Bangladesh-Sweden Development Cooperation: Achievements and Future Directions

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“Promoting sustainable business is high on the Swedish agenda in Bangladesh. Swedish companies are well-placed to supply many advanced skills, goods and services that can contribute to Bangladesh’s dynamic path of sustainable development and economic growth”

 – Ambassador of Sweden Alexandra Berg von Linde

The bilateral relations between Bangladesh and Sweden, characterized by a shared commitment to development, have evolved over the decades into a remarkable partnership that has had a transformative impact on Bangladesh’s socio-economic landscape. The genesis of cooperation between Bangladesh and Sweden can be traced back to a pivotal moment in history—the birth of Bangladesh as an independent nation. The year 1971 marked not only the emergence of a sovereign Bangladesh but also the commencement of a profound partnership between the two nations. Sweden’s swift recognition of Bangladesh’s independence and its immediate commitment to extend development assistance laid the foundation for a relationship grounded in shared values and a commitment to alleviating poverty and promoting social justice.

Sweden’s engagement in Bangladesh was driven by a noble objective—to improve the living conditions of the impoverished, with a particular emphasis on the most vulnerable segments of the population, namely women and children. This commitment resonated with the aspirations of the newly formed Bangladeshi government, which had pledged to uplift its citizens from the shackles of poverty and inequality. Thus, the stage was set for a partnership that would have far-reaching implications for Bangladesh’s socio-economic landscape.

A Legacy of Achievements: Key Areas

Over the years, Sweden’s development assistance to Bangladesh has yielded a rich tapestry of achievements that have contributed to the nation’s progress. One of the foremost pillars of this cooperation has been the relentless pursuit of gender equality—a cause that both Bangladesh and Sweden hold dear. Sweden’s support in promoting gender equality and empowering women in Bangladesh has manifested in numerous ways, from initiatives aimed at improving women’s access to education and healthcare to programs that enhance their economic participation and leadership roles in society. Sweden’s current cooperation strategy for international development cooperation with Bangladesh covers the period 2021–2025 and comprises a total of SEK 1.75 billion. The aim is to contribute to improving the conditions for people to raise themselves out of poverty and to contribute to sustainable development. The cooperation is focused on human rights and gender equality, climate change and environment change, inclusive economic development and health and SRHR.

Moreover, reduction of poverty has remained a paramount objective for both Bangladesh and Sweden. Sweden’s assistance has played a pivotal role in bolstering Bangladesh’s efforts to alleviate poverty through various means, including the creation of livelihood opportunities, the establishment of social safety nets, and the enhancement of agricultural productivity. These collaborative endeavors have significantly improved the living standards of millions of Bangladeshis, especially those in rural areas.

The cooperative journey between Bangladesh and Sweden has not been limited to addressing poverty and gender disparities alone. Climate change and environmental conservation have emerged as critical concerns in the 21st century. Here, too, the partnership has flourished, with joint efforts aimed at climate change adaptation and mitigation. The exchange of knowledge, technology, and best practices in sustainable environmental practices has equipped Bangladesh to confront the challenges posed by climate change and safeguard its fragile ecosystems.

Also, Sweden has expressed its interest to collaborate with Bangladesh in the information and technology sector. Bangladesh’s achievements in IT and climate change adaptation and expressed their keenness to collaborate with Bangladesh on IT sector development and green transition.

Sweden FDI Inflow: A Shining Example in the Development Cooperation

While there are fluctuations in FDI inflows from year to year, a broader long-term trend emerges from the data: an overall upward trajectory in Sweden’s FDI to Bangladesh. This suggests that Swedish investors have increasingly recognized Bangladesh’s potential as an investment hub, resulting in a continuous flow of capital into the country. This long-term perspective is essential for understanding the evolving nature of the economic relationship between these two nations. Several factors influence FDI inflows, including the overall business environment, political stability, infrastructure development, and government policies. Foreign Direct Investment (FDI) inflow from Sweden to Bangladesh over a span of 23 years, from 2000 to 2022, offers a comprehensive view of the evolving economic relationship between these two nations. FDI inflow is a pivotal economic indicator that reflects the amount of capital invested by Swedish entities, including businesses and individuals, into various sectors of the Bangladeshi economy.

Sweden FDI inflow to Bangladesh (in million USD)
Year USD million
2000-2008 0.4
2009 10.25
2010 0.46
2011 1.81
2012 4.01
2013 3.80
2014 11.35
2015 18.61
2016 11.38
2017 18.58
2018 21.63
2019 13.28
2020 17.61
2021 11.27
2022 15.24

The chart reveals that in the early years of the 21st century (2000-2008), Sweden’s FDI inflow to Bangladesh remained relatively low, with an average of around 0.4 million USD per year. This modest level of investment may be attributed to several factors, including limited business ties between the two countries, a lack of awareness about investment opportunities in Bangladesh, or economic conditions that did not favor substantial capital outflows.

A Turning Point in 2009

A notable turning point occurred in 2009, as Sweden’s FDI to Bangladesh witnessed a significant surge, reaching 10.25 million USD. This sudden upswing suggests that something changed in the economic landscape, making Bangladesh more attractive to Swedish investors. Potential drivers could include improved economic conditions within Bangladesh or specific investment opportunities that piqued the interest of Swedish entities.

