Introduction

Our topic is about export, import, net capital outflow (NCO), consumption and savings.

The terminologies are following:

 Export: Exports are goods and services produced domestically and sold abroad.

 Import: Imports are goods and services produced abroad and sold domestically.

 Net Capital Outflow: Net Capital Outflow is the difference between the purchase of foreign
assets by domestic residents and the purchase of domestic assets by foreigners

 Consumption: Consumption is expenditure by households on goods and services with the

exception of purchase of new housing.

 Savings: Savings are the total income in the economy that remains after paying for
consumption and government purchase.

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 Export

Exports are goods and services produced domestically and sold abroad. Here is shown exports in
Bangladesh from 2012 to 2021 which is visualized through the table and the graph:

Year Export (In USD)

2012 26886637936
2013 29304945498.3092
2014 32830360072.3104
2015 33820154152.8479
2016 36924080441.4852
2017 37658602119.9609
2018 40734109733.496
2019 45993821195.4892
2020 39045806253.0294
2021 44385410500.6474

Export (in $)
50000000000.00
45000000000.00
40000000000.00
35000000000.00
30000000000.00
25000000000.00
20000000000.00
15000000000.00
10000000000.00
5000000000.00
0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Export (in $)

The above graph is about export which means goods and services produced domestically and sold
abroad. In this graph we can see the highest amount of export was in 2019, and the lowest amount

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of export was 2012. The number of export is increasing year-after-year, It is a good sign for our
country.

Our country’s major export sectors are- RMG ( Ready Made Garment), Jute Products, Fisheries,
Leather Industry, Light Engineering goods etc. Among them, RMG (Ready Made Garment) sector
has the largest demand globally. Specially USA, UK, Germany, France, Spain, Canada etc. are the
moajr buyers of our country’s RMG products. Increasing of garment manufacturing factories,
effective skilled human resources, greater amount of buyers worldwide etc. are affecting in this
sector’s exporting. Total 83.4% of total exports are from this sector. Then Jute made products has
contributed in export after the RMG products. Other sectors are also contributing to the export as
well.

Here is the data of contribution of various sectors in our country’s export which is shown below:

Product Total Export in %

Readymade Garments 83.4

Jute and Jute Manufacture 3.6

Fish, Shrimps, and Prawns 1.4

Leather and Leather Manufactures 1.8

Home Textile 1.7

Vegetable Products 0.7

Pharmaceutical Products 0.4

Plastic and Plastic Products 0.3

Bicycle 0.3

Terry Towel 0.1

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The reason of our increasing our country’s export are the following-

1) Increases in foreign demand: Our major exported goods, such as RMG, Jute products,
fisheries, light engineering products are globally demanded. Specially ready made garment
products are bought by major countries of the world like USA, UK, France, Germany, Canada
etc.

2) Increased domestic production changes in the terms of trade: Our country is increasing
their domestic production of the exported goods gradually. Most factories for RMG and Jute
productions are in vast amount in our country. Regular production by modern machineries
and hardworking skilled labours are fueling to the increase of the export.

Increasing in our country’s export is a good sign for our economy, because it increases trade
surplus, which increases economic growth, employment of workers, stabilize the exchange rate.
Also our country can earn more foreign currencies by exporting more goods and services. Thus
it increases GDP of our country and can be economically sound. In order to make our country
economically self-dependent, increasing export is necessary.

We can increase export by following these steps:

1) Increasing future scope of exports: Our country has also chance for making exports in some
specialized areas such as- manmade fibres, halal products, halal fashion, recycled products,
freelancing, software and IT-enabled services, e-commerce etc. By increasing contribution to
these sectors, exports can also be increased.

2) Industrialization: The goods and services which is available for exports can be increased
massively. More factories can be built, more workers can be hired for running the production.
For this more goods can be porduced to be exported.

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3) Emphasizing of locally produced goods: Government should emphasize on producing more
and more domestic goods with local raw materials and labours. By exporting them massively
our country’s economy can grow.

