Page 62 - ICE BUSINESS TIMES January 2020

It is time for the World Trade and of course moving towards a the matter is Bangladesh has our exports made up of RMG. It is Has the paradigm of of multilateralism. Globalization is baby out with the bathwater. What enough you can't get the benefit of inward oriented. Because if you
Organization to go through trade oriented, outward oriented been exporting large numbers of not going to fall, unless the export-led growth reached a about multilateralism, and we see that system needs is reform. It is growth acceleration. Japan has fail to do that then you cannot
constructive reforms. To policy that gave this accelerated products alongside RMG non-garment exports really grow dead end in light of the this tendency to backtrack from time for the World Trade suffered from zero growth for two exploit the demographic dividend.
improve its performance to growth. That was one critical garments. If you look at the much faster. In the last 10 years backlash against globalization by those same Organization to go through decades at a stretch. Bangladesh The demographic dividend doesn't
is a young country in that respect.
countries who are the
constructive reforms. To improve
make an inclusive multilateral factor. Of course it had to come export basket of fiscal year 2018, we have seen the concentration globalization seen across protagonists, who are the first its performance to make an Bangladesh’s working age last very long. The increasing
the developed world giving
going up from 75% to 84%.
share of working age population,
we exported 1392 non-garment
system that benefits all of us, with all the other things like products. That’s a lot, but only In my view and after much rise to economic promoters of globalization. inclusive multilateral system that population as well as youth the increasing share of youth
macroeconomic stability, along
not necessarily equally. If there with other strategies for human 292 of them were higher than 1 research in this area, I have come nationalism, protectionism, Thankfully, Bangladesh is one benefits all of us, not necessarily population is rising. That is what population, that increase would
are some losers, then they will development and poverty million dollars. That is about 97% to the conclusion that it’s not the and unilateralism? country that is a significant equally. If there are some losers, we call and what has been start falling after a certain number
have to be compensated. There reduction. Alongside the high of the 6 billion dollars of non competitiveness issue, it’s not the Anybody who is looking at the beneficiary of globalization and then they will have to be described as the demographic of years. If we delay in exploiting
has to be a system of growth during these three decades, garment exports that we did in infrastructure alone. Those are current state of the global economy multilateralism so we should, if compensated. There has to be a dividend. But it is not enough, this growing share of working age
compensation to bring people there was a very high rate of 2018. The remaining 1100 export problems for both exports and would say globalization has run its anything, for the future stand by system of compensation to bring you have to make sure that they population now, by giving them
get to work and also that they are
who are not benefitting from poverty reduction; as a result we products, -- I am talking HS code import substitute industries we course, and you have these this particular paradigm of trade people who are not benefitting productive. jobs and skills, then we will end
up with a larger population which
openness, of globalization and
have here. The problem that
from the system and how to bring
the system and how to bring are at a stage now that our poverty at 6-digit level . At HS-6 digit prevents exporters from really developed economies of Europe harness the opportunities that are them to the fold. So I would not So there are these challenges to is not skilled and don't have a
level is how you identify each
them to the fold. level is down to about 21% of the and North America that are create jobs, to make them more
population, with extreme poverty traded product. The 1100 trying to become proactive and suddenly realizing that open trade created by this particular paradigm write an obituary on the jobs.
down to about 12-13%. This products I mentioned were really expanding their exports in the meant they are not necessarily of export-led growth. I would multilateral system as yet, but as skilled, more productive, and in
growth is not just growth in small, less than 1 million dollars. non-garment sector is the policy going to benefit or everybody in qualify the statement by saying it's far as Bangladesh is concerned, we step with the technological What skills do you think
wealth of the economy, but it also What is worse is that we have environment. The policy their country is not benefitting. not just export-led growth but should support and uphold the revolution which we now call the are the most relevant right
has had a substantial impact on been exporting 1200, 1300 environment that creates a There are pockets in every trade-led growth. Because export system so it lasts longer, with Fourth Industrial Revolution. In now?
