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Introduction: Bangladeshi international trade is extremely small relative to the size of its population,although it experienced accelerated growth during

the last decade. It is not verydiversified and depends on the fluctuations of the international market. The Bangladeshigovernment struggles to attract export-oriented industries, removing red tape andintroducing various financial and tax initiatives. Between 1990 and 1995 Bangladeshdoubled its exports from US$1.671 billion in 1990 to US$3.173 billion in 1995 and thenalmost doubled them again from US$3.173 billion in 1995 to US$5.523 billion in1999.During the 1990s, the United States has been the largest trading partner for Bangladesh, with its exports to the United States reaching 35.7 percent in 1998-99. This percentage consisted mainly of Ready-Made Garments (RMG). Germany is the secondlargest export market, with the proportion of goods reaching 10.4 percent; and the UnitedKingdom is in third place at 8.3 percent. Other export destinations are France, Italy, the Netherlands, Belgium, and Japan.

Comparative Performance of Bangladeshs Exports: The performance of Bangladeshs expo rt sector in recent years is quite i m p r e s s i v e especially in the 1990s when we compare it with that of world and SAARC countries.The average annual growth rate of Bangladesh export (11.91%) is higher than those of the world (9.48%) and SAARC countries (10.69%) during 1990 -2003. Because of thelower export performance in the 1980s, annual average growth rate of this sector during1980-2003 is not as impressive compared to other Asian countries and the world, thoughthis sector shows competitiveness compared to other SAARC countries (IMF variousy e a r s ) . O v e r t h e p e r i o d o f 1 9 8 0 - 2 0 0 3 B a n g l a d e s h s e x p o r t s a s a p e r c e n t a g e o f t h e worlds exports remain around 0.11% to 0.12% with the exception of 1984, when it was0.14%, and 1990-1994, when the ratio was around 0.09%. Bangladeshs exports as a percentage of SAARC countries exports show slightly increased trend especially in 2000and 2001.For these two years Bangladeshs exports are 11% and 12% of the SAARC countriesexports respectively. Bangladeshs share of SAARC countrys exports was the lowest,7.72%, in 1983. Bangladeshs exports share in the Asian developing countries, however,shows a decreasing trend in the 1990s compared to the1980s though the ratio is slightlyh i g h e r i n 1 9 9 8 a n d 1 9 9 9 c o m p a r e d t o i m m e d i a t e e a r l i e r y e a r s . T h e r a t i o d r o p p e d t o 0.59% in 2003 from 1.46% in 1980 though it was 0.75% in 2001 (IMF various years). Export Shares to GDP: The contribution of the export sector to Bangladeshs GDP has been gradually increasingover the years. While export share in GDP was 4.52% in 1980, this share has reached to1 3 . 4 5 % i n 1 9 9 9 , r e f l e c t i n g 1 9 7 . 5 6 % i n c r e a s e i n G D P c o n t r i b u t i o n i n n i n e t e e n ye a r s (World Bank 2004). This ratio further increased in 2000, 2001 and 2002. The ratio was15.38% in 2001. The trade openness (trade/GDP ratio) was around 14% to 16% till 1989.After that the ratio increased to 28% in 1995. In 2001 the ratio has

increased to 36.88%which implies that trade has been liberalized in Bangladesh to a great extent since 1980.Over the years trade deficits ranged from 2.23% to 7.37% of GDP (World Bank 2004).

Export Earnings and Export Growth: The export sector performed rather well throughout the 1990s. This sector achieved agrowth 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.T h e t e r r o r i s t i n c i d e n t o f S e p t e m b e r 1 1 , 2 0 0 1 i n U S A a n d s u b s e q u e n t e v e n t s m a y b e 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$ 562.35million, during 2002-2003, with total export earnings amounting to US$ 6,548.44 millioncompared 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. Exports Performance Compared to Imports: The export earnings also continuously increased over the years with increased import p a y m e n t s . T h o u g h i m p o r t p a y m e n t s a r e a l w a ys h i g h e r t h a n t h e e x p o r t e a r n i n g s i n absolute terms, the percentage of Bangladeshs export to imports is improving graduallyand in recent years has been quite impressive. In FY 1983-84 the value of Bangladeshsexports was US$ 811 million and the corresponding figure for Bangladeshs imports wasUS$ 2073 million that represents export/import ratio of 39.12%. The export-import ratioincreased to 70.09% and 67.80%, respectively, in FY2001 -02 and FY 2002-03 (EPB2004). A Review of Trade Balance: During the last decade, Bangladeshi exports shifted from the sale of agricultural productsa n d raw and processed natural resources to labor-intensive m a n u f a c t u r e d g o o d s (including clothing, footwear, and textiles), but the country, unlike neighboring India,could not catch up with the exporters of skill-intensive products. The problem of balanceof trade in Bangladesh is well known: ever since the independence of the country, exportearnings have persistently fallen behind import payments. Consequently, every year thecountry incurs a huge trade deficit

