During the last two decades the economy of Bangladesh achieved a modest and reasonably steady annual rate of growth of GDP of just over four per cent. While allowing a significant reduction in the incidence of poverty, this growth rate has failed to prevent a widening of the disparity in the living standard between Bangladesh and the rest of developing Asia including South Asia. Furthermore, the rate of poverty reduction halted, at least for a period, after the mid 1980s and the social indicators of development of Bangladesh have progressed at a far slower rate than that of developing Asia. There was an early rise in the rate of investment until 1980/81. Thereafter, it went into decline and prolonged stagnation before returning to the previous peak level. The rate of saving, though much higher in the early 1990s than in the late 1970s, is still very low even by the standard of the low-income developing countries. Exports have grown reasonably rapidly, but the composition of exports still remains rather undiversified and the most rapidly rising components of exports have grown under the protection of quotas in importing OECD countries and their value added and net foreign exchange earnings have been a very small proportion of their gross values. Bangladesh has implemented a substantial program of economic reform which has failed to improve the growth performance of the economy. This was mainly due to the exclusive focus of reforms on promoting allocative efficiency and the failure to replace the (distorted) pre-reform system of incentives by an alternative system of incentives for production and investment. An understanding of the nature and manifestations of this imbalance is an essential precondition for the formulation of development policies to overcome the phenomenon of slow growth and poor human development.