Unleashing the power of innovation in Bangladesh

Bangladesh, a rising economic powerhouse, is experiencing dynamic growth across multiple sectors, including textiles, pharmaceuticals and information technology. As the nation strives to become a middle-income country by 2030, innovation will be the driving force behind sustainable and inclusive development. Boasting a youthful, energetic population and a flourishing economy, Bangladesh is poised to transform into a hub of creativity and innovation, propelling its journey to prosperity.

As Bangladesh transitions from a Least developed country (LDC) to a middle-income country, the country's policymakers and business leaders must focus on developing new strategies and programs. One of the most common challenges LDC graduates face is the loss of international support measures such as preferential market access. 

The reduction of Bangladesh's privileges and preferences will hurt its exports, especially its apparel products. It is estimated that the country's gross export revenue may decrease by around 8-10% due to the loss of quota and duty-free market access. In addition, following its exit from the LDC group, Bangladesh will no longer be able to enjoy the benefits of the global trade organisation's generalised system of preferences. As a result, it will no longer be eligible for specific special and differential treatment measures.

Furthermore, after graduating, Bangladesh must comply with the WTO requirements, which will prevent the country from providing subsidies to the agriculture sector. Furthermore, since it is transitioning from being an LDC to becoming a middle-income country, Bangladesh will no longer be eligible for the grants and soft loans it has received from the international community. 

The reduction of the country's access to concessional finance may also hurt the country's development. Due to Bangladesh's status as one of the most climate-sensitive countries, its graduation journey will be even more challenging. For example, Green Climate Fund is a global financing scheme that provides financial assistance to LDCs vulnerable to climate change. 

The UN Technology Bank was launched to support the scientific and technological development of LDCs, which will stop providing financial assistance to Bangladesh once it becomes a developing country. The world's developed economies are evolving around the Fourth Industrial Revolution. However, the effects of this revolution are yet to be felt in Bangladesh and other LDCs. As technology costs continue to decrease, the country's reliance on imported technology will become detrimental.

Thus, innovation is crucial for Bangladesh's journey toward sustainable and inclusive growth. Innovation serves as the catalyst for economic growth, stimulating new industries, generating employment opportunities, and elevating productivity. 

Encouraging innovation can make Bangladesh a more attractive investment destination, boosting its global competitiveness. By developing a robust innovation ecosystem, the country can attract MNCs, leading to technology transfer and increased foreign investment. Innovation can help Bangladesh keep pace with rapid technological advancements and capitalise on emerging trends like artificial intelligence, automation, and the Internet of Things (IoT). 

By harnessing the power of technology, the country can improve various sectors, from agriculture and healthcare to transportation and communication, enhancing efficiency and overall quality of life. Innovation can be critical in building resilience against natural disasters, economic crises, and other unforeseen challenges. Bangladesh can mitigate risks and adapt to changing circumstances by developing innovative strategies and adopting cutting-edge technologies more effectively. 

Fostering innovation necessitates investment in human capital through education and skill development. Focusing on developing a skilled and educated workforce will create a talent pool capable of driving innovation, entrepreneurship, and long-term growth. By positioning itself as an innovation hub, Bangladesh can assume a leadership role in the region, inspiring neighbouring countries and sharing best practices in technology, sustainability, and social development.

Bangladesh has been commended for its efforts in developing an innovation ecosystem. The country has expanded its economy by collaborating with academic institutions and private sectors. As a result, it is now more competitive in various sectors, such as pharmaceuticals and telecommunications. 

The ICT sector in Bangladesh has shown significant growth in recent years, with the revenue from the ICT sector reaching $1 billion in 2020, as per the Bangladesh Association of Software and Information Services (BASIS). The government has established numerous high-tech parks and software technology parks to facilitate the growth of the ICT industry and attract foreign investment. In 2009, the government of Bangladesh launched its Digital Bangladesh vision, which was aimed at becoming a knowledge-based country by 2021. 

Over the years, the vision has been instrumental in the country's development. In 2021, the government proposed establishing seven innovation hubs in different universities. The World Bank has also partnered with the government to develop software parks in the country. The project aims to create a beneficial environment for start-up and innovation activities. According to Start-up Bangladesh, Bangladesh's start-up ecosystem is gradually gaining momentum, with over 2,500 start-ups operating in the country as of 2021. 

