Bangladesh’s rise and Ethiopia’s fall: a new path for development
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In the 1980s, Bangladesh transformed from a desperately poor country into a major garment exporter, increasing annual income from under $300 to $2,600 since 1990, while Ethiopia struggled to replicate this success despite significant investment.
Ethiopia borrowed $1 billion to build industrial parks, but by 2021, these parks employed only 90,000 people in a country adding 2 million workers to its labor force yearly, and the nation ultimately defaulted on its debt.
This contrast reflects a shift in global development, as the conditions that allowed many poor countries to grow rapidly from 1991 to 2016 are disappearing. The post-Cold War era saw poor countries benefit from access to rich-country markets, foreign investment, and aid, leading to tripled incomes and improved health and democracy. However, rich countries are now closing markets, China is competing for manufacturing dominance, automation is reducing the need for cheap labor, and foreign aid is declining.
As a result, poorer nations are no longer catching up economically, and some are experiencing increased conflict and political instability. Experts suggest that poor countries must focus on building from existing strengths, like ports, factories, or mines, rather than pursuing large-scale projects.
They also argue that rich countries should help by providing market access, directing investment toward viable businesses, and accepting limited numbers of legal migrants to address labor shortages, ultimately creating a new engine of development based on mutual benefit.