Bangladesh has a long history of maintaining a negative trade balance, importing moregoods than it exports. In the 1970s and 1980s it imported goods and services twice andsometimes 3 times as much as it exported. Even during the relatively successful 1999financial year, the country exported just US$5.523 billion worth of products while itimported US$8.381 billion worth of products, leaving a large trade shortfall of US$2.858 billion. Exports of Bangladesh to Industrial and Developing Countries: While developing countries were the major destinations during the 1970s and earl y1 9 8 0 s , t h i s d i r e c t i o n r e v e r s e d f r o m t h e m i d d l e o f 1 9 8 0 s a n d t h e t r e n d c o n t i n u e d throughout the 1990s and thereafter. Now industrial countries are the main destinations of B a n g l a d e s h s e x p o r t s . T h e i n d u s t r i a l c o u n t r i e s u s e d t o r e p r e s e n t 4 1 . 4 % s h a r e o f Bangladesh exports in 1978 and developing countries used to represent 45.8%. In 2002 t h e s e f i g u r e s s t o o d a t 8 8 . 3 % a n d 1 1 . 7 % r e s p e c t i v e l y f o r i n d u s t r i a l a n d d e v e l o p i n g countries. Among the developing countries, the Asian countries import more than othersfrom Bangladesh.It is also observed that the annual growth rate of Bangladeshs exports to the world is positive since the 1990s; it is found very impressive in 1990 and 1994 being 28.1% and1 6 . 3 % r e s p e c t i v e l y. H o w e v e r , t h e c o r r e s p o n d i n g f i g u r e s a r e b e t t e r f o r i n d u s t r i a l countries: 40.6% and 18.7%. The export growth rate to developing countries in 1998 and2002 are negative, -15.9% and 2.9% respectively though these rates were positive in1990 and 1994. Trade Policy Reforms: During the past three decades, Bangladesh carried out extensive trade policy reforms. In particular, the country has been pursuing a liberal trade policy since the beginning of the1990s, which is consistent with the trends in the global market economy, Uruguay RoundAccord and agreement with the World Trade Organization. The government formulated afive-year export policy along with a more liberal five-year import policy in 1997/98 witht h e objective of attaining a favorable trade balance and gradual improvement i n t h e foreign exchange reserve situation (GOB 2002). The governments in 1990s really wantedto promote rapid export growth by reducing and eliminating the anti-export bias prevalentin the economy. Keeping this goal in mind, the government has b een pursuing a limited protective policy only in consideration of several important issues like public health,security and religious restrictions. Also, the government has been adopting more liberalimport and export policies and programs including reduction and harmonization in tariff rates, and elimination of many quantitative restrictions on imports (GOB 2002, CSB2003) portProductCategoryID=2

Growth of Exports: Bangladeshs total exports got a significant boost with an annual trend growth rate of 14.24 percent during 1985/86 to 1999/00, compared to an annual trend growthrate of below 10 percent (in nominal US dollar terms) over the earlier period of 1 9 7 2 / 7 3 t h r o u g h 1 9 8 4 / 8 5 . S u c h a p a t t e r n o f e x p o r t g r o w t h o v e r t i m e l a r g e l y reflects the effects of progress in Bangladeshs policy reforms over the period.Export products during the earlier period (e.g. jute and jute goods) did have asignificant effect in limiting the overall export growth, especially starting with themid-1980s.

