Moudud Ahmed Sujan
The Export-led Growth (ELG) propelled by economic liberalisation and decentralisation policy adopted by the government is rapidly boosting Bangladesh economy.
Different indicators show that there has been a satisfactory growth in exports for years, which has been concentrated in the garment sector with very little diversification, and it needs to be addressed immediately.
Sources said the expansion of garment exports measured have roughly moved the domestic contribution in RMG exports from 25 per cent in 2000 to 50 per cent in 2017.
Furthermore, in real terms, the production of garments has been growing faster than the value of exports as the price of exports has been declining which lies behind the growth rate increasing from 3-4 per cent to 6-7 per cent.
But the ratio of the value of gross exports to the GDP remains modest at about 16 per cent while countries with strong ELG policies drive the exports up to 40-45 per cent of GDP.
Bangladesh’s export economy is dominated by ready-made garment manufacturing, but the country remains largely rural with an urbanisation rate of only 34.3 percent of the population.
World Bank data shows, while the agriculture sector employs 47 per cent of the population, it accounted for only 15.1 per cent of GDP in 2015.
The industrial sector accounts for 28.6 per cent of GDP and employs 13 per cent of the population, primarily in the RMG and light manufacturing sectors.
The services sector accounts for 56.3 per cent of GDP and employs 40 per cent of the population. The services sector, including information and communication technology (ICT) services, has strong potential for growth over the next decade.
In this context, the export growth must be accelerated and diversified, if Bangladesh is to raise its growth rate up to the 8-10 per cent range.
“Nevertheless, the RMG sector will be the core of the manufacturing sector for the next 25 years, and support for its growth and competitiveness is essential. The arithmetic is simple: Achieving 8 per cent real growth for 25 years; ratio of RMG to other exports equal to 50 per cent after 25 years; exports to GDP ratio reaches 40 per cent after 25 years. All of these means that exports grow at 12 per cent, RMG exports grow at 10 per cent and other exports at 17 per cent,” Forrest Cookson, an American economist recently wrote in several Bangladeshi newspapers.
Forrest Cookson also suggested for a national strategy oriented towards export promotion.
“The first and key requirement is a quiet political environment so that businessmen and workers can get on with their work of producing and selling stuff. Political disputes are off the table.”
Dr Anisur Rahman said, “There are some positive development in the last several years in export and import. To step up this, the proper implementation of Incentives, institutional cooperation and export diversification must be focused on.”
“There is no alternative to adopt and implement a right export strategy to enjoy the highest opportunity in the technology based competitive global economy. In this case, the regional cooperation could be a major tool,” said Dr Rahman.