Bangladesh has roughly 15 years left to enjoy its first demographic dividend. But, have we been able to connect all the necessary dots of developing our human capital to harness the benefits of this unique opportunity?
According to the Human Capital Index by the World Bank, if a child is born in Bangladesh, she will be 46% productive even if she grows up enjoying complete education and full health. This percentage is lower than the South Asian and Lower Middle Income Countries’ (LMIC) average of 48%. The youth employment scenario is not much satisfactory as well. According to Quarterly Labour Force Survey 2022, around 22% of the youth in Bangladesh are Not in Education, Employment or Training (NEET). The crisis is more pronounced among the female youth as they comprise 65.5% of the total unemployed population.
The major challenge lies in prioritization of the policies and lack of consistent follow-up mechanisms. It is seen that while Bangladesh could make some notable achievements by focusing on the ‘low hanging fruits’, we could not harvest our ‘high-hanging fruits’ much.
In the education sector, Bangladesh has attained notable success in primary school enrollment rate, achieving gender parity at the primary and secondary level and distributing free textbooks countrywide. According to Annual Primary School Census 2021, the net enrollment rate in primary education is 97.42% with girls comprising 49.54% of the total enrolled. Targeted interventions like 1993 Compulsory Primary Education Act, Food for Education Program, Primary Education Development Programme (PEDP) and stipend programs contributed to this success. Along with the government interventions, a major role in this success was played by the development partners and NGOs. On the other hand, due to lack of timely and long-term planning, the quality of education system has not improved much. The Human Capital Index found that the learning outcomes are severely low especially in rural areas reflected by 51% of the children not being able to read and understand a simple text by age 10. This is resulted by lack of deeper systematic investment and reforms. Lack of investment is evident from the national budget. Bangladesh’s education budget as a percentage of GDP has consistently hovered around or below 2% over the last 15 years, significantly falling short of UNESCO’s recommended minimum investment of 6% of total GDP.
The healthcare sector shows a similar pattern. Bangladesh has earned significant achievement in child immunization, reducing maternal mortality through initiatives like the Expanded Programme on Immunization (EPI). The initiatives were largely supported by external funding and targeted, vertical programs. However, core systemic issues persist. We have high out-of-pocket heath expenditure, critical shortage of skilled healthcare professionals, urban-rural disparities, and a growing burden of non-communicable diseases (NCDs). According to the World Health Organization (WHO), Bangladesh has only 0.67 physicians per 1000 people which is lower than the WHO’s recommended minimum of 1:1000. Combined with the lowest health spending among 45 LDCs in 2021, this limits the country’s ability to effectively tackle critical issues like malnutrition, urban health, NCDs and Water, Sanitation and Hygiene (WASH). To fully benefit from its demographic window, Bangladesh must ensure a healthy, skilled, and productive population through stronger, sustained investments in healthcare systems, cross-sectoral collaboration, and long-term strategic planning, which currently lack adequate prioritization and follow-through.
In an attempt to find the impact of government prioritization in human capital, we conducted a study titled ‘Impact of Government Investment in Human Capital on Harnessing Bangladesh’s Demographic Dividend’. Considering employment growth as an indicator for demographic dividend, the study attempted to find out whether government spending on human capital influence employment growth both in short and long term for Bangladesh. In the short run, increasing government spending on education leads to a significant immediate boost. For every unit increase in education spending, there is a 5.39 unit improvement while in long run the impact is slightly smaller (0.24 units increase). Similarly, a 1 unit rise in healthcare spending results in 10.38 units rise in employment growth. However, there is a negative long-run effect of healthcare spending (-6.28 units).
The study result echoes existing literature highlighting that while education and health spending yields quick returns in employment, sustaining that impact over time may require deeper structural reforms and higher investments. Without well-targeted planning, the long term impact on employment growth will be diminishing. To improve education quality in Bangladesh, it is essential to increase national budget allocations for teacher training, curriculum update and to enhance the employability of graduates from both tertiary and technical and vocational education. For health, increasing the budget in public health services, hiring more nurses and doctors, emphasizing nutrition for children etc. needs to be focused on. Overall, Bangladesh needs to spend more on capacity building of human capital like training, research, hiring more skilled professionals rather than heavily investing on building infrastructure. Rather than focusing on achieving quick wins, we need to undertake structural, high-impact reforms in order to avoid stagnation despite early successes. A clear roadmap, political commitment, and evidence-based policymaking along with higher public spending are essential to translate short-term gains into sustainable development.
This article was first published in the April, 2025 edition of the Thinking Aloud
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