Capital Flight, Inequality, and Who Pays
This third article in a three-part series argues how wealth leaves the country, why the gains of growth narrow at the top, and what a fairer settlement would actually require.
If the first two parts of this series were about how Bangladesh's economy broke -- through squeezed labour and captured banks -- this final part is about something that, for me at least, cuts even deeper.
It is about where the gains actually went. Who was protected when trouble arrived. And who was quietly left to carry the cost.
In Bangladesh today, that burden is being carried by ordinary people through inflation, weak public services, insecurity in work, and a tax system that still leans far too heavily on those with the least room to manoeuvre.
By contrast, many of those who gained most during the long years of headline growth have had ways to shield themselves. They can move money, diversify assets, buy property abroad, or sit close enough to political power to protect their interests. That is why capital flight and inequality are not side issues. They sit very near the centre of the present crisis.
I have to be honest: When I first encountered the capital flight numbers, I thought there had to be an error. The scale seemed too large to be real. But the more I read -- and the more I cross-checked between different sources -- the harder it became to dismiss.
According to a March 2026 report by Global Financial Integrity, Bangladesh lost around $68 billion over the decade from 2013 to 2022 through trade mis-invoicing alone. That works out at roughly $6.8 billion a year.
The methods are familiar enough: Import invoices are overstated to move money out, export proceeds are understated to keep money abroad, and the losses are dispersed across a system until they start to seem abstract. But there is nothing abstract about it. This is wealth produced through labour and commerce in Bangladesh leaving the country instead of being reinvested in production, jobs, infrastructure, health, or education.
Some of that money, according to the same broad body of reporting, ends up in places such as London, Singapore, Dubai, and various secrecy jurisdictions. The pattern is depressingly recognizable. A country works, exports, saves, and struggles, while part of its surplus quietly drains outward through legal grey zones and illegal channels.
For a poor or lower-middle-income country, this is not a technical leak. It is a political wound. I think about this sometimes when I visit relatives in Dhaka and see the traffic gridlock, the waterlogging after every heavy rain, the overcrowded hospitals. The money for better infrastructure was not absent from the economy. It was generated. It just left.
I want to be careful here, because intellectual honesty requires it. The measurement of illicit flows is genuinely difficult, and some scholars -- including Zahurul Alam in a 2026 paper in the Journal of Public Policy and Administration -- have questioned whether the higher-end estimates may overstate the totals due to methodological limitations and political incentives. That caution is legitimate, and I take it seriously.
But even if one takes a more conservative view, the underlying point does not disappear. Bangladesh is losing very large sums through a structure that rewards opacity, weak enforcement, and elite exit. That is difficult to reconcile with any serious talk of national development.
I keep asking myself what capital flight actually looks like from the ground -- not from a GFI spreadsheet, but from a hospital in Rangpur or a school in Mymensingh.
And the answer, I think, is this: It looks like a government that cannot afford to build enough hospitals, schools, or flood shelters. Not because the country is too poor to generate the resources -- it is not -- but because those resources have already left.
It looks like Taslima Akhter, president of the Bangladesh Garment Sramik Samati, asking a question that should trouble every policymaker: "The RMG sector brings in around 84% of the country's total foreign exchange earnings. Do the workers, who are the driving force behind this success, deserve such miserable lives?"
When $6.8 billion a year leaves through mis-invoiced trade -- more than three times the country's annual foreign direct investment -- the money that could have paid for a public clinic in Rangpur or a technical college in Chittagong is instead sitting in a property portfolio in London or a numbered account in Singapore.
The picture becomes even more troubling when you lay capital flight alongside domestic inequality. I spent some time with the Household Income and Expenditure Survey data and the government-commissioned white paper on the state of the Bangladesh economy, and the numbers are stark.
The income Gini coefficient has been climbing for two decades and now stands at 0.50. But it is the wealth Gini -- measuring not what people earn but what they own -- that really stopped me. It stands at 0.84. That is an extraordinary level of concentration. It means that a tiny sliver of the population controls the overwhelming majority of all accumulated assets in the country.
