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The Foreign Trade of Bangladesh: Its Composition, Performance, Trend, and Policy

Mohammad Mafizur Rahman, PhD
Lecturer
School of Accounting, Economics and Finance, The University of Southern Queensland, Toowoomba, QLD 4350, Australia.

Abstract/ Executive Summary:

Despite structural limitations in the Bangladesh economy, the export sector performed well throughout the 1990s. The export growth rate of Bangladesh was higher than that of the world and the SAARC countries. However, the balance of trade of Bangladesh was always in deficit and the trade deficit with India is huge. The export share of primary commodities has decreased while that of manufactured commodities has increased over the years. The growth rate of manufactured commodities is better than that of primary commodities. The import share of principal primary commodities has declined while that of principal industrial and capital goods has slightly increased over the past years. The striking features of Bangladesh’s exports are commodity and market concentration. To overcome the problem, there is no alternative but to diversify exports and improve quality. To improve the country’s overall trade balance, especially trade balance with India, some policy recommendations are offered in this paper.

Keywords: Export, Import, Agricultural products, Jute Gods, Readymade Garments, Frozen Foods, Jute Goods, Tea, Leather

Location: In Bangladesh

Start Date:

End Date:

Program Area: Comparative study

Commodity: Trade, Market analysis, Socioeconomic

Objectives:

To examine Bangladesh’s export and import performance compared to those of various countries, regions and the world over the years.

Methodology:

The export sector performed rather well throughout the 1990s. This sector achieved a growth rate of 37.04% in the FY 1994-95. During the twelve years, 1991-92 to 2002-2003, Bangladesh experienced negative export growth (-7.44%) only in FY 2001- 2002. The terrorist incident of September 11, 2001 in USA and subsequent events may be blamed for this unexpected suffering of the export sector in the particular fiscal year. However, the export sector achieved a 9.39% growth rate, an increase of US$ 562.35 million, during 2002-2003, with total export earnings amounting to US$ 6,548.44 million compared to US$ 5,986.09 million in 2001-2002. Charts 1 and 2 provide comparative year-wise export earnings and export growth rates for twelve years. Readymade garments and knitwear are the main contributors to the export earnings of Bangladesh. Their contributions are, respectively, 52.20% and 24.37% of total export earnings in FY 2001-2002 and 49.75% and 25.26% in FY 2002-2003. The contribution of frozen foods, jute goods and leather in FY 2002-2003 are 4.91%, 3.93% and 2.92% of total export earnings respectively. The statistics reveal that tea, leather and handicraft experienced negative growth in FY 2002-2003. In terms of positive growth, engineering products topped the list (842.34%), followed by petroleum by-products (215.45%), chemical products (50.95%), raw jute (34.89%), other products (20.77%), frozen food (16.55%), knitwear (13.34%), agricultural products (12.96%), jute goods (5.61%) and readymade garments (4.28%) (EPB, 2004).

Source of Information: Export Promotion Bureau 2004;

Article Link (Online Journal): Website: www.epbbd.com / ExportStat.html

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The striking features for Bangladesh’s exports are commodity and market concentration. This is the main concern. To address it, there is no alternative but to initiate diversification and quality improvements. New markets for the country’s exports must also be explored to secure more stability in the export sector. To reduce the dependence on imported inputs for the readymade garments and knitwear industries, Bangladesh must make massive investments in both yarn and fabric manufactures. This would create forward and backward linkages and the current trade deficit would improve. Furthermore, the openness of Bangladesh and its trading partners, infrastructural development, adequate trade-related services, appropriate macroeconomic policy, and close partnership between the government and the business community is crucial to improving the country’s overall trade balance. To improve the trade balance with the SAARC countries, especially with India, further currency devaluation, measures to stop border smuggling, removal of tariff and non-tariff barriers on Bangladesh’s exports, arrangement for more Indian investment in Bangladesh, and political harmony in the region are vital. A customs union within the SAARC region is likely to offset many of the existing trade-related problems.

Knowledge Management: Journal