Bangladesh was once dismissed as a "basket case." Today it is a lower-middle-income economy, transformed in large part by a garment industry that employed millions of women and, so the story goes, turned cheap clothing into a national ladder out of poverty

For half a century, a single insult has trailed Bangladesh through the development literature: the country once written off as a basket case. It turns up in textbooks, in ministerial speeches, and in nearly every article that wants a before-and-after arc. The after is real enough. In 2015 the World Bank reclassified Bangladesh as a lower-middle-income economy, and much of that shift traces back to one industry that learned to stitch cheap clothing for the rest of the world.

What interests us is not that story, which is well documented, but the two places where the popular telling overstates what the record supports. The first is the phrase. The second is the claim that the garment industry was, straightforwardly, a ladder that lifted millions of women out of poverty.

Both contain a lot of truth. Neither is as clean as the retelling suggests.

Who actually said it, and what they said

The line is almost always hung on Henry Kissinger, and the version that circulates has hardened into “bottomless basket case.” The declassified minutes tell a narrower story. At a Washington Special Actions Group meeting on 6 December 1971, chaired by Kissinger, it was Under Secretary of State U. Alexis Johnson who remarked that the emerging country would be “an international basket case.” Kissinger’s reply, recorded in the same State Department minutes, was colder and more revealing of his actual concern: “But not necessarily our basket case.”

The word “bottomless” does not appear in the record. Neither does the tidy image of a great statesman dismissing a nation. What the transcript shows is a room of officials treating an imminent famine as a logistics problem attached to a Cold War calculation. The distinction matters because the misquote flatters everyone. It hands Bangladesh a convenient villain and a satisfying comeback, and lets the reader skip the uglier context, which is that the assessment was made while the war that created the country was still being fought.

What the industry actually did

The economic transformation needs no exaggeration to be striking. Garment exports grew from a rounding error in 1980, well under two million US dollars, to tens of billions today, on figures compiled by the Economics Observatory. World Trade Organization data, reported by The Business Standard, put Bangladesh’s garment exports at about 38.5 billion US dollars in 2024. A widely repeated 50-billion-dollar figure for that year is worth handling with care: it refers to total merchandise exports, not garments alone. Ready-made garments still account for more than 80 per cent of the country’s export earnings, and for most of the past decade Bangladesh held second place among global apparel exporters, behind only China. That ranking is no longer secure.

The poverty numbers moved alongside. Using the World Bank’s international line of 1.90 US dollars a day, the share of Bangladeshis living in poverty fell from 44.2 per cent in 1991 to 13.8 per cent in 2016 to 2017, as the Bank set out in its 2018 assessment.

That is not a rounding artefact. It is one of the larger sustained declines in poverty recorded anywhere in the period.

At its most expansive the industry employed around four million people. This is the point where the celebratory version usually adds that roughly 80 per cent of them were women, and for years that figure was broadly accurate, and it mattered. Factory work pulled large numbers of rural women into paid employment and into cities, with effects on marriage age, schooling, and household bargaining that researchers have tracked for decades.

Where the “ladder for women” story gets complicated

The complication is that the 80 per cent figure is now dated, and the female share appears to have fallen. More recent labour-force data put women at a notably lower proportion of the sector’s workforce, and analysts have raised the question of whether mechanisation and a shift toward higher-value production are steadily displacing the women the industry was once celebrated for employing. We would not present the exact current share as settled, because the counts vary by definition and source. The direction of travel is the part worth holding onto: a story told in the present tense about millions of empowered women rests partly on a snapshot that has aged.

There is a second thing the ladder metaphor obscures. The comparative advantage that built the industry was, plainly, cheap labour. Bangladesh became an attractive place to make clothes partly because of national policy and entrepreneurial risk, and partly because of forces that had nothing to do with either. Quota limits under the Multi-Fibre Arrangement pushed established Asian manufacturers to outsource cutting and sewing to countries outside the caps. Civil conflict in Sri Lanka sent buyers looking elsewhere. The economist Rehman Sobhan has described the result less as liberation than as a change of dependency, with the economy moving from reliance on foreign aid to reliance on foreign orders.

What the industry cost to build

The clearest reminder of the price sits in the record as a date. On 24 April 2013 the Rana Plaza building in the Dhaka area collapsed, killing at least 1,132 people, most of them garment workers, in the deadliest disaster in the industry’s history. It followed a factory fire months earlier that had killed more than a hundred. The safety agreements that came afterward, negotiated with international brands, did measurably improve conditions in the factories they covered. They also arrived only after the bodies were counted, which is its own comment on how the ladder was constructed.

None of this erases the gains.

A country where fewer than one in seven people now live in extreme poverty is a different place from the one described in that Washington situation room. The transformation was messier, more contingent, and more expensive in human terms than the phrase “national ladder out of poverty” lets on.

What to watch next

The near-term picture is less certain than the long arc. Bangladesh is scheduled to leave the United Nations’ least-developed-country category in 2026, a graduation that removes some of the tariff preferences its exporters have long relied on in European and other markets. Competitors are closing in. World Trade Organization data for 2025 show Vietnam’s apparel exports growing more than ten per cent to about 37.5 billion US dollars, against near-flat growth that left Bangladesh at roughly 38.8 billion, cutting the gap between the two to a little over one billion dollars. On some measures Vietnam is already ahead, including sales to the United States. The sector is also still absorbing the political rupture of August 2024, when the long-governing Awami League administration fell and a number of factory owners tied to it abandoned their businesses, leaving workers unpaid.

The World Bank’s current outlook for the country is subdued, with slower growth projected and poverty expected to sit above its 2022 level for the next few years. Four decades of progress are not in question. What is in question is whether an economy this concentrated in one low-margin industry can build its next stage on something other than the cheapness that built the first, especially as the countries gaining on it are competing less on wages than on the higher-value work Bangladesh has been slower to capture.