The Competitiveness and Future Challenges of Bangladesh in International Trade

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  • Topic: International trade, Economics, Economic growth
  • Pages : 12 (3631 words )
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  • Published : October 29, 2010
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The Competitiveness and Future Challenges of Bangladesh in International Trade

Dr. Laila Arjuman Ara Visiting Research Fellow WTO Research Centre, Aoyama Gakuin University Tokyo, Japan and Assistant Professor, Southeast University, Dhaka Email:lailamolly2003@yahoo.com And M. Masudur Rahman JSPS-UNU Postdoctoral Fellow United Nations University-Institute of Advanced Studies Yokohama, Japan Email:rahman@ias.unu.edu

Abstract: Bangladesh’s steady growth for the past two decades and the average annual GDP growth more than 6 percent over the last five years and drop of almost 10 percent in the poverty rate - are both very respectable. The past decade’s boom in exports – particularly the apparel sector is very significant to country’s economic growth. This report gauges Bangladesh’s trade competitiveness and future challenges. This report uses the Prof. Michael Porter’s data base of Harvard Business School for cluster map and bubble for competitiveness analysis, the world trade Indicator (WDI) database, International Trade Centre (ITC)’s trade map and competitiveness and World Economic Forum (WEF) website for data and graphical presentation for competitiveness analysis. To make the most of its export opportunities on the changing international playing field, Bangladesh needs to follow a strategic game plan, invest in infrastructure, technology and skills, streamline policies, and improve quality and safety standards.

Key words: Bangladesh; Trade competitiveness

1. Trade Competitiveness: Essential Issue 1.1 Introduction: The determinants of competitiveness are many and complex. For hundreds of years, economists have tried to understand what determines the wealth of nations. This attempt has ranged from Adam Smith’s focus on specialization and the division of labor to neoclassical economists’ emphasis on investment in physical capital and infrastructure, and, more recently, to interest in other mechanisms such as education and training, technological progress, macroeconomic stability, good governance, the rule of law, transparent and well-functioning institutions, firm sophistication, demand conditions, market size, and many others.(The Global competitiveness report 2008). The World Economic Forum calculated the Global Competitiveness Index (GCI) for measuring national competitiveness, which captures the microeconomic and macroeconomic foundations of national competitiveness. The Global Economic Forum (GEF) defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy. The GEF group all these components into 12 pillars of economic competitiveness. These are as Institutions, Infrastructure, Macroeconomic stability, Health and primary education, Higher education and training, Goods market efficiency, Labor market efficiency, Financial market sophistication, Technological readiness, Market size, Business sophistication, and Innovation. At micro level, a firm is said to be competitive if it is profitable and maintains or gains market share in a world of fair and free markets with intense domestic and international competition. The IMF defines the competitiveness as an appropriate level of competitiveness in the short run is typically associated with the value of the real exchange rate, which, in conjunction with other domestic policies ensures both internal and external balance. In the long run competitiveness is more generally defined in terms of an economy’s ability to support increases in living standards. According to the OECD countries, the degree to which a country can, under free trade and free market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long term. The European Commission defines competitiveness as the ability...
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