Can Bangladesh become a teacher to India?

Bangladesh, a country which became independent with the help of India, is all set to surpass India economically. Bangladesh and Vietnam are the newer examples of low income countries using exports to propel their economy. Bangladesh in the last couple of decades has emerged as the key hub for apparel exports. About three decades ago its exports of footwear and apparel accounted for less than 1% of the global exports in these products. But now it’s about 7% only behind China and Vietnam. These sectors employ about 3.6 million people, of which more than half are women. Because of this Bangladesh has grown about 6.5% to 8% over the last five years. On the other hand India because of it’s protectionist mindset is failing to integrate more tightly into global value chains(GVCs).  The global value chain (GVC) describes the people and activities involved in the production of a good or service and its supply, distribution, and post-sales activities (also known as the supply chain) when activities must be coordinated across geographies. GVCs are the most important development in cross-border trade over the last two decades. Bangladesh has quickly used the GVC to expand its export of readymade garments. The lessons that India needs to absorb are that GVCs work well when imported inputs are made cheaper by lower tariffs. This must be supplemented by government interventions. Because of coronavirus many countries are banning chinese goods and this can turn out to be a huge opportunity for countries like Bangladesh, Vietnam, India(if it really wants to grab the opportunity) etc. And if these countries can really prove themselves to the outer world then obviously they will gain out of this. A low income country like Bangladesh offers relevant lessons to design the set of changes that will help country like India to be back on its growth track of 8%.

Soumya Bhattacharyya.   

PGDM Batch 2019-21