Introduction:

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$5.523 billion in
1999.During the 1990s, the United States has been the largest trading partner for
Bangladesh, with its exports to the United States reaching 35.7 percent in 1998-99. This
percentage consisted mainly of Ready-Made Garments (RMG). Germany is the secondlargest export market, with the proportion of goods reaching 10.4 percent; and the United
Kingdom is in third place at 8.3 percent. Other export destinations are France, Italy, the
Netherlands, Belgium, and Japan.
Trade (expressed in billions of US$):
Bangladesh

Exports

Imports

1975

.327

1.321

1980

.793

2.599

1985

.999

2.772

1990

1.671

3.598

1995

3.173

6.497

1998

3.831

7.042

1999

3.83

7.04

SOURCE: International Monetary Fund. International Financial Statistics Yearbook

1999.

Comparative Performance of Bangladeshs Exports:

The performance of Bangladeshs export sector in recent years is quite impressive
especially in the 1990s when we compare it with that of world and SAARC countries.
The average annual growth rate of Bangladesh export (11.91%) is higher than those of
the world (9.48%) and SAARC countries (10.69%) during 1990-2003. Because of the
lower export performance in the 1980s, annual average growth rate of this sector during
1980-2003 is not as impressive compared to other Asian countries and the world, though
this sector shows competitiveness compared to other SAARC countries (IMF various
years). Over the period of 1980-2003 Bangladeshs exports as a percentage of the
worlds exports remain around 0.11% to 0.12% with the exception of 1984, when it was
0.14%, and 1990-1994, when the ratio was around 0.09%. Bangladeshs exports as a
percentage of SAARC countries exports show slightly increased trend especially in 2000
and 2001.
For these two years Bangladeshs exports are 11% and 12% of the SAARC countries
exports respectively. Bangladeshs share of SAARC countrys exports was the lowest,
7.72%, in 1983. Bangladeshs exports share in the Asian developing countries, however,
shows a decreasing trend in the 1990s compared to the1980s though the ratio is slightly
higher in 1998 and 1999 compared to immediate earlier years. The ratio dropped to
0.59% in 2003 from 1.46% in 1980 though it was 0.75% in 2001 (IMF various years).

Export Shares to GDP:

The contribution of the export sector to Bangladeshs GDP has been gradually increasing
over the years. While export share in GDP was 4.52% in 1980, this share has reached to
13.45% in 1999, reflecting 197.56% increase in GDP contribution in nineteen years
(World Bank 2004). This ratio further increased in 2000, 2001 and 2002. The ratio was
15.38% in 2001. The trade openness (trade/GDP ratio) was around 14% to 16% till 1989.
After that the ratio increased to 28% in 1995. In 2001 the ratio has increased to 36.88%
which implies that trade has been liberalized in Bangladesh to a great extent since 1980.
Over the years trade deficits ranged from 2.23% to 7.37% of GDP (World Bank 2004).

Export Earnings and Export Growth:

The export sector performed rather well throughout the 1990s. This sector achieved a
growth rate of 37.04% in the FY 1994-95. During the twelve years, 1991-92 to 20022003, Bangladesh experienced negative export growth (-7.44%) only in FY 2001-2002.
The terrorist incident of September 11, 2001 in USA and subsequent events may be
blamed for this unexpected suffering of the export sector in the particular fiscal year.
However, the export sector achieved a 9.39% growth rate, an increase of US$ 562.35
million, during 2002-2003, with total export earnings amounting to US$ 6,548.44 million
compared to US$ 5,986.09 million in 2001-2002. Charts 1 and 2 provide comparative
year-wise export earnings and export growth rates for twelve years.

Exports Performance Compared to Imports:

The export earnings also continuously increased over the years with increased import
payments. Though import payments are always higher than the export earnings in
absolute terms, the percentage of Bangladeshs export to imports is improving gradually
and in recent years has been quite impressive. In FY 1983-84 the value of Bangladeshs
exports was US$ 811 million and the corresponding figure for Bangladeshs imports was
US$ 2073 million that represents export/import ratio of 39.12%. The export-import ratio
increased to 70.09% and 67.80%, respectively, in FY2001-02 and FY 2002-03 (EPB
2004).

A Review of Trade Balance:

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. The problem of balance
of trade in Bangladesh is well known: ever since the independence of the country, export
earnings have persistently fallen behind import payments. Consequently, every year the
country incurs a huge trade deficit.

