Bangladesh's position is gradually sliding down in economic diversification in terms of exports. Latest report of the global Economic Complexity Index (ECI) showed that the country slipped 25 positions in a decade in its global survey conducted by a renowned firm recently.
The country ranked 123rd among 129 countries in the ECI survey in 2017, whereas it ranked 98th in 2008. The ECI measures knowledge intensity of an economy by considering the knowledge intensity of the products it exports.
The ECI has been validated as a relevant economic measure by showing its ability to predict future economic growth and to explain international variations in income inequality. Japan continues to keep the number one position in the ECI for the last two decades. Switzerland and Germany ranked second and third respectively last year.
Countries like India, Vietnam, Pakistan, Ethiopia and Zambia are ahead of Bangladesh in the ranking. Bangladesh shipped products worth US$ 39.4 billion and became the 54th largest export economy in the world in the last fiscal year. But only one product - ready-made garment (RMG) - comprises more than 82 per cent of the export earnings. The index generally considers diversification of export basket.
The ECI is based on qualitative performances of an exportable item, like - its production aspects, technology and resources in manufacturing stage. The more complex and diversified an exportable product is in its production stage, the more point it will gain. But the backward linkages of the country's RMG sector are not reflected in the index.
The global ranking shows that the country is not resilient to external shocks in terms of export, as it depends on one product only for its export economy. Even the country's key export-earning sector - RMG -- is also not well diversified. The government's policy on RMG export is very much in focus, but policies on the non-RMG sectors are not so emphasised. Bangladesh has only 100 categories of products, which can be mentioned as export earning segments. The country's policy should be to set a target of making at least 10 non-RMG sectors able to fetch one billion dollar each in the next 10 years.
It appears that the country is failing to promote non-RMG items, like - footwear, jute products, light engineering, fresh produce, fishes, processed foods and others in the global market. In fact, it needs to have sector-based policies to ensure export diversification.
The country's businesses, however, underline the vital importance of efforts for diversification of export products, in tandem with those for expanding the horizon of export markets, in order to enable the country to help attain its $50 billion export target within 2021.
The steps that were earlier taken by the government -- either strategic or operational -- were not sufficient to help diversify both products and markets. It is high time for the government to provide all-out policy support to the non-readymade garment products. Those who are small suppliers need networking, match-making and information-sharing to export their products.
Some potential products are known to have already been identified to help expand the country's export basket. Such products and services include, among others, printing and packaging, furniture, electronics, shipbuilding, plastic and light engineering. Shipbuilding, depending upon varying global market conditions, can be considered to be a potentially dynamic sector because of its backward linkage advantages that can create extra market.
An action plan is thus considered crucially important for increasing the competitiveness of the local products and exploring the untapped markets for such products across the world. Such a plan has to be drawn, taking the country's present energy situation and infrastructural deficit into consideration.