5
 Import

Imports are goods and services produced abroad and sold domestically. Here is the data of import
from 2012 to 2021 which is shown below with table and graph:

Year Import (in USD)

2012 37272043676.6211
2013 40135237754.4778
2014 44128009984.4957
2015 48280651359.4871
2016 46185443714.8541
2017 50467000572.5184
2018 63761096214.6839
2019 64920444321.7358
2020 59183693205.0697
2021 71019901846.7989

Import (in USD)

80000000000.00
70000000000.00
60000000000.00
50000000000.00
40000000000.00
30000000000.00
20000000000.00
10000000000.00
0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Import (in USD)

From the above graph, we can see that from FY 2012, the import was althrough at an increasing
rate, and it continued till FY 2021. But also we can see that there is downfall in import during FY

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2016 and FY 2020. In FY 2020, due to Covid-19 pandemic, the international trade was halted for
a long time. So it was difficult for the foreign suppliers for trading their goods to foreign countries.
Thus the import goes down.

There is one thing to be noted that Bangladesh is an import-dependent country. There are some
reasons for it. The reasons for import dependency is-

1) Lack of raw materials: Though Bangladesh has lots of natural resources, there is lack of
skilled human resources who can extract those underground resources. So some of the
sources of natural resources are not discovered yet or they are extracted by importing
foreign skilled labours. There are also some raw materials for some goods (E.g-
Electronics, Food processing etc.) which are unavailable in our country. So they hav eto be
imported from foreign countries.

2) Lack of skilled human force: There is also lack of skilled people in our country who can
produce the goods. Due to lack of technical skilled people in our country, they have to be
imported from the foreign countries
.
3) Lack of technology: Our country is still now lag behind in technology sector. In order to
run a factory in our country, the machineries have to be bought from foreign countries.

4) Lack of some final goods: There are many food and non-food final goods in our country,
which are still now produced in foreign countries. They have to be imported from foreign
countries.

But import dependency is not a good sign for our country. Because due to importing goods to
foreign countries, we have to give cost for it to the foreign suppliers. Too much import dependency
reduces our country’s reserve, and thus it increase trade deficit. So we have to reduce import
dependency. It can be done through- industrialization, govt. policy, producing goods locally etc.

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 Net Capital Outflow

Net capital outflow is the outflow is the net flow of funds that is invested outside of the country
for a certain period of time (especially 1 year). Actually, NCO is the rate by which we can
understand how much money or capital Bangladesh invests in abroad.
A higher rate of NCO represents a country invests outside more than other country. Similarly, a
lower rate of NCO represents a country invests outside less than other country.

Formula: Domestic residents’ + purchase of foreign assets – purchase of domestic assets.

Now we are going to analyze net capital outflow in Bangladesh for last 10 years (2012-2021).

Year Net Capital Outflow (in USD)

2012 289058929.515111
2013 546876802.618094
2014 41769923.686296
2015 59902023.7533623
2016 40516462.3424691
2017 126742274.660245
2018 19210044.1953508
2019 23061761.9575118
2020 4807601.88421795
2021 83184395.3201463

Here we can see from 2012 to 2021 is shown as a FY. Surprisingly, there was the highest capital
outflow in 2013 that is 546876802.618094. Unfortunately, in 2014, there was a sharply fallen
down and after then, it was up and down ward sloping. Below, the table is shown by graph chat
for understanding perfectly and going to analyze why there was a tendency of decreasing.

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 Net Capital Outflow (in USD)
600000000

500000000

400000000

300000000

200000000

100000000

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Net Capital Outflow (in USD)

Reasons why the number of net capital outflow was decreased in those years:

 Political unrest
 Restrictive market policies
 Threats to property ownership
 Low domestic interest rates
 Decrease interest rate in the world

Political unrest: For a developing country political unrest is a major issue. Because if there is no
non-adverse situation in political issue, there will be huge impact on economy. The investors or
government can’t invest properly in domestic or outside of the country. As a result, NCO will be
decreased. Exactly this happened in 2013-2020.

Restrictive market policies: restrictive market policy is also responsible for decreasing NCO.
BY Restrictive market policy indicates some variables that keep the economy market within
certain boundaries. Like as floating exchange rate, fluctuate in relative value based on supply,
demand and other variables.
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Threats on property ownership: Threats on property ownership is another variable decreasing
net capital out flow.

Low domestic interest rates: low domestic interest rate is another important cause for
decreasing net capital outflow. Because, the higher domestic interest rate makes our assets more
attractive. But the lower domestic interest rate makes our assets unattractive. As a results, it
reduces net capital outflow.

