Not long ago, Bangladesh was hailed as an economic miracle. Its singular focus on exporting textiles and apparel delivered rapid growth, lifting millions out of poverty and winning the country’s Prime Minister, Sheikh Hasina, fame and admiration.

But Hasina’s abrupt exit from power has exposed the limitations of that strategy, as Bangladesh struggles to combat steep inflation and joblessness that economists say are largely the result of poor policy decisions. Her increasingly authoritarian rule and Bangladesh’s widespread corruption only added to the frustration that boiled over and forced her ouster.

Now, Bangladesh must decide its future.

Student protesters who had called for Hasina’s resignation have brought in Muhammad Yunus, a Nobel laureate and microfinance pioneer, to oversee an interim government. Yunus faces a daunting task.

Bangladesh underwent economic reforms starting in the 1970s, and the garment industry has been central to the country’s economy for decades. But Hasina, who came to power in 2009, narrowed the country’s focus to that single sector and expanded into new global markets, which drove much of Bangladesh’s growth.

Cheaply made garments were attractive to global clothing retailers, especially fast-fashion brands. At the same time, that demand created livelihoods for millions of people, especially women, and transformed living standards.

Hasina spent heavily on infrastructure, reassuring international companies that they could rely on the country to meet their demands.

“What she brought was a level of stability, which was attractive for foreign investors,” said Thomas Kean, a consultant on Bangladesh at the International Crisis Group. Garment buyers were unlikely to send business to Bangladesh if there were worker strikes, power cuts or other factors that made it unreliable, Kean said.

For more than a decade under Hasina, the economy grew at a blistering pace, in some years crossing 7 per cent. Garment exports drove more than 80 per cent of the country’s earnings.

But that dependency was also Hasina’s undoing.

The pandemic reduced global demand for textiles and apparel. At the same time, supply chain disruptions and Russia’s war on Ukraine sharply raised prices for imported food and fuel. With so little diversification in its economy, Bangladesh was unable to pull in enough revenue from other industries to help pay the bills.

As inflation soared, the Hasina government’s efforts to control it backfired. While trying to prop up the value of its weakening currency, Bangladesh spent down its foreign exchange reserves, which dropped so low that it was forced to seek a loan from the International Monetary Fund in 2022.

By the time garment exports bounced back after the pandemic, Bangladesh was mired in its short-term troubles — a situation that also highlighted underlying problems. Bangladesh collects very little in taxes, partly because of a lax bureaucracy and an unwillingness by many citizens to pay their taxes. Its tax-to-G.D.P. ratio, a measure of a government’s ability to fund its priorities, is one of the lowest in the world. That meant it could not count on tax revenue to pay its steep bills.

Perhaps the biggest long-term problem for Hasina was her government’s inability to create new jobs because of its narrow focus on the garment business. There aren’t enough new or better-paying jobs for the country’s large working-age population.

New York Times News Service