reducing poverty. products since 2000 or even negative incentive for exporting, a developed country with people who also involves import. Readymade reforms that are necessary. order to do all of that, we have to Two things; we have to continue
before. The number of export policy that overwhelmingly favors lost out because the competition garment sector did not grow up on make sure that jobs are being to industrialize; to industrialize
products is huge, and some of the import substituting production for just exporting and making things Bangladesh’s working age created. And here is the link
We rely on our RMG, and it sale in the domestic market. This from low cost countries like China, from domestic resources, it was a population (15-64) has between the trade orientation we faster, you got to look outwards,
these were part of the changing has contributed products may be similar but they India and even Bangladesh is too talked about, the strategy for you have got to link up with the
direction of economic strategy. significantly to our GDP are not the same. RMG is not one happens because of high tariffs. severe, and we lost jobs. That's a classic case of integrating with risen from 47% in 1974 to world economy. Then we have this
That created a spurt in economic growth. But haven’t we product, it covers 215 products You have high tariffs to protect the political backlash, and there has global value chain. We started by 66% in 2018 symbolizing getting growth acceleration. If you whole connectivity issue coming
have this kind of open trade
growth. In the previous 20 years, reached the peak of RMG, that we have exported. domestic industries and restrict been a political backlash that gave importing fabrics, yarn and the demographic dividend. from ICT, the technological
there were three 5-year plans People will say our infrastructure import and import competition. rise to what we call economic accessories and making them into What should Bangladesh do orientation, greater integration transformation that is taking
Bangladesh economy Asian Tigers – Korea, Taiwan, 1990’s Bangladesh changed and isn’t it time to diversify is bad, our transport is bad and The non-garment sector is not a apparels. Today we have much to convert this demographic with the world economy, then
has experienced growth Hong Kong, Singapore. – its trade orientation. Not just which all targeted 5% GDP growth, our products. Which is the ports are not functioning, there is 100% export oriented sector nationalism. They want to limit better backward linkage. We dividend into a high growth you’ve integrated with the larger place. For this, the youth
but never got anywhere close. For
acceleration for the past These countries showed the in trade orientation, but also next sector poised to power shortage, customs is whereas RMG is 100% export 100% which artificially raises the but the world market is 80 trillion their market and it is the same started by importing and that is opportunity? market in the world and if your population is much better
three decades. Was the world that there was a new in the domestic economy, the first time Bangladesh achieved become as vastly significant incompetent. All of that might be oriented – they can’t sell in the price of the product in the dollars. India is ten times thing as protectionism, you want essential for export success (China, industrialization is linked with equipped than the older no longer be left out and
5% growth on average in the 90’s
change in its trade paradigm of growth -- Bangladesh went in for as our RMG sectors? true, but RMG is being exported domestic market even if they domestic market. Bangladesh Bangladesh’s economy, China is to protect your market; another for instance, is the number one Bangladesh is a young country, in that wider market, then you are generation. So we have to make considered to be a basket case
orientation during the export-led growth which is deregulation, privatization, decade. The growth rate kept going Just about everybody in town has from within this environment, so wanted to. They are meant for middle class is growing. It’s 30 times our economy and the word for it is unilateralism instead exporter of the world but it is also terms of its population. Half the going to be able to create the jobs sure that we have the right scope anymore, This is
up 1 % every decade. In fact in the
1990s that sparked the dependent on trade openness trade openness, trade been asking this question. In the why can’t other products do it? exports, but the others like growing, and it’s buying, apart world market is several hundred the number two importer of the population is under 30 years of that you need. The domestic and opening for greater be complacent, we have
uptick in GDP growth and integration with the world liberalization, import last 10 years it has been going up first half of the 1990’s when RMG Everybody will tell you that they footwear, leather goods, plastic from food and shelter you are times bigger. So once you are able world). The world economic order age. The working population, market is limited in scale, no exploitation and utilization of ICT challenges, particularly th
1 % every five years.
and poverty reduction? economy. The new paradigm liberalization, exchange rate One can ask what is it that was exports became the predominant are perhaps not competitive. We industry, agro processing industry, buying so many other consumer to get a foothold in that larger is such that there is a lot of which is from the age group of matter how fast the economy opportunities that are being challenges coming out of
15-64 has been growing over the
created. The younger generation
To answer and clarify the showed that open trade, flexibility, and so on. All of different during this period. The export of Bangladesh, it have researched the ceramic industry – they export and goods. All of these consumer market, you can create jobs here. cross-border integration in past several years. More grows. If you are relying entirely has had greater access to Bangladesh’s impending
context we need to go back a exporting and exploiting the one big difference is we followed superseded the earlier export competitiveness aspect, and also sell in the domestic market. goods are priced at 50-100% above You don’t export just for foreign production; it doesn’t mean you importantly the youth population on the domestic market, the education than the older graduation out of LDC status. We
little bit, before the 1990’s. We world market through exports the trade orientation of the East dominance of jute and jute goods. found that we are competitive in When they sell in the domestic international prices, that’s what exchange, you export to create produce everything from in-house; which is from the ages 15-29 has historical record is, you cannot counterparts, but there is a become a developing country in
had spent two decades in allows faster growth and also Asian economies relying on export We used to have jute as our about 40% of those export market, their profit margins are at our consumers are paying. It’s a jobs. RMG has shown us that you you import things, you assemble been growing also. So the working grow fast enough. In order to question of quality of that 2024 by the UN classification. We