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.
Bangladesh: Trade Balance and Export-Import Price Indices
Year
1973/74
1974/75
1975/76
1976/77
1977/78
1978/79
1979/80
1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00c

Exportsa
2,983
3,136
5,552
6,670
7,178
9,632
10,997
11,484
12,387
18,016
20,136
26,225
27,396
33,682
41,161
42,686
41,515
60,272
74,198
88,215
98,739
136,970
144,521
171,554
229,408
245,620
289,383

Value (Tk. Million)

Importsa
Trade Balancea
7,320
-4,337
10,842
-7,706
14,703
-9,151
13,993
-7,323
18,216
-11,038
22,073
-12,441
30,525
-19,528
37,288
-25,804
38,729
-26,342
45,265
-27,249
50,874
-30,738
68,263
-42,038
62,929
-35,533
68,496
-34,814
91,588
-50,427
95,075
-52,389
113,305
-71,790
111,877
-51,605
132,756
-58,558
138,198
-49,983
137,540
-38,801
218,564
-81,594
254,646
-110,125
290,187
-118,633
318,916
-89,508
341,016
-95,396
422,755
-133,372

Price Indices (1984/85 = 100)

Exportsb
Importsb
46.8
49.0
57.9
64.2
50.7
58.2
56.1
57.7
64.4
59.1
80.4
68.7
97.0
87.4
80.0
102.6
68.7
107.1
69.9
101.5
82.5
100.1
100.0
100.0
72.5
88.9
75.2
81.1
88.0
82.5
85.1
87.7
87.9
93.0
93.7
96.9
92.3
94.2
98.6
97.3
104.1
100.0
111.0
108.9
118.5
116.9
124.1
120.4
128.9
124.5
129.2
130.9
129.9
142.6

Sources: a. BBS, Foreign Trade Statistics (various issues)

b. Bangladesh Economic Survey (various issues)
c. Bangladesh Economic Survey, 2001

Exports of Bangladesh to Industrial and Developing Countries:

While developing countries were the major destinations during the 1970s and early
1980s, this direction reversed from the middle of 1980s and the trend continued
throughout the 1990s and thereafter. Now industrial countries are the main destinations of
Bangladeshs exports. The industrial countries used to represent 41.4% share of
Bangladesh exports in 1978 and developing countries used to represent 45.8%. In 2002
these figures stood at 88.3% and 11.7% respectively for industrial and developing
countries. Among the developing countries, the Asian countries import more than others
from Bangladesh.
It is also observed that the annual growth rate of Bangladeshs exports to the world is
positive since the 1990s; it is found very impressive in 1990 and 1994 being 28.1% and
16.3% respectively. However, the corresponding figures are better for industrial
countries: 40.6% and 18.7%. The export growth rate to developing countries in 1998 and
2002 are negative, -15.9% and 2.9% respectively though these rates were positive in
1990 and 1994.

Trade Policy Reforms:

During the past three decades, Bangladesh carried out extensive trade policy reforms. In
particular, the country has been pursuing a liberal trade policy since the beginning of the
1990s, which is consistent with the trends in the global market economy, Uruguay Round
Accord and agreement with the World Trade Organization. The government formulated a
five-year export policy along with a more liberal five-year import policy in 1997/98 with
the objective of attaining a favorable trade balance and gradual improvement in the
foreign exchange reserve situation (GOB 2002). The governments in 1990s really wanted
to promote rapid export growth by reducing and eliminating the anti-export bias prevalent
in the economy. Keeping this goal in mind, the government has been pursuing a limited
protective policy only in consideration of several important issues like public health,
security and religious restrictions. Also, the government has been adopting more liberal
import and export policies and programs including reduction and harmonization in tariff
rates, and elimination of many quantitative restrictions on imports (GOB 2002, CSB
2003).