Decrease interest rate in the world: If there is a decreasing interest rate tendency in the world, it
will decrease the rate of net capital outflow.
These are reasons why the number of net capital outflow decreased in the whole years from 2013-
2020. But in 2021, this was in an increasing rate.

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 Consumption

Consumption can be defined as usage of goods and services by the household .Consumption is a
component in the gross domestic product. If we want to value a company we look at the
consumption trend of that business, macroeconomists use the same method they look at the
consumption of the country to measure GDP. Here is shown the consumption data of Bangladesh
which is visualized through table and graph:

Year Consumption (in USD)

2012 105052641755.659
2013 116938413682.408
2014 134695157648.24
2015 151852227932.064
2016 192905634967.181
2017 214247744998.047
2018 236370475362.446
2019 256810156469.418
2020 272658392506.082
2021 310775839502.301

Consumption (in USD)

350000000000.00
300000000000.00
250000000000.00
200000000000.00
150000000000.00
100000000000.00
50000000000.00
0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Consumption (in USD)

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Source:
This table contains consumption data of Bangladesh from 2012 to 2021 .Here we can see a
constant growth in the consumption for last 10 years. We can see a change in overall
consumption pattern change in Bangladesh’s economy in last decade.

Reasons responsible for change in consumption pattern:

 Structural Shifts: Bangladesh’s economy is used to depend mainly on agriculture .But in

last decade we can see that the share of agriculture sector in Bangladesh’s economy has been
replaced by industrial and service sector. Because of this industrial and service sector
development in last decade the employment rate of Bangladesh is increasing. This structural
shifts affected consumer’s needs, behavior, and lifestyle .This increasing employment rate is
creating more money in the economy. People are getting more money to spend and that is
increasing the consumption level.

 Lower poverty level: In 2012 Bangladesh’s poverty rate was 89.40 and in 2021 the
consumption rate was 86.90 .as the poverty level has been reduced at the same time this is
increasing people’s purchasing power. That’s why people are consuming more.

 Increasing income and remittance: Bangladesh has the second largest economy in south
East Asia. Bangladesh has entered to the lower middle income status for lower income status in
the year 2015.In nominal terms Bangladesh’s economy is the 35’th largest in the world and 25’th
largest by purchasing power parity. Bangladesh is the seventh recipient of remittance in the
whole world. In 2021 Bangladesh had $22.1 billion remittance and was 3rd highest recipient of
remittance in South Asia. This increasing income and remittance is providing more money to
people. As we know when people have more money they tend to consume more.

 Education: In Bangladesh literacy rate has also been increased in last decade .This flow
of information is has also played a vital role in changing people’s taste in consumption.

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  Increasing International trade: In last decade the growth of international trade and
globalization was higher than any other time .This growing International trade and globalization
has also influenced the changing consumption pattern.

 IT Sector Advancement :Bangladesh’s IT sector is growing 40% annually from 2010.This

advancement in Bangladesh’s IT sector and communication sector and communication tools has
played a vital role in growing consumption in last decade.

Those were some of the reason responsible for change in consumption pattern in Bangladesh
from the year 2012 to 2021.

Advantages of consumption growth in the economy:

 Quantity of consumption: Increasing consumption in the economy has a potential to bring

a great development in the economy.

 Increasing consumption is used as a growth mechanism in the economy. As consumption

increases the sales in economy, to meet the consumption need of consumers’ sellers
decides to invest more in their businesses.

 Increasing income may induce new investments. Society’s standard of leaving depends on
quality and.

Along with these advantages increasing consumption also has some disadvantages in the
overall economy.

 If all of consumption grows rapidly but saving in the economy do not grow
simultaneously than there will be high chances of investment deficiency in the economy.

 When a country’s consumption is very high then import of that country is also high. If this
import portion exceeds export then it will create trade deficit.

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 It can distort trade balance of a nation.

 Domestic currency will be devalued.

 Foreign exchange risk will be created .There is chances of large change in foreign
currency exchange rate.

Bangladesh’s consumption rate was 68.8% in the year 2021.In order to find out if this
consumption rate of Bangladesh is desired or not we need to calculate the desired amount
of consumption .If consumption rate exceeds the desired amount than it will be not good
for the economy. If it do not exceeds that amount than this consumption rate of
Bangladesh is a desired consumption rate.

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 Savings

Savings are the total income in the economy that remains after paying for consumption and
government purchase. Saving has two parts:

1) Private Saving: Public saving is the amount of income that households have left after
paying their taxes and paying for their consumption.

