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The Foreign Trade of Bangladesh – Its Composition, Performance, Trend, and Policy Essay

Despite structural limitations in the Bangladesh economy, the export sector performed well throughout the 1990s. The export growth rate of Bangladesh was higher than that of the world and the SAARC countries. However, the balance of trade of Bangladesh was always in deficit and the trade deficit with India is huge.

The export share of primary commodities has decreased while that of manufactured commodities has increased over the years. The growth rate of manufactured commodities is better than that of primary commodities. The import share of principal primary commodities has declined while that of principal industrial and capital goods has slightly increased over the past years. The striking features of Bangladesh‟s exports are commodity and market concentration.

To overcome the problem, there is no alternative but to diversify exports and improve quality. To improve the country‟s overall trade balance, especially trade balance with India, some policy recommendations are offered in this paper.

issues, challenges and policy options are also
discussed briefly.

Trade is an integral part of the total developmental effort and national growth of all economies including Bangladesh. It particularly plays a central role in the development plan of Bangladesh where foreign exchange scarcity constitutes a critical bottleneck.

Export trade can largely meet „foreign exchange gap‟, and export growth would increase the import capacity of the country that, in turn, would increase industrialization, as well as overall economic activities.

Composition and Performance of Exports of Bangladesh Export Earnings and Export Growth The export sector performed rather well throughout the 1990s. This sector achieved a growth rate of 37.04% in the FY 1994-95. During the twelve years, 1991-92 to 2002-2003, Bangladesh experienced negative export growth (-7.44%) only in FY 20012002. The terrorist incident of September 11, 2001 in USA and subsequent events may be blamed for this unexpected suffering of the export sector in the particular fiscal year.

However, the export sector achieved a 9.39% growth rate, an increase of US$ 562.35 million, during 2002-2003, with total export earnings amounting to US$ 6,548.44 million compared to US$ 5,986.09 million in 2001-2002. Charts 1 and 2 provide comparative year-wise export earnings and export growth rates for twelve years.

Bangladesh‟s import needs are substantial; hence the need to rapidly increase exports is immediate. In order to finance the imports and also to reduce the country‟s dependence on foreign aid, the Government of Bangladesh has been trying to enhance foreign exchange earnings through planned and increased exports. However, the global trade scenario has exposed structural limitations of the Bangladesh economy, posing a variety of challenges for the country that has underdeveloped technology and a low capital base.

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