Export Products of Bangladesh:

Garments

Vegitable

Jute Products

Handicrafts

Woven Garments

Frozen Fish

Food Products

ICT Products

Knitwear

Potteries

Ceramics
Products

Bicycle

Growth of Exports:
Bangladeshs total exports got a significant boost with an annual trend growth rate of
14.24 percent during 1985/86 to 1999/00, compared to an annual trend growth
rate of below 10 percent (in nominal US dollar terms) over the earlier period of
1972/73 through 1984/85. Such a pattern of export growth over time largely
reflects the effects of progress in Bangladeshs policy reforms over the period.
Export products during the earlier period (e.g. jute and jute goods) did have a
significant effect in limiting the overall export growth, especially starting with the
mid-1980s. The export upturn in the latter period also reflects the fact that the
export setback in jute and jute goods was more than recouped by remarkable
growth in the export of a new product group, ready-made garments.

Jute goods:
Among jute and jute goods, only jute goods had a statistically significant low annual
trend growth rate of more than 6 percent during the early period and around 1
percent for the entire period. In the latter period, (1985/86 to 1999/00), it had no
significant growth trend. Raw jute exports, on the other hand, had statistically
significant negative growth trends for the whole period as well as for the second
period. The reasons for the decline were the growth of jute manufacturing
industry in the country and falling demand for raw jute in developed countries due
to extensive use of synthetic fibers (Hessian, 1996).

Frozen food:

Frozen food (mainly frozen shrimps) was one of the major product groups, which had a
highly satisfactory trend growth rate of 16.11 percent for the whole period.
However, its growth remained uneven, a spectacularly high rate of 31 percent
during the period till 1984/85 along with a sharp drop to about 8.4 percent during
1985/86 to 1999/00. The drop in the growth rate in the later period may be
attributed to a fall in demand in the EU markets in the late 1980s and early 1990s,
which recovered only during the second half of the 1990s. The dwindling growth
of frozen foods in the later period may also be attributed to supply constraints.

Tea:
Tea falls in the category of an exceptional export product since it had a significant growth
of 13 percent during the early period up to 1984/85. However, its growth was so low and
erratic subsequently that it showed a negative growth trend during the later period. While
Bangladesh successfully recouped the loss of tea export earnings caused by the
dislocation during the countrys war of Independence, it lost the momentum in its race
with India and Sri Lanka in the late 1980s and early 1990s.

Leather and leather products:

Bangladeshs exports of hides, skins, and leather, and leather products have increased
since the early 1970s. The product group, included in the traditional export category, had
a trend growth rate of about 9 percent during the entire period, which was close to the
average growth for all exports. Its growth rate was more than 13 percent during the first
period but the rate slowed to 5 percent during the second period
.

Readymade garments:
Starting from a virtually zero base during the late 1970s, readymade garments exports
grew at a very rapid rate of about 95 percent during the early period up to 1984/85, and,
from a sizeable base, at a moderate but fairly high rate of 20.37 percent during the later
period.

Knitwear products newly entered the export market with some significance only in
1989/90 and since then its export grew very rapidly at a much faster rate than other
readymade garments. The very fast growth of the RMG product group as a major export
earner (in gross terms) was the most remarkable development for Bangladesh, and
without this phenomenal growth, Bangladeshs total exports which had a setback in the
traditionally important exports of jute and jute goods, could not have grown at double
digit in the late 1980s and 1990s.

Annual Growth Trends of Exports by Commodity Groups

Commodity Group

1972/73 1999/00

1972/73 1984/85

Raw Jute
-1.75
0.71
Jute Manufactures
1.22
6.49
Frozen Foods
16.11
30.58
Tea
1.75
13.23
Leather
8.86
13.2
Readymade Garments*
57.10
94.91
Others
19.02
23.18
Total Exports
10.91
8.6
Source: Authors estimation based on Bangladesh Bank data.

1985/86 1999/00
-2.13
1.01
8.4
-0.95
4.88
20.37
24.39
14.24

Trend of growth in export of Bangladesh among 1980-90 to 1990-99s:

During 1990s, Bangladeshs total exports in Current US $ value grew at an annual
compound rate of 14.4 per cent. In fact, Bangladesh experienced double digit export
growth in most of the years during the 1990s.The Gap between Export and Import
widened from-US$1791 million in 1990/91 to -$2814 million in 1990/00,although the
share of export earnings in import payments steadily rose from 31 per cent in 1980/81 to
67 per cent in 1999/00.The openness of the economy as measured by total external trade
as a proportion of GDP went up from around 22 percent in 1990/91 to nearly 30 percent
10

in 1990/00 with the share of export in GDP rising from 7 per cent to 12 percent during
the same period.
Trend of growth in export among 1980-90 to 1990-00
Description

