The Bangladesh government has to add more diversified products to the export basket to make export growth sustainable, the World Bank has said.
It is high time to focus on new and potential export items in order to come out of overdependence on readymade garments as Bangladesh will face more challenges after becoming a developing country, said Hans Timmer, World Bank Chief Economist for South Asia at a seminar.
Bangladesh Institute of Development Studies (BIDS) organised the seminar titled “Bangladesh Development Story: Role of Service and Manufacturing Sectors in Driving Diversification and Inclusive Growth” by Hans Timmer, Chief Economist for South Asia, World Bank.
Dr Binayak Sen, Director General of BIDS, presided over the programme.
Businessmen said the country has more new and potential export items, like jute and jute goods, leather, agricultural products and pharmaceuticals.
To compete with other Asian countries, notably China, India, Indonesia, Malaysia, Sri Lanka, Thailand and Vietnam, it is necessary to come up with more diversified products, they mentioned.
Existing policies to boost export earnings, undertaken by the government, appear to be very fruitful for several items. But more support for other potential products on the part of the government can help export earnings rise to a great extent, they added.
Timmer said that Bangladesh has been spectacularly successful during its first 50 years of independence, but economic problems are emerging and strong sustained future growth is not guaranteed.
Lack of inclusion in the productive economy is a key structural impediment that makes current problems difficult to solve and makes future growth through diversification uncertain, he mentioned.
“Crises create opportunities. It is needed to trigger the development of new technologies, allow creative destruction and lead to new divisions of labor and new economic paradigms. In short, crises can break through economic structures that are no longer evolving,” he added.
Hans said bold action in new directions is needed to unlock underutilized potential.
Bangladesh needs to continue its growth by reducing gender gaps, ensuring preferential treatment of privileged groups and solving inequality of opportunity, he said.
A rethinking of formal firms may be helpful because the informal sector is heterogenous and technologies such as digital platforms potentially offer new opportunities, he added.
However, informality in South Asia is dominated by firms that happen to be outside the purview of regulations because they are small, as opposed to those that remain small to escape regulations, he mentioned.
“Reducing inequality of opportunity and increasing economic mobility in South Asia is important because it is an essential part of broadening the tax base,” said the World Bank Chief Economist.
“Therefore, eliminating obstacles to mobility is not merely a long-term agenda, but should be a central part of current reform programs that aim to make the fiscal outlook more sustainable, and help South Asia achieve its full potential,” he mentioned.
To this end, Timmer recommends continuing to improve the quality of primary education and expanding access to secondary and higher education, evaluate and strengthen affirmative action policies targeted to “low opportunity” groups, and policies to improve the business climate for small and medium enterprises, who account for the bulk of job opportunities for the less well-off. In addition, reducing barriers to labor mobility can have a powerful equalizing impact as urban areas tend to offer more opportunities for social mobility.