The country has recently witnessed a surge in start-up investments, with active investors growing to 65 in 2021, up from just 10 in 2015. In addition, the Department of Patents, Designs, and Trademarks (DPDT) also reported a steady increase in the number of patent applications filed in Bangladesh, with 467 applications filed in 2019; this demonstrates an increased awareness of intellectual property rights and the importance of protecting innovation in the country. Therefore, Bangladesh has made some progress in fostering an innovation-driven economy. 

To fully capitalise on its potential, addressing the challenges in areas such as R&D investment, human capital development, and collaboration between academia, industry, and the government is crucial. Bangladesh can unlock its innovation potential and accelerate its journey toward sustainable growth by implementing targeted policies and taking proactive measures. 

The performance of Bangladesh in research and innovation is lower than many LDCs. According to the Global Innovation Index 2021, Bangladesh ranked 116th out of 132 countries, indicating that, while the country has potential, there is significant room for improvement in innovation performance. 

Bangladesh spends about 0.62% of its GDP on R&D, as reported by the World Bank in 2018, significantly lower than the global average of 2.4% and the suggested UNESCO target of 1% for developing countries. According to the World Bank, Bangladesh's gross tertiary enrollment rate was 19.02% in 2019, highlighting the need to improve access to higher education, particularly in STEM fields. Additionally, only 2.5% of the total tertiary graduates were in the fields of engineering, manufacturing, and construction in 2018. 

Bangladesh is a lucrative market with over 160 million people and recent success stories (GDP growth, lower poverty/unemployment rates, women empowerment). There are around 280 start-ups in Bangladesh, and over 90% are in Dhaka and a handful in Chittagong and Sylhet. However, in unique markets like Bangladesh's, traditional approaches might not succeed without meeting the local needs and solving problems at a social level. Thus, it becomes crucial to bridge the gap between an overall understanding of the ecosystem and implementation through innovation-oriented solutions. 

Bangladesh should revise the national curriculum and emphasise STEM disciplines, critical thinking, problem-solving, and creative skills. Furthermore, collaboration between industry and academia should be fostered to ensure educational programs align with market demands and produce graduates with relevant skills. 

In addition, vocational and technical education should be promoted to develop a skilled workforce that can contribute to the country's growth. Lastly, investments in digital literacy initiatives should be increased, particularly in rural areas, to enable more citizens to access and benefit from technological advancements, further supporting the nation's innovation ecosystem. 

Bangladesh should increase public and private R&D funding to achieve the UNESCO target of 1% of GDP. The lack of public funding prevents academic institutions from producing the right talent. In the country's budget for 2019, the government only allocated about USD 6 million for scientific research. The education ministry also gave universities about 4% of the budget for research. Therefore, it is unclear if the country has an adequate funding environment for research and innovation. 

Bangladesh should develop policies encouraging knowledge sharing and technology transfer among academia, industry and government. Conferences, seminars, and workshops should be facilitated to provide networking opportunities and stimulate cross-sector collaboration. In addition, local and international partnerships should be promoted to share best practices and create new opportunities for innovation. 

Bangladesh should strengthen the IPR framework by updating legislation to align with international standards. The capacity of the Department of Patents, Designs, and Trademarks (DPDT) should be enhanced to process applications and enforce IPR more effectively. Awareness of IPR should be raised among entrepreneurs, researchers, and the general public to encourage the protection and commercialisation of intellectual property. The IPR application process should be simplified, and support should be provided to local innovators in navigating the system. 

Bangladesh should develop targeted policies and programs to support start-ups in various stages of growth, such as seed funding, mentoring, and incubation facilities. Venture capital and angel investment should be encouraged by offering tax incentives and reducing regulatory barriers. In addition, an entrepreneurial culture should be fostered through education, competitions, and public awareness campaigns to encourage more start-ups. Sustainable infrastructure, such as renewable energy and efficient transportation systems, should be prioritised, creating a supportive environment for green innovation. 

The journey towards becoming a middle-income country by 2030 demands bold and innovative solutions to overcome the nation's challenges. A robust innovation ecosystem is crucial in achieving this goal. With concerted government, private sector, academia, and civil society efforts, Bangladesh can unleash its full potential and become a hub of creativity, ingenuity, and progress.

Faria Tabassum is an MBA candidate and Graduate Assistant at the University of Wisconsin Milwaukee and a Finance Professional at Johnson Controls Inc, USA. faria.econ@gmail.com

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.