1980/81

1990/91

1999/00

Annual compound

Annual

Growth rate %

compound

1980s

Growth rate %

Export(millions $)

710

1718

5752

9.2

1990s
14.4

Import(millions $)

2282

3510

8566

4.4

10.4

Trade Deficit

1572

1792

2814

1.3

5.1

(million $)
Export as % of

31.1

48.9

67.1

import
Export as % GDP

7.3

12.1

import As of GDP

16

15

17.9

Openness of the

21

22.3

30

economy %

Source: Export Promotion Bureau and World Bank

Changes in Composition of Exports and Imports:

11

Exports of traditional goods (composed of jute, jute goods, tea and leather), constituted
most of Bangladeshs total exports, around 97 percent in 1972/73. These exports
precipitously fell to less than 10 percent in 1999/00. At present the dominance of
raw jute and jute goods in the export trade of Bangladesh has weakened
considerably, and some non-traditional items have made inroads. For example, the
share of raw jute in export earnings has declined from about 38 percent in
1972/73 to a meager 1 percent in 1999/00. Over the same period, the share of jute
goods declined from 52 percent to less than 5 percent. Another traditional exports
item, tea, declined from 2.7 percent to 0.3 percent during the period. Teas relative
export share did increase in some of the years in the 1980s but it declined sharply
in later years. Leathers share in total exports showed a significant increase from
4.6 percent in 1972/73 to more than 10 percent in the late 1980s but declined to a
level of 3.4 percent in 1999/00.
On the other hand, nontraditional exports (i.e., exports of goods other than traditional
ones) dramatically grew in importance from 3 percent of total exports in 1972/73
to more than 90 percent in 1999/00. Among the nontraditional exports, RMG
including knitwear rose to 54 percent during 1999/00 from an insignificant level
in the early 1980s. The share of frozen food increased from less than 1 percent to
6 percent during the years. Frozen foods share in total exports was higher in the
1980s but its later decline reflected a deceleration in its growth performance in
recent years. Residual export category showed a big jump in export importance
from 1.8 percent in 1972/73 to 31 percent in 1999/00.

12

Composition of Exports by Commodity Groups

(% of Total Export Earnings)
Year
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00

Raw Jute

Jute Goods

7.56
8.18
6.07
4.29
3.14
2.26
2.08
2.32
2.63
2.09
1.35
1.25

18.92
18.69
10.41
14.71
12.26
11.21
9.21
8.49
7.20
5.43
5.71
4.62

Frozen
Foods
10.99
9.05
8.26
6.40
6.93
8.34
8.63
8.10
7.28
5.76
5.15
5.98

Tea

Leather

3.10
2.59
2.52
1.62
1.73
1.50
0.95
0.86
0.87
0.91
0.73
0.31

10.65
11.74
7.82
7.25
6.25
6.66
5.83
5.45
4.41
3.67
3.16
3.39

Readymade
Garments
36.63
39.97
42.83
53.36
52.05
50.97
52.98
50.23
50.62
54.97
56.07
53.60

Others
12.13
9.78
22.10
12.37
17.62
19.06
20.32
24.55
26.99
27.17
27.84
30.84

Source: Authors calculation based on Bangladesh Bank data

Some Graphical Statistics over Last Two Decades:

Figure 4.1.2 shows that:

During 1983-84 to 1989-90, the average trade deficit was 7.3% of GDP. This deficit
decreased to 6.7% on average in the last five years.

13

Figure 4.2.1 shows that:

The growth in exports has fluctuated considerably from an average low of 7% in 19811985 period to an average high of in excess of 17% in 1991-1995 and 2006-2008 periods.

Figure 4.2.2 shows that:

14

The share of primary commodities to total exports decreased from 17.5% in 1980-81 to
7% in 2007-08.On the other hand, the share of manufactured goods to total exports
increased from 44% in 1980- 81 to 93% in 2007-08.

Figure 4.4.4 shows that:

there has a dramatic increase in the number of expatriate workers since 2005, rising
from about 2.50 lakh to 8.75 lakh.
However, the impact of the global financial crisis may lead to a decline over the
coming months.

