International Monetary Fund, 2014. “Sustaining Long Run Growth and Macroeconomic Stability in Low Income Countries – The Role of Export Diversification”, Washington.
International Monetary Fund, 2016. “Bangladesh: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bangladesh”, Washington.
International Monetary Fund, 2017. “The Diversification Toolkit: Export Diversification and Quality Databases (Spring 2014)”, Washington.
MG Robbani, 2000. “World trade organization and the ready-made garment industry of Bangladesh: A critical Analysis”, Journal of Business Studies.
Planning Commission, Bangladesh, 2016. “Bangladesh Seventh Plan FY2016 – FY20: Accelerating Growth, Empowering Citizens”, Dhaka.
Prepared by Jayendu De.
The MFA governed the world trade in textiles and garments from 1974 through 2004, imposing quotas on the amount that developing countries could export to developed countries.
Revealed comparative advantage refers to when the country’s share of global exports is larger than what would be expected from the size of its export economy and from the size of a product’s global market.
According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in 2017, cost increases over the two years included wage costs (by 32.4 percent), accessories, packaging and washing costs (by 4.9 percent), freight and transportation costs (by 40 percent), and costs from an increased consumption of power and gas (by 15 and 7 percent respectively). The costs of compliance are also high. A small to medium sized factory spends about BDT 50 – 200 million (approximately US$0.6–2.4 million) to maintain compliance.
The IMF’s diversification index is available for product and for partners, and it can be decomposed into two components. The “between” component of the Theil index captures the extensive margin of diversification (i.e. the number of products/partners), while the “within” component measures the intensive margin (i.e. product shares).
To examine the impact of quality upgrading, Fund staff developed a dataset with estimates of export quality for 178 countries from 1962–2010. Concentration in sectors with limited scope for increases in productivity and quality may result in less broad-based and sustainable growth.
Under the Duty-Drawback Scheme, exporters receive reimbursements for the tariffs paid on imported intermediate inputs. The scheme is expected to be revamped to reduce long lags and high transaction costs for reimbursements.