At the same time, reports have pointed to a rapid increase in the country’s ultra-high-net-worth population. Ordinary people experience rising prices, precarious work, and stagnant real purchasing power, while a narrow layer accumulates assets at remarkable speed. That is not an unfortunate contradiction inside an otherwise healthy model. It is one of the main ways the model works.
Figure 5: Income and wealth inequality in Bangladesh -- national trend and international comparison
Figure 5 puts numbers to that claim. The left panel shows Bangladesh's income Gini coefficient -- a standard measure of inequality, where 0 means everyone earns the same and 1 means one person earns everything -- rising from 0.45 in 2000 to 0.50 by 2022. That alone would be concerning. But the wealth Gini, which measures not earnings but accumulated assets -- land, property, savings, business ownership -- sits at 0.84.
The gap between those two lines tells you something important: Income inequality is severe, but wealth concentration is in a different category altogether. A garment worker may earn a wage, however meagre; she almost certainly owns nothing of lasting value. The right panel places Bangladesh in comparative perspective.
On income inequality, the country now sits not with its South Asian neighbours -- India at 0.35, Pakistan at 0.30 -- but with Latin American societies like Brazil and Colombia that have long been considered global outliers. That is not the company Bangladesh expected to be keeping.
I am aware that not everyone reading this will find a Marxist framework congenial. But I would ask even skeptical readers to consider the basic structural point, because I do not think it requires you to accept everything Marx ever wrote.
The wealth of the few does not sit beside the hardship of the many by accident. It grows through social relations that channel value upward: Low wages, weak bargaining power, regressive taxation, financial capture, and the ability of capital to move more freely than labour ever can. In that sense, inequality is not just a moral issue. It is built into the distribution of power.
Bangladesh's tax structure is one of the clearest mechanisms through which this inequality reproduces itself, and it is something I find personally frustrating because the solution is so obvious and the political will so absent. The tax-to-GDP ratio remains shockingly low, while indirect taxes -- VAT, supplementary duties, the kind of levies that fall equally on a garment worker buying rice and a property developer buying a second car -- continue to do far too much of the work.
That means consumption is taxed heavily in a country where millions already live close to the edge, whereas wealth, inheritance, property, and high-end accumulation are taxed far more lightly than they should be. The result is predictable. The state remains fiscally weak, public services remain underfunded, and the burden falls again on those who depend most on collective provision.
Figure 6: Bangladesh's tax-to-GDP ratio vs. regional and global peers. Sources: OECD Revenue Statistics in Asia and the Pacific 2025; CEIC; IMF World Economic Outlook.
The chart shows Bangladesh at 6.8% -- lowest in South Asia, less than half of Pakistan (14.7%), roughly a third of India (17.7%), and a fifth of the OECD average (33.5%). It makes the inequality argument visual: The state cannot fund public services because the wealthy are not taxed. I find that chart almost unbearable to look at, because it tells you in a single image why Bangladesh's public services remain so poor despite decades of economic growth.
The money is there. It is just not being collected from the people who have it. And this matters especially now because Bangladesh is approaching LDC graduation in November 2026 without having resolved the deeper weaknesses of its development model.
Trade preferences helped sustain export growth, but they did not by themselves create justice, resilience, or broad-based prosperity. Once those external advantages narrow, the country will need a stronger domestic base: Higher productivity, deeper revenue capacity, stronger labour rights, cleaner finance, and far less tolerance for capital flight. Without that shift, graduation may expose more fragility rather than confirm real transformation.
To grasp what that fiscal weakness means in practice, consider a simple comparison. Bangladesh loses an estimated $6.8 billion a year through illicit trade mis-invoicing alone. That sum is larger than the country's entire annual public health expenditure. It dwarfs the social safety net budget. It is more than three times the annual foreign direct investment Bangladesh receives.
In other words, the wealth that drains out of the country through opaque channels each year could, if retained and taxed, transform the quality of public hospitals, schools, flood shelters, and rural infrastructure. The crisis is not that Bangladesh is too poor to provide for its people. It is that the resources exist but leave before they can be claimed.
So what would I actually want to see happen? I am not naïve enough to think that a newspaper article changes policy, but I do think it matters to state clearly what a fairer direction would look like, because too much of the commentary on Bangladesh's crisis stays safely in the realm of diagnosis without ever reaching prescription.