15

Trend of Export Earnings:

At present, Bangladesh faces growing economic competition from India, Pakistan, and
Indonesia, countries which could offer better infrastructure and larger and growing
domestic markets. The exports of Bangladesh have been experiencing a steady rise since
the late 80s of which apparels constitute approximately 75% of the total exports. Other
items include frozen foods, jute & jute products, leather & leather products, handicrafts,
vegetables, chemical products etc. Major export markets for Bangladeshi exporters are
North America (33%) and EU (52%) while other regions constitute the rest. In Fiscal
Year 2006-07, total exports earnings of Bangladesh exceeded US$ 12 billion. The trend
of Bangladeshi exports from FY 1972-72 to 2006-07 iis shown below.

16

Conclusion:
Bangladesh economy has passed through a heightened pace of global integration in the
1990s. The degree of openness of the Bangladesh economy is now higher than many
developing countries exports and imports of goods and services currently account for
about a-third of the countrys GDP. Thus, by definition, the state of the global economy is
likely to have a stronger impact on the Bangladesh economy now than at any time in the
past. The impact of the state of the global economy would continue to be increasingly felt
in terms of the countrys macroeconomic performance, GDP growth rate, external sector
performance, foreign exchange reserves, and health of the financial institutions. This is
perhaps one of the most important legacies that the Bangladesh economy has inherited
through its developmental practice and reforms of the 1990s.
Bangladeshs export sector registered double-digit real growth rate throughout the 1990s.
As a matter of fact, real export sector growth rate was almost three times the real GDP
growth rate during this period. Even during FY 1990 and FY 1991, a period which
coincided with the last major global recession, Bangladeshs export sector posted robust
growth rates of 17.9% and 12.7% respectively. The structure of export was different,
though, at the time. Raw jute, jute goods and leather were some of the major export
commodities in the early 1990s, their combined share being equal to the share of RMG in
total exports of Bangladesh. A relatively diversified base and market provided some sort
of a cushion against sudden fluctuations of the global market.
Exporters

and

trade

experts

attribute

Bangladeshs

export

success

to

the

competitiveness of the countrys readymade garment sector and availability of cheap

labor, although exports of frozen food, leather and jute fell. Garment manufacturers
produced lower-end products whose demand did not fall significantly in global markets.
Remaining competitive in these days of difficulties since the quota system was
withdrawn and the ongoing lingering economic slide worldwide is rewarding for
Bangladesh.

17

Bangladesh maintains export trends

YEAR

1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03

EXPORT IN (MILLION US$)

Export (M US$)
CURRENT
CUMULATIVE
0.16
0.16
4.45
4.61
7.59
12.21
15.27
27.47
13.93
41.40
16.08
57.48
34.21
91.69
47.99
139.67
76.99
216.67
127.05
343.71
145.60
489.32
228.26
717.58
337.02
1054.60
462.77
1517.36
636.05
2153.41
711.69
2865.10
890.82
3755.92
1067.87
4823.79
1077.03
5900.81
1200.22
7101.03

2003-04

1353.91

8454.94

2004-05

1548.68

10003.62

2005-06

1836.18

11839.80

2006-07

2063.67

2063.67

2007-08

2429.58

16333.04

2008-09

2581.70

18914.74

2009-10

2822.54

21737.28

2010-11 (January,
2011)

1940.01

23677.28

Growth (2009-10)

9.33%

18

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Bakht, Z. (2001): Trade Liberalisation, Exports and Growth of Manufacturing Industries
in Bangladesh in M. M. Huq and Love (eds.) Strategies for Industrialisation: The Case
of Bangladesh, University Press Ltd., Dhaka.
Rab, A. (1997): Export Trends and Policies in Bangladesh: Some Lessons of Past
Performance for Future Policies, paper presented to a Workshop organized by the
Institutional Support to the Ministry of Finance Project (ISMOF) supported by the Asian
Development Bank, March, Dhaka.
Rahman, S. H. (1979): The Determinants of Change in Trade Balance: Some Estimates
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84.
Ahmed, S. and Sattar, Z. (2004). Trade Liberalization, Growth and Poverty Reduction:
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Bangladesh, Dhaka.
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Bangladesh International trade, Information about International trade in
Bangladesh http://www.nationsencyclopedia.com/economies/Asia-and-thePacific/Bangladesh-INTERNATIONAL-TRADE.html#ixzz1GOf4e1tc
Bangladesh Export Promotion Bureau

19