Changes needed in economic pattern
Local and regional institutions should be restructured to benefit from global business, for which political willingness is highly important, economists said yesterday.
“The core challenge for South Asian countries is to restructure their economic pattern,” said Rehman Sobhan, chairman of the Centre of Policy Dialogue, at a session on the opening day of the two-day SANEM Annual Economists' Conference 2018.
The Asian countries are holding major foreign currency reserves, he said, citing China's reserves of $3 trillion to further his point.
India and China should maintain a good relationship with each other to benefit from the global value chain and integration is required among the Asian countries.
Sobhan's comments came at the session titled “Institutions, Governance and Trade in the Context of Emerging Global and Regional Challenge – A South Asian Panel Discussion in Memory of Dr Saman Kelegama”. Speakers said Bangladesh's position in the global value chain is at now the lower end: buyers purchase items made in the country at a low cost and sell them at prices that are six to seven times higher.
The country will have to reduce the gap in the global value chain and businesses should improve their negotiation skills, Sobhan said.
Bangladesh's trade gap has widened significantly in recent times and its export's capacity is low too.
For instance, Vietnam, a competitor of Bangladesh in the global market, has seen its export earnings cross the $200 billion-mark already. “But Bangladesh is still far away from the level,” he added.
The authorities should focus on how the least-developed countries like Bangladesh can increase their participation in global trade, said Mustafizur Rahman, a distinguished fellow of the CPD.
The developed countries did not follow on their commitment made at a LDCs conference in 2011 to decrease the number of LDCs to 24 from 48, he said.
They had also promised that the export volume of the LDCs would be increased to 2.80 percent of the global share from 1.40 percent, according to Rahman.
“But, they failed to keep their both promises.”
The economist said local and regional institutions should put pressure on global organisations like the World Trade Organisation to implement the commitments.
Political willingness is important to strengthen the regional institutions like the South Asia Free Trade Agreement and South Asian Association for Regional Cooperation.
It is not possible to implement the regional economic zone and the economic union by 2020 in the absence of a political willingness, he said.
There are three types of organisation -- policy, regulatory and implementer -- in Bangladesh.
“We should take the initiative to strengthen the organisations to ensure the interest of the workers and the producers.”
Rahman also said the country should stop capital flight.
According to the Panama and Paradise Papers, $5 billion has been laundered from the country. Of the sum, 80 percent were laundered through mis-invoicing, he added.
Democracy is a pivotal component in strengthening institutional capability, said Posh Raj Pandey, chairman of the Kathmandu-based South Asia Watch on Trade, Economics and Environment.
“Stable democratic situation will also boost economic outcome,” he added.
Kunal Sen, a professor of the University of Manchester; Prabir Dey, a professor of the Research and Information System for Developing Countries in India; and Dushni Weerakoon, executive director of the Institute of Policy Studies, Sri Lanka, also spoke.
Selim Raihan, executive director of the SANEM, moderated the session.
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