The export upturn in the latter period also reflects the fact that the e x p o r t s e t b a c k i n j u t e a n d j u t e g o o d s w a s m o r e t h a n r e c o u p e d b y r e m a r k a b l e growth in the export of a new product group, ready-made garments. Jute goods: Among jute and jute goods, only jute goods had a statistically significant low annualtrend growth rate of more than 6 percent during the early period and around 1 percent for the entire period. In the latter period, (1985/86 to 1999/00), it had nosignificant growth trend. Raw jute exports, on the other hand, had statisticallysigni ficant negative growth trends for the whole period as well as for the second p e r i o d . T h e r e a s o n s f o r t h e d e c l i n e w e r e t h e g r o w t h o f j u t e m a n u f a c t u r i n g industry in the country and falling demand for raw jute in developed countries dueto extensive use of synthetic fibers (Hessian, 1996). Frozen food: Frozen food (mainly frozen shrimps) was one of the major product groups, which had ah i g h l y s a t i s f a c t o r y t r e n d g r o w t h r a t e o f 1 6 . 1 1 p e r c e n t f o r t h e w h o l e p e r i o d . However, its growth remained uneven, a spectacularly high rate of 31 percentduring the period till 1984/85 along with a sharp drop to about 8.4 percent during1 9 8 5 / 8 6 t o 1 9 9 9 / 0 0 . T h e d r o p i n t h e g r o w t h r a t e i n t h e l a t e r p e r i o d m a y b e attributed to a fall in demand in the EU markets in the late 1980s and early 1990s,which recovered only during the second half of the 1990s. The dwindling growthof frozen foods in the later period may also be attributed to supply constraints . Tea: Tea falls in the category of an exceptional export product since it had a significant growthof 13 percent during the early period up to 1984/85. However, its growth was so low anderratic subsequently that it showed a negative growth trend during the later period. WhileB a n g l a d e s h s u c c e s s f u l l y r e c o u p e d t h e l o s s o f t e a e x p o r t e a r n i n g s c a u s e d b y t h e dislocation during the countrys war of Independence, it lost the momentum in its racewith India and Sri Lanka in the late 1980s and early 1990s. Leather and leather products: Bangladeshs exports of hides, skins, and leather, and leather products have increasedsince the early 1970s. The product group, included in the traditional export category, hada trend growth rate of about 9 percent during the entire period, which was close to theaverage growth for all exports. Its growth rate was more than 13 percent during the first period but the rate slowed to 5 percent during the second period. Readymade garments: Starting from a virtually zero base during the late 1970s, readymade garments exportsgrew at a very rapid rate of about 95 percent during the early perio d up to 1984/85, and,from a sizeable base, at a moderate but fairly high rate of 20.37 percent during the later period

Knitwear products newly entered the export market with some significance only i n 1989/90 and since then its export grew very rapidly at a much faster rate than other readymade garments. The very fast growth of the RMG product group as a major exporte a r n e r ( i n g r o s s t e r m s ) w a s t h e m o s t r e m a r k a b l e d e v e l o p m e n t f o r B a n g l a d e s h , a n d without this phenomenal growth, Bangladeshs total exports which had a setback in thetraditionally important exports of jute and jute goods, could not have grown at doubledigit in the late 1980s and 1990s. Trend of growth in export of Bangladesh among 1980-90 to 1990-99s: During 1990s, Bangladeshs total exports in Current US $ value grew at a n a n n u a l compound rate of 14.4 per cent. In fact, Bangladesh experienced double digit exportg r o w t h i n m o s t o f t h e ye a r s d u r i n g t h e 1 9 9 0 s . T h e G a p b e t w e e n E x p o r t a n d I m p o r t widened from-US$1791 million in 1990/91 to -$2814 million in 1990/00,although theshare of export earnings in import payments steadily rose from 31 per cent in 1980/81 to67 per cent in 1999/00.The openness of the economy as measured by total external tradeas a proportion of GDP went up from around 22 percent in 1990/91 to nearly 30 percent in 1990/00 with the share of export in GDP rising from 7 per cent to 12 percent duringthe same period. Changes: Exports of traditional goods (composed of jute, jute goods, tea and leather), constitutedmost of Bangladeshs total exports, around 97 percent in 1972/73. These exports precipitously fell to less than 10 percent in 1999/00. At present the dominance of r a w j u t e a n d j u t e g o o d s i n t h e e x p o r t t r a d e o f B a n g l a d e s h h a s w e a k e n e d considerably, and some non-traditional items have made inroads. For example,the share of raw jute in export earnings has declined from about 38 percent in1972/73 to a meager 1 percent in 1999/00. Over the same period, the share of jutegoods declined from 52 percent to less than 5 percent. Another traditional exportsi t e m , t e a , d e c l i n e d f r o m 2 . 7 p e r c e n t t o 0 . 3 p e r c e n t d u r i n g t h e p e r i o d . T e a s relative export share did increase in some of the years in the 1980s but it declineds h a r p l y i n l a t e r ye a r s . L e a t h e r s s h a r e i n t o t a l e x p o r t s s h o w e d a s i g n i f i c a n t increase from 4.6 percent in 1972/73 to more than 10 percent in the late 1980s butdeclined to a level of 3.4 percent in 1999/00.On the other hand, nontraditional exports (i.e., exports of goods other than traditional ones) dramatically grew in importance from 3 percent of total exports in 1972/73t o m o r e t h a n 9 0 p e r c e n t i n 1 9 9 9 / 0 0 . A m o n g t h e n o n t r a d i t i o n a l e x p o r t s , R M G including knitwear rose to 54 percent during 1999/00 from an insignificant levelin the early 1980s. The share of frozen food increased

