Excessive concentration of people and economic activity in Dhaka hampers development, slows job creation, and reduces industrial employment, with economic or GDP losses estimated at 6–10%, according to recent findings from a joint Bangladesh Institute of Development Studies (BIDS) and Policy Research Institute (PRI) research project released on Thursday.
It also highlighted that until recently, a 4-fold increase in urbanization, accompanied by a 10-fold rise in population, led to a 4-fold rise in per capita incomes.
PRI organized a seminar titled “Urbanization and Bangladesh’s Development: Selected Findings from BIDS-PRI Research” at PRI head office to unveil the research findings.
The keynote presentation was delivered by Ahmad Ahsan, director of PRI.
It showed that urbanization in greater Dhaka had been a powerful engine of growth. A 4-fold increase in urbanization (10x population) accompanied a 4-fold rise in per capita incomes. Urbanization, manufacturing, jobs, and incomes grew concurrently.
The presentation added that until recently, urbanization was now affected by excessive concentration in the primate Dhaka region, leading to a 6-10% loss in GDP.
Key reasons included an assemblage of externalities, economies of scale overtaken by congestion costs, diseconomies of scale, misallocation, market, policy, and political economy failures.
To present the findings from a joint BIDS-PRI research project, Ahsan noted that while urbanization had long been a driver of growth, the current Dhaka-centric pattern was proving unsustainable.
Lack of decentralization
“Excessive concentration of people and economic activity in the capital—together with congestion, pollution, and diversion of resources from other urban centers—was sharply hampering development, slowing job creation, reducing industrial employment, and causing economic losses estimated at 6–10%.”
“Although some relocation of people and industries is occurring outside Dhaka, this largely bypasses secondary cities and instead shifts to smaller towns and rural areas, undermining the benefits of urbanization and weakening long-term growth prospects. The poor state of urban services—water supply, sanitation, waste management, health, and education—was cited as a central constraint, with Gazipur highlighted as an example of industrial dynamism coexisting with poor welfare for workers,” he explained.
He attributed these challenges to the absence of a national urbanization policy, the lack of a dedicated ministry, and fragmented governance among elected city leaders, central agencies, and line ministries, which has rendered many plans ineffective or disregarded.
Ahsan emphasized the need for unified, decentralized city governments with authority and resources to operate transparently and accountably.
He also pointed to strategic opportunities, including Chittagong Port and regional development and the Khulna bypass corridor, as priorities to restore urban dynamism and drive Bangladesh’s next phase of growth.
City planning skills absent
Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre (PPRC), attended the program as chief guest.
He said that just as villages disappeared from researchers’ focus in the 2000s, cities now risk similar neglect, making urban-centered research urgent.
He stressed three lenses: data quality and policy cycles, interest group dynamics and meaningful decentralization, and vision for reviving district towns and small space management.
He added that managing cities requires specialized skills, which are currently missing at all governance levels and must be urgently developed.
Earlier, the program opened with welcoming remarks by Khurshid Alam, executive director of PRI and chair of the session.
He said: “Dhaka’s growth was unplanned and reactive, with policies constantly trying to catch up with realities. The concentration of facilities in Dhaka has made both citizens and institutions reluctant to relocate.”
Imran Matin, executive director of Brac Institute of Governance and Development (BIGD), emphasized that the study relied on highly disaggregated data, which are rarely available, and urged BBS to lead in producing such datasets.
He highlighted the costly 'missing middle' dynamic where resources bypass second-tier cities and flow directly to more rural areas.”
Matin also called for harnessing knowledge outside Dhaka and ensuring citizen participation in city governance.
Ashikur Rahman, principal economist of PRI, argued that city development authorities were designed to weaken city corporations and centralize power. Urbanization has expanded without parallel improvements in urban services, creating deep mismatches.
Without institutional change, he warned, planned urbanization and decentralization will remain “orphan agendas.”
This was the first in PRI’s two-part talk series about the issue on urbanization.
The next seminar, scheduled for September 25, will feature Ahmad Ahsan speaking on “Can Bangladesh Develop without Decentralizing?”