First, capital controls and trade monitoring need to be treated as genuine administrative and political priorities -- not as lines in a budget speech that everyone forgets by July. Trade mis-invoicing cannot be treated as an unfortunate side effect of commerce. It has to be treated as organized extraction.
Second, taxation has to move upward. Bangladesh needs much stronger direct taxation of wealth, inheritance, high-value property, and capital gains, alongside stricter enforcement against those who habitually escape the net.
Third, labour has to gain more bargaining power. A country cannot build a just economy while systematically keeping the people who produce its export earnings weak, cheap, and disposable.
There is also a wider international question. Bangladesh’s garment economy sits inside global supply chains that reward price pressure at the top and cost compression below. Brands demand low prices and quick turnaround; suppliers pass the squeeze downward; workers absorb the pain.
Any serious reform therefore has to include purchasing-practice accountability and greater responsibility from international buyers, not just lectures to Bangladesh about governance. If surplus is drained both outward and upward, then domestic reform by itself will always run up against the power of the global market.
I want to end the analytical section on a note that I hope is honest rather than either optimistic or despairing. Bangladesh is not doomed. Saying so would be as lazy as saying the old model was a pure success. The country did industrialize in important ways. Millions of women -- including women in my own extended family -- entered paid work and gained a degree of economic independence that would have been unthinkable a generation earlier. Infrastructure did expand.
Poverty did fall over the long run compared with an earlier period. But those gains were always uneven, and too much of the model rested on suppressing labour, tolerating predation, and allowing private enrichment to masquerade as national success. The present crisis has made that harder to deny.
Across this series, I have tried to make one basic point. Bangladesh's current breakdown cannot be understood simply as a temporary slowdown, a few policy errors, or an unfortunate run of external shocks. It is rooted in a deeper political economy: Workers who create value without receiving a fair share of it; banks bent toward politically connected power; wealth that can exit when conditions darken; and a state that taxes the broad population more easily than it confronts concentrated privilege. Until that structure changes, growth will keep producing achievement on paper and insecurity on the ground.
I want to end with something concrete, because I think abstraction is one of the ways we avoid confronting what is actually happening. Somewhere in Ashulia right now -- as you read this, probably -- a woman is sitting at a sewing machine. She is stitching a garment that will sell for fifty or a hundred times what she earns in a day. She did not cause the banking crisis.
She did not mis-invoice a trade shipment. She did not design the tax code that lets the wealthy pay less than she does. But she is paying for all of it -- through wages that do not cover her rent, through an inflation rate that eats what little she saves, through public services that remain underfunded because the revenue was never collected or was quietly moved offshore.
The question facing Bangladesh is not whether growth should return. It is whether it will return on her terms or on the terms of those who have already taken more than their share. That is not an economic question. It is a political one. And it will not be answered by models, projections, or donor reports. It will be answered by whether the people who produce the country's wealth are finally given the power to shape how it is shared.
Jamil Iqbal is a UK-based researcher and writer from Bangladesh whose work spans qualitative research, public policy, and social analysis.
Sources for figures
Figure 5: Income Gini data from Bangladesh Household Income and Expenditure Survey (HIES) 2000, 2005, 2010, 2016, and 2022, as compiled by the World Bank and Bangladesh Bureau of Statistics. Wealth Gini from the White Paper on the State of the Bangladesh Economy, submitted to Chief Adviser Muhammad Yunus, 2024 (reported in The Daily Star, "Wealth Inequality Way Worse Than Income Disparity"). International comparators from World Bank Poverty and Inequality Platform.
Figure 6: Bangladesh tax-to-GDP ratio of 6.8% for FY2025 from The Daily Star, "Bangladesh Economy in 2025 and Expectations for 2026." Regional comparators from OECD, Revenue Statistics in Asia and the Pacific 2025; CEIC Data; and IMF World Economic Outlook. India (17.7%), Nepal (19.8%), Pakistan (14.7%), and developing country average (25.6%) from New Age, "Govt Struggles to Raise Tax-GDP Ratio to Double Digits," citing IMF World Economic Outlook, October 2019 edition.
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