Bangladesh Among Lowest R&D Spenders Among Peer Countries: Finance Minister Khosru

Dhaka, August 24, 2026 — Bangladesh spends only about 0.3 percent of its gross domestic product (GDP) on research and development (R&D), one of the lowest rates among peer middle-income countries, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said on 24 August 2026. Speaking at the Bangladesh Industry Research, Development and Innovation (BIRDI) Grants Awarding Ceremony in Dhaka, he highlighted countries such as South Korea, China, India, and Vietnam, which invest significantly more in R&D, to underscore the gap Bangladesh needs to close.

📊 The R&D Spending Gap

• 🇧🇩 Bangladesh: ~0.3% of GDP on R&D
• 🇰🇵 South Korea: ~4.8% of GDP (highest globally)
• 🇨🇳 China: ~2.4% of GDP
• 🇮🇳 India: ~0.7% of GDP
• 🇻🇳 Vietnam: ~0.5% of GDP

Citing Bangladesh Bureau of Statistics (BBS) data, the minister said the picture is worse at the industrial level, with manufacturing enterprises spending, on average, less than Tk 500 per worker annually on research and innovation. As a result, Bangladesh continues to struggle to compete for global market share, foreign direct investment, and high-value employment, he said.

🏛 BIRDI Grants: Bridging Industry, Academia, and Finance

The event was organised by the Skills for Industry Competitiveness and Innovation Program (SICIP) under the finance ministry at the InterContinental Dhaka, attended by representatives from industry, academia, and development partners. The minister said the country must shift decisively towards a research-driven, innovation-based economy, with greater investment in R&D, stronger industry-academia collaboration, and a clear focus on practical solutions.

During the event, twelve research projects spanning pharmaceuticals, textiles, agriculture, electric mobility, electronics, and energy received grants totalling more than Tk 21 crore in the programme's first round. Each project pairs an industry partner with a research team to tackle challenges such as:

• 🧵 AI-driven fabric inspection
• 💧 Water-saving smart dyeing
• 💊 Vaccine-grade enzymes
• ☀ Solar-powered cold storage

👥 Industry-Academia Collaboration: A Persistent Gap

Khosru said high-return research cannot flourish in isolation and needs coordinated action among industry, academia, and government. Universities have often produced theoretical research with limited commercial use, he said, while industrial enterprises have faced inefficiencies without sufficiently using domestic scientific talent.

"Competing purely on low wages is no longer viable," Khosru added, urging Bangladesh to build a more sophisticated, innovation-driven production base. The comment reflects the broader strategic challenge facing Bangladesh as it approaches LDC graduation in November 2026 — the country's competitive advantage in low-cost labour manufacturing is eroding as wages rise and competitors like Vietnam and Cambodia close the cost gap.

🌐 ADB's $300 Million SICIP Financing

Qingfeng Zhang, Country Director of the ADB Bangladesh Resident Mission, said the country's next phase of growth depends on developing homegrown innovators and moving up the value chain through productivity, technology, and quality jobs. While technologies can be imported, local capability to identify problems, adapt tech, and bring solutions to market must be built within Bangladesh, he noted.

Zhang said the BIRDI grants align with ADB's $300 million financing for SICIP, bridging industry, academia, and finance to tackle real business challenges beyond traditional skills training. The programme represents a shift from pure skills training to innovation-driven industrial competitiveness — a recognition that Bangladesh's manufacturing sector needs to move up the value chain to remain globally competitive.

📊 Strategic Context for Bangladesh's Export Economy

For Bangladesh's export economy, the R&D investment gap is a structural vulnerability that directly affects long-term competitiveness. The country's RMG sector, which accounts for roughly 84 percent of merchandise exports, operates on thin margins driven by low-cost labour rather than innovation. Without significant R&D investment in areas like automated fabric inspection, water-saving dyeing technologies, and AI-driven quality control, Bangladeshi manufacturers will increasingly lose ground to competitors in Vietnam, China, and even India, where R&D investment is substantially higher.

The BNP government's emphasis on innovation-driven growth, articulated by Finance Minister Khosru at the BIRDI ceremony, aligns with the broader GED five-year strategic framework that targets 8.5 percent annual GDP growth by 2031. Achieving that growth target will require not just capital machinery investment and energy sector reform, but a fundamental shift in how Bangladesh's industrial sector approaches research, development, and innovation.

The Tk 21 crore in BIRDI grants is a small beginning — scaling this to the level needed for transformative impact will require sustained budget commitments, stronger IP protection frameworks, and the kind of industry-academia-government coordination that has driven innovation success in countries like South Korea and Taiwan. The challenge for Bangladesh is not just increasing R&D spending as a percentage of GDP, but ensuring that the spending produces commercially viable innovations that can drive export competitiveness and economic diversification. Without this shift, Bangladesh risks remaining locked in low-value manufacturing even as its labour cost advantage erodes and its LDC graduation privileges expire, leaving the country without a clear path to the upper-middle-income status the GED plan envisions for 2031.