One of the most remarkable trends revealed by the chart is the period of rapid growth in FDI inflows from Sweden to Bangladesh, spanning from 2014 to 2018. During these years, FDI surged from 11.35 million USD in 2014 to a peak of 21.63 million USD in 2018. This five-year stretch of consistent growth signifies that Swedish investors identified favorable conditions or opportunities in Bangladesh, making it an attractive destination for capital deployment. The factors contributing to this growth could include economic stability, significant infrastructure development, and government incentives aimed at attracting foreign investments.

Sweden-Bangladesh Trade Relations: A Growing Partnership

Recent trends underscore the growing economic ties between the two nations, as trade volumes have gained momentum. In 2022, Sweden’s imports from Bangladesh reached an impressive US$827.96 million, highlighting Bangladesh’s emergence as a significant and expanding trade partner in Southeast Asia. While this trade relationship started from a relatively modest base, it has exhibited a positive trajectory, revealing untapped potential for collaboration and growth. Sweden’s trade portfolio with Bangladesh is diverse, with key export categories including machinery and apparatuses, which constituted approximately 40% of Swedish exports to Bangladesh in 2021. Additionally, Swedish products such as crude materials, mineral fuels, chemicals, paper, iron, and steel contribute significantly to the export portfolio. On the other hand, Swedish exports to Bangladesh in 2022 amounted to US$51.05 million, reflecting a range of products and opportunities within this trade relationship.

Figure: Sweden Import from Bangladesh (USD)

Figure: Sweden Export to Bangladesh (USD)

Future Directions: A Pathway for Cooperation

The relationship between Bangladesh and Sweden has evolved significantly since its inception in 1971. While historical ties have laid a solid foundation, both countries now stand at a juncture where they can explore and capitalize on new opportunities for collaborative action across various fronts. This brief delves into the future prospects for Bangladesh-Sweden relations, outlining ten key areas for potential cooperation and expansion of their partnership.

Collaborations on the Economic Front

To fortify economic relations, it is imperative for both nations to explore new trade routes and strategies. This includes increasing investments in each other’s economies and fostering corporate collaborations. Sectors such as technology, renewable energy, and sustainable industries offer promising avenues for joint ventures. Initiatives such as trade missions, business forums, and investment incentives can stimulate economic engagement.

Collaboration in the Information Technology Sector

The Information Technology (IT) sector presents a ripe opportunity for collaboration. Bangladesh boasts a burgeoning IT sector, while Sweden brings its wealth of experience in innovation and digitalization. Encouraging partnerships in IT can lead to knowledge exchange, technology transfer, and the development of innovative solutions, benefiting both nations.

Sustainable Development

Coordinated efforts towards sustainable development are paramount. This entails aligning strategies to achieve Sustainable Development Goals (SDGs), with a particular focus on poverty reduction, climate change mitigation, and environmental preservation. Partnerships in green technologies, renewable energy, and sustainable practices can be explored to address shared global challenges.

Education and Research

Enhancing educational links is vital for strengthening the relationship. Both countries can promote academic collaborations, research partnerships, and student mobility programs. This not only enriches knowledge exchange but also fosters cultural understanding and people-to-people connections, laying a robust foundation for future cooperation.

Gender Equality and Women’s Empowerment

Both Bangladesh and Sweden have made strides in promoting gender equality and women’s empowerment. Collaborative efforts and programs can further narrow gender gaps in both nations. Sharing best practices, organizing awareness campaigns, and supporting initiatives that empower women economically and socially can bring both countries closer to achieving gender equality.

Climate Change Mitigation

Addressing climate change is a global imperative, and cooperation between Bangladesh and Sweden in this realm can yield significant results. This entails the exchange of best practices, technologies, and expertise in climate change adaptation and mitigation. Joint ventures in sustainable energy, afforestation, and eco-friendly infrastructure can contribute to environmental sustainability.

Exchanges of Cultures

Promoting cultural exchanges is a valuable means of deepening mutual understanding. Initiatives such as art exhibits, cultural festivals, and exchange programs can foster greater appreciation for each other’s heritage. Strengthening cultural ties paves the way for stronger relationships between communities and individuals.

Healthcare and Pharmaceuticals

Collaboration in the healthcare and pharmaceutical sectors can address public health challenges and bolster healthcare infrastructure. Joint research, knowledge sharing, and partnerships in vaccine production, pharmaceutical innovation, and healthcare delivery systems can enhance healthcare access and quality.

Diplomatic Initiatives

Both Bangladesh and Sweden can amplify their diplomatic influence on the global stage by participating in international forums and initiatives. Advocating for shared concerns such as peace, human rights, and sustainable development can elevate their diplomatic profiles and contribute to positive global change.

To Summarize, Bangladesh-Sweden relations are promising, offering a plethora of opportunities for collaborative action across various domains. By strategically investing in these areas, both countries can fortify their partnership, address global challenges, and create a brighter and more prosperous future of cooperation and diplomacy. Through sustained efforts and a shared commitment to mutual growth, Bangladesh and Sweden can navigate the complexities of the modern world and emerge as influential actors on the international stage.

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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