Bangladesh's Export Sector: Changes and Challenges
Professor Mustafizur Rahman Research Director Centre for Policy Dialogue

From Aid-Dependence to Trade Dependence In the recent past Bangladesh's macroeconomic performance has come to be increasingly dependent on the performance of her external sector. This is manifestly demonstrated by the shift in the relative importance of aid and trade in the economy of the country. In 1990 total disbursed aid was equivalent to 8.1% of Bangladesh's GDP; in 2000 the share had come down to 4.0%; exports as a percentage of GDP, on the other hand, has gone up from 6.8% to 14.5% over the same period. In 1990 the country's earnings of the foreign exchange from export and remittance was 1.3 times that of the aid disbursed; by the year 2000 it was almost 5 times as high. Bangladesh's graduation from a predominantly aid recipient country to a predominantly trading country is one of the major achievements of the 1990s. The structural shift from primary to manufacturing exports, from resource-based to process based exportables and from the traditional jute-centric to the emergent RMG-centric export is remarkable by any standard. Over the same period the country had also to import an increasing amount of production and non-production related commodities. Increasing exports have allowed the country to service a large part of this growing import demand without seriously undermining the balance of payments position of the country and the country's debt servicing record. Consequently, in view of the increasing degree of openness of the Bangladesh economy, factors such as competitiveness of the external sector, market access capacity and ability for strengthened global integration are becoming key determinants in terms of not only the performance of the external sector but also the overall growth and development of the country. The present