which we just followed reduces poverty much faster push and export promotion leading export. Everybody knows products that are non-garment. least 2-3 times the profit margins question of incentives – why create a huge number of jobs and you export and if you have a age population as well as the create the jobs, for exploiting the education. The quality is not that are already a lower mid
economic policies, and than the old paradigm of through which we achieved we need to diversify our export We are competitive with 30 other from exports because in exports would they produce for exports if through exports and then it’s not seamless trade regime that is the youth population has been a demographic dividend, you need great, everybody would agree, we country by the World Bank
particularly policies of trade import-substituting success, not necessarily in so basket, but why are we unable to countries, who also export to the margins are very thin. If you get the domestic market is so just the direct jobs, there are best for producers and it is also bonanza for Bangladesh and any to grow much faster, you need to still have created a pool of savvy classification, so we are
and industrialization that industrialization where you many sectors, but in one sector do it? Why is it that RMG exports same destinations. 5% or 7% it’s great, but in the profitable? indirect jobs like those who live on good for consumers because that country that has a growing integrate with the vast global internet based, computer based towards Upper Middle Income
were essentially legacies of tried to produce things at which is the Readymade Garment continue to grow and grow faster Competitiveness is measured by domestic market you have to do But what we are missing out is the profit and income and salaries way you produce things cheaply, working population, is likely to be marketplace so that it creates professionals that can still give us Country (UMIC) status but
the past. We didn’t really get home, by raising barriers to sector. We did really well in that than the non-RMG exports? Is it some standard measure of 20% or 25%, otherwise you won’t that our economy is growing that come from the RMG sector. and you make products available able to grow faster. Because in more jobs. In order to convert the an extra push to improve our will take some more time. Once
into any new approach to import competition. At the end one sector. It’s a textbook case of that we don’t have any other competitiveness that economists be able to pay the loans that you because of our exports. The impact is greater than the 35 to consumers at cheaper prices. So, order to grow faster, you need demographic dividend into growth livelihoods and the state of our graduate out of LDC status,
industrial development or to a of the day you do have some where Bangladesh competitive product to export? That is illogical. use. If we are competitive, then take out at 12-15% interest. The Bangladesh economy cannot grow billion dollars’ worth of RMG the point here is that, I for one, labour force that is growing, unlike opportunity, you have to make economy. So we have to be have more challenges coming our
new approach to trade industries, but they are not advantage lies, because in RMG If we could succeed in RMG export, how come we are not increasing fact of the matter is, it is much more than 8% without additional exports that we do. It is a lesson would like to believe that this is a Japan or some other developed sure you have got jobs for the mindful to not lose the way, we will have to observe
orientation. In the 1990s we competitive in the world the final process of assembly, of it is because we exploited our the exports of these non-garment more profitable to sell in the export success. No country in on what export does. We talked sort of a temporary phenomena, country which has a larger aging young labor force; if you don't opportunity. Right now is the time various standards and rules
made the course correction market. fabricating the apparel, is a labor comparative advantage in low products. Year after year you find domestic market, because you history has grown at 8%, 9% or about this growth acceleration the backlash against globalization. population and the labour force is have jobs for them then the when we have to create those international trade and at the
that was essential to bring India for instance realized intensive process and Bangladesh skilled, unskilled labor which is RMG export growing faster than need much less effort to get high 10%, without really integrating which came from our trade The other thing is multilateralism, contracting. With labour force demographic dividend becomes a opportunities and make the best moment we are not very up to
dynamism into the economy. that, but it took India 50 years took advantage of its cheap cheap in Bangladesh, though non-garment products. If RMG returns. with the world market, because orientation and export success. If which is symbolized by the World contracting, I agree that there is demographic burden. Creating job use of our younger generation in date on the rules. Since we
The change in policy direction to reach that conclusion. unskilled and low skilled labor productivity is not that great. Is exports are growing faster than Bottom line: (a) Gaining a foothold the world market is huge. Once that is not maintained, and we Trade Organization, which sets the some productivity increase that opportunities depends on the handling the ICT revolution that is we are a significant benefic
was inspired by the new Thankfully Bangladesh took force and we know the result. there no other labor intensive non-garments, what will happen in the export market is not easy you get a foothold there the world cannot continue to be an export rules of trade, has come under they always get because of growth strategy you adopt. And I ongoing. the multilateral system, we have
paradigm of growth coming about 20 years to realize the I would argue strongly that it was product in which we also have to the export basket? It will get (b) margins are very thin. And market opens up for you. Domestic success then this growth could criticism due partly to its technological advancement, but would strongly argue that our Bangladesh has shown that it can got to play by the rules a bit
out of East Asian countries. folly of an inward-looking this radical change in the direction comparative advantage? There are more and more concentrated with then in the domestic market, you market has a scale problem. We slow down. That is the historical ineffectiveness in many areas. But that productivity is very limited. growth strategy should be do things, and Bangladesh than we did in the past.
They were called the East closed economy strategy. In of Bangladesh’s economic policy numerous items, and the fact of RMG. Right now we have 84% of have protective tariffs of 85% or have a 300 billion dollar economy, evidence. it does not mean you throw the Unless labour force grows fast outward oriented rather than population has shown that we can

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