from less than 1 percent to6 percent during the years. Frozen foods share in total exports was higher in the1980s but its later decline reflected a deceleration in its growth performance inrecent years. Residual export category showed a big jump in export importancefrom 1.8 percent in 1972/73 to 31 percent in 1999/00 The share of primary commodities to total exports decreased from 17.5% in 1980 -81 to7 % i n 2 0 0 7 - 0 8 . O n t h e o t h e r h a n d , t h e s h a r e o f m a n u f a c t u r e d g o o d s t o t o t a l e x p o r t s increased from 44% in 1980- 81 to 93% in 2007-08 Trend of Export Earnings: At present, Bangladesh faces growing economic competition from India, Pakistan, andI n d o n e s i a , c o u n t r i e s w h i c h c o u l d o f f e r b e t t e r i n f r a s t r u c t u r e a n d l a r g e r a n d g r o w i n g domestic markets. The exports of Bangladesh have been experiencing a steady rise sincethe late 80s of which apparels constitute approximately 75% of the total exports. Other items include frozen foods, jute & jute products, leather & leather products, handicrafts,vegetables, chemical products etc. M ajor export markets for Bangladeshi exporters are North America (33%) and EU (52%) while other regions constitute the rest. In FiscalYear 2006-07, total exports earnings of Bangladesh exceeded US$ 12 billion. The trendof Bangladeshi exports from FY 1972-72 to 2006-07 iis shown below Conclusion: Bangladesh economy has passed through a heightened pace of global integration in the1990s. The degree of openness of the Bangladesh economy is now higher than manydeveloping countries exports and imports of goods and services curr ently account for about a-third of the countrys GDP. Thus, by definition, the state of the global economyis likely to have a stronger impact on the Bangladesh economy now than at any time inthe past. The impact of the state of the global economy would continue to be increasinglyfelt in terms of the countrys macroeconomic performance, GDP growth rate, externalsector performance, foreign exchange reserves, and health of the financial institutions.This is perhaps one of the most important legacies that th e Bangladesh economy hasinherited through its developmental practice and reforms of the 1990s.Bangladeshs export sector registered double-digit real growth rate throughout the 1990s.As a matter of fact, real export sector growth rate was almost three time s the real GDPg r o w t h r a t e d u r i n g t h i s p e r i o d . E v e n d u r i n g F Y 1 9 9 0 a n d F Y 1 9 9 1 , a p e r i o d w h i c h coincided with the last major global recession, Bangladeshs export sector posted robustgrowth rates of 17.9% and 12.7% respectively. The structure of

export was different,t h o u g h , a t t h e t i m e . R a w j u t e , j u t e g o o d s a n d l e a t h e r w e r e s o m e o f t h e m a j o r e x p o r t commodities in the early 1990s, their combined share being equal to the share of RMG intotal exports of Bangladesh. A relatively diversified base and market provided some sortof a cushion against sudden fluctuations of the global market.E x p o r t e r s a n d t r a d e e x p e r t s a t t r i b u t e B a n g l a d e s h s e x p o r t s u c c e s s t o t h e competitiveness of the countrys readymade garment sector and availability of cheap l a b o r , a l t h o u g h e x p o r t s o f f r o z e n f o o d , l e a t h e r a n d j u t e f e l l . G a r m e n t m a n u f a c t u r e r s produced lower-end products whose demand did not fall significantly in global markets.R e m a i n i n g c o m p e t i t i v e i n t h e s e d a y s o f d i f f i c u l t i e s s i n c e t h e q u o t a s y s t e m w a s withdrawn and the o n g o i n g l i n g e r i n g e c o n o m i c s l i d e w o r l d w i d e i s r e w a r d i n g f o r Bangladesh.