JBS Vol 02. Num 1. 2000 - A DECADE OF TRADE LIBERALIZATION: HOW HAS DOMESTIC INDUSTRY FARED IN BANGLADESH?

By the end of the 1980s, the government of Bangladesh, having negotiated with international financial institutions,
plunged into various market-oriented reforms to revitalize the economy. While the reforms had many aspects, this
paper focuses on international trade reforms and their effect on the industrial sector. It finds that the reforms have
not encouraged the development of an autonomous domestic industrial capability. Among export industries, it is
seen that the jute sector has had difficulties because of world market conditions and has not been able to go through
sectoral adjustment. Although export growth is largest in the readymade garments sector, it remains dependent on
foreign buyers. Leather exporters have also generally suffered from an inability to move to high end products and
adopt necessary quality controls. Quality standards pose a marketing problem for seafood producers as well.
Furthermore, environmental and labor safety issues persist in all these sectors. These problems are pervasive in
import competing sectors such as textiles, chemicals, and metals which have not successfully competed with
consumer goods imports. Recent investments in large firms such as power or fertilizer also have not created
employment for a labor abundant economy. Small firms have not benefited from the reforms in that cost savings
from lower tariffs on imported inputs have rarely been passed on to them. While the reforms have led to some
resource shifts in the economy, growth and diversification in the industrial sector has been limited. Marketing,
technical, and entrepreneurial skills have yet to be developed to allow such success. These and an ability to
negotiate in the larger global economy are critical for the welfare of the country.