Bangladesh - International trade

Bangladeshi international trade is extremely small relative to the size of its population, although it experienced accelerated growth during the last decade. It is not very diversified and depends on the fluctuations of the international market. The Bangladeshi government struggles to attract export-oriented industries, removing red tape and introducing various financial and tax initiatives. Between 1990 and 1995 Bangladesh doubled its exports from US$1.671 billion in 1990 to US$3.173 billion in 1995 and then almost doubled them again from US$3.173 billion in 1995 to US$5.523 billion in 1999.

During the 1990s, the United States has been the largest trading partner for Bangladesh, with its exports to the United States reaching 35.7 percent in 1998-99. This percentage consisted mainly of Ready-Made Garments (RMG). Germany is the second-largest export market, with the proportion of goods reaching 10.4 percent; and the United Kingdom is in third place at 8.3 percent. Other export destinations are France, Italy, the Netherlands, Belgium, and Japan.

India, China, and Singapore are the 3 largest sources of imports. Most Bangladeshi imports originate from

neighboring India, reaching 20.8 percent in 1998-99. The second most important source is China, totaling 9.3 percent, third is Singapore with 8.6 percent, with Hong Kong fourth at 7.6 percent.

During the last decade, Bangladeshi exports shifted from the sale of agricultural products and raw and processed natural resources to labor-intensive manufactured goods (including clothing, footwear, and textiles), but the country, unlike neighboring India, could not catch up with the exporters of skill-intensive products. While India is becoming an important international player in the field of software and applications development, Bangladesh lags far behind, despite the government's efforts to promote this area.

Bangladesh has a long history of maintaining a negative trade balance, importing more goods than it exports. In the 1970s and 1980s it imported goods and services twice and sometimes 3 times as much as it exported. Even during the relatively successful 1999 financial year, the country exported just US$5.523 billion worth of products while it imported US$8.381 billion worth of products, leaving a large trade shortfall of US$2.858 billion.

At present, Bangladesh faces growing economic competition from India, Pakistan, and Indonesia, countries which could offer better infrastructure and larger and growing domestic markets. A border conflict between Bangladesh and India, the worst in the last 30 years erupted in April 2001, bringing political and economic uncertainty to the region and undermining international investor confidence in the Bangladeshi market. If the investors move out, they could cause further social polarization and increased poverty in the country.