This paper assesses the impact of trade liberalisation on wage inequality in the Bangladesh manufacturing sector over the period 1973-1994 by applying alternative techniques of two-stage least squares and error correction modeling. The study also examines the hypothesis that skilled labour and physical capital are complementary with each other. The study finds that wage inequality in the Bangladesh manufacturing sector, as measured by the ratio of the non-production workers’ wage to the production workers’ wage as well as by the Theil’s wage inequality index, has widened over time. The econometric results suggest that export orientation of the Bangladesh manufacturing sector has contributed to the widening of wage inequality, while the relative demand for skilled workers had an offsetting effect. Furthermore, the findings do not support the claim that skilled labour and capital are complementary with each other.
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The past attempts to investigate whether the Marshall-Lerner condition is fulfilled by using aggregate data in Bangladesh suffer from aggregation bias. This paper estimates trade elasticities using bilateral data between Bangladesh and its major trading partners. The results, using data covering 1973-2009, confirm long run relationships of volumes of export and import with real exchange rate and real income. The study unveils that the Marshall-Lerner condition holds only in case of the United States. As such, the depreciation of real exchange rate may not be effective in improving the trade balance of Bangladesh in the long run.
Habibur Rahman
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Executive
Summary India continues to remain one of
Bangladesh’s major trading partners, accounting for 8.7 per cent of Bangladesh’s
global trade in FY2008‐09, a year when India was Bangladesh’s fourth most
important trading partner. However, with an import to export ratio
of 10.3 to 1 and an increasing bilateral trade deficit, issues of barriers to
trade with India and search for avenues to enhance Bangladesh’s export
opportunities in the growing Indian market, have assumed high significance and
prominence in related discourse in Bangladesh in recent times. Underlying
factors contributing to India’s strong presence in Bangladesh’s import market
are well known. Imports from India help Bangladeshi enterprises access inputs
at lower costs and enable these to remain competitive in domestic and foreign
markets; import of consumer goods help stabilise prices of some key essential
items in Bangladesh. However, all these does not in any way undermine or
minimise the importance of the need to enhance and realize Bangladesh’s own
export opportunities in the Indian market. In recent times, India has also mooted
the idea of signing a Bilateral Free Trade Agreement with Bangladesh. In spite
of the initiatives under the various RTAs and also bilateral market access
initiatives export from Bangladesh to India has tended to remain at low levels
reaching USD 276.6 million in FY2008‐09 which was a mere 1.8 per cent of
Bangladesh’s global export. The above trends notwithstanding, recent dynamics
of trade between the two countries does indicate new developments with regard
to Bangladesh’s export to India. Evidence suggests that Bangladesh’s export to
India has been on the rise in the recent past. In view of above, the present
article attempts to address the following issues relating tocstimulating
Bangladesh’s exports to India.
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Summary As
is known, jute was the single most important export item of Bangladesh till the
end of the 1980s.
With the ascendancy of export-oriented readymade garments (RMG), and later on
of shrimp,
jute lost its pre-eminent position. It presently occupies the third position in
the export
basket of Bangladesh. Owing to environmental conditions, scarcity of land for
cultivation, high input cost, high profitability of high-yielding variety (HYV)
and hybrid crops, and an unfavourable jute-rice price ratio, jute at present
tends to be cultivated in less productive land. The consequence of lower
productivity and low profit thus gave rise to a vicious cycle. Governments and
private sectors in jute growing countries only lately have started to undertake
initiatives to address the attendant concerns. This renewed emphasis has been
spurred due to the resurgence of global demand for jute as an
environment-friendly commodity. A number of technological breakthroughs favouring
diversified uses of jute fibre have also helped. The present paper makes an attempt
to analyse the challenges and opportunities in the world market for
Bangladesh’s export-oriented jute sector, in view of the recent development. The
relative advantages of jute, as an environment-friendly and bio-degradable
product have generated renewed interest in jute, creating avenues for product
development and product diversification. Bangladesh should also pursue her
interest in this connection in the various global fora, both in terms of
addressing her concerns with regard to NTBs, and also with regard to promoting
jute’s advantages. The review and analyses in the following sections have
examined the performance of Bangladesh’s jute sector in the global market and
have identified opportunities and challenges in view of the emergent situation.
Both market and product diversification are important and the key to attaining
both of these will be Bangladesh’s ability to raise her competitive strength.
Centre for policy dialouge August 2004 Summary:The dialogue has been organised to discuss the incremental opportunities Bangladesh will have in the EU and Japan and also the requirements like compliance, rules of origin, quality and other non-tariff issues needed to enjoy these new offers. The study has taken these issues to a very desegregated level, identifying the very specific Read more...
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Trade