Formula: Private saving= Y-T-C [where, Y= Household income, T= Taxes, C=

Consumption]

2) Public Saving: Private saving is the amount of income that the government has left after
paying for its spending.

Formula: Public Saving= T-G [where, T= Tax revenue, G= Government Expenditure]

If T exceeds G, the government receives more money than it spends. Thus, public saving is
positive, and the government runs a ‘budget surplus’. And if G exceeds T, the government spends
more than received tax revenue. In this case, public saving is negative and dthe government runs
a ‘budget deficit’.

Here is shown the data of gross savings of Bangladesh from 2012 to 2021 which is visualized
through the table and the graph:

Year Savings (in USD)

2012 54136962495.0575
2013 59615108541.7508
2014 65314901844.7167
2015 71659752874.1795
2016 98880242101.1899
2017 103650865446.261

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 2018 113957099911.994
2019 127687460972.498
2020 139054566038.597
2021 150065964561.702

Savings (in USD)

160000000000.00

140000000000.00

120000000000.00

100000000000.00

80000000000.00

60000000000.00

40000000000.00

20000000000.00

0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Savings (in USD)

Savings amounts from 2012-2021 are included in the above table, and also visualized in the graph.
It's quite noticeable that there was a constant growth in the savings meaning no sudden up – down
was detected. The year 2012 with the lowest amount which is 54136962495 USD and the last year
2021 with the highest amount consisting 150065964561 USD. Existing other years were blessed
with growth higher than previous year. One thing to specially mention that even the year 2020
was absolutely normal in growth like others and that’s undoubtedly a good thing because balance
was maintained.

Reasons for increased savings:

1) Income taxes: Our government is charging taxes on the income of the people of our country. Also
charging taxes on some services also. Charging taxes adds to the reserve of the government and
contributes to country’s GDP. Thus it increases country’s savings.

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2) Interest Rates: People keeps their part of their income in banks as deposits and banks charge certain
amount of interest rates on the deposits. The more the deposit, the higher the interest will be charged.
A part of the bank interest government cuts as taxes which increases govt. savings.

3) Increase in reserves: Our countries reserve is being increased by foreign exchange which is made by
remittances and exports. It also adds to government reserves and it is increasing year by year.

Though our country has an increasing saving, our country has less savings rate. The reasons for
less saving rate is-

1. Low per capita income: Per capita income ($2064 in 2020) of Bangladeshi people is too
low. It is very hard to save after filling their daily needs. So, they can’t save more.

2. Lack of education: The literacy rate of Bangladeshi people is not satisfying at all. Being
illiterate they can’t feel the necessity of saving.

3. Lack of security: Like other developing countries, the law and order of this country are not
good enough. People fear losing all of their savings.

4. Social and religious culture: Social and religious culture is not suitable to form capitals.
Being uneducated, they believe in superstition and bigotry. So, they feel disinterested in
savings.

Way to increase Savings of Bangladesh

We can increase savings by following these steps:

1. Encourage savings: The government should take proper steps to encourage people on
saving. They can use print and electric media to encourage people to save more and more.

17
2. Expand education: Educated people will create awareness and take responsibility for
savings. Educated people are aware of their future life and income. So, they will save for
their future.

3. Collect saving from rural areas: The saving of rural people lies on their lockers. Bank and
insurance companies can collect those and can invest savings.

4. Capital market: Share market should set up in every metropolitan city. The share market
helps people to save more.

5. Insurance: Bangladeshi insurance companies are work in limited areas or sectors. They
should expand their business and encourage people on saving.

6. Increase fixed deposits: About 30 % of savings come from fixed deposits. there are not
enough financial institutions to collect those deposits. The government should take proper
steps on this.

7. Expand national saving Bureau: Bangladesh’s national saving bureau should expand its
business to rural areas and encourage people on saving.

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 Conclusion

In this report work, we all the group members have analyzed the trade performance of Bangladesh,
which includes export, import, net capital outflow, consumption and savings. From the analysis,
we can say that import, export, consumption and saving all are in the overall increasing rate. We
also seen the fluctuation in net capital outflow also. Overall we can say that we need to improve
the state of our economy.

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 References

All datas are collected from World Bank Data Bank.

https://data.worldbank.org/
Other datas are also collected from various sources from internet.

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