy, and enhancing the capacity of the state to implement reforms effectively. The goal is to create a more equitable and sustainable model for job creation that aligns with Bangladesh's developmental aspirations.