Globalization and Its Impact on Bangladesh

Page 1 of 2

Globalization and Its Impact on Bangladesh

By | March 2007
Page 1 of 2
The contemporary global debate on globalization and its multi-pronged impact has had a strong echo in the academic and political discussions in Bangladesh as well. After a hesitant start in the mid-1980s, Bangladesh moved decisively to embrace the wave of globalization in the 1990s. Ever since, the impact of globalization on the economy of Bangladesh and, more pointedly, on the lives of its people, has become a hotly debated issue.1 This paper attempts to take a fresh look at the impact of globalization on the evolving poverty situation in Bangladesh, and to draw some policy conclusions.

For the purposes of present analysis, globalization is viewed purely in its economic dimensions – defined as increasing integration of a national economy with the world economy through exchange of goods and services, capital flows, technology, information, and labour migration. Not all of these exchanges, however, figure equally prominently in the case of Bangladesh. The least advance has been made in respect of capital flow. By the year 2000, foreign direct investment (FDI) amounted to just 0.4 per cent of gross domestic product (GDP), which was low even by the standards of low-income countries (average 0.9 per cent). But significant advances have been made in some of the other spheres – especially, exchange of commodities and labour. Aided by trade liberalization and export incentives of various kinds, the economy has become much more open in the last decade or so. During the 1980s, the shares of both imports and exports in GDP had remained virtually stagnant. By contrast, between 1989-90 and 1999-2000, the share of imports in GDP went up from 13.5 per cent to 20.0 per cent, and the share of exports went up from 5.7 per cent to nearly 13.4 per cent. The flow of labour migration and the concomitant inflow of migrants' remittances have also gathered pace. The foreign exchange earnings from remittances now amount to nearly three-fourths of net export earnings. This paper will...