chapter  3
24 Pages

Bangladesh: Selim Raihan

BySELIM RAIHAN

For over one and a half decades following independence in 1971, Bangladesh pursued an import-substitution industrialisation strategy. The trade policy regime was characterised by high tariffs and non-tariff barriers to trade and an overvalued exchange rate system. This policy was pursued with the aim of improving the balance of payments position of the country and creating a protected domestic market for manufacturing industries (Bhuyan and Rashid 1993). The government embarked on a gradual process of dismantling trade barriers in the mid-1980s. The reform process gathered momentum in the early 1990s. Since then, successive governments have reaffirmed their commitment to the development of a more liberal trade regime. There are intense debates among economists and policy makers on the

extent of trade liberalisation. The World Bank and IMF have claimed that the pace and extent of liberalisation in Bangladesh in the 1990s has not been as rapid as in other developing countries (World Bank 1999). However, this is not endorsed by economists and private industrial entrepreneurs in Bangladesh, who argue that a much slower pace of liberalisation is warranted (Mahmud 1998). It has also been pointed out that the views of the stakeholders have not been taken into consideration in the framing and implementation of trade liberalisation policies. In fact, there have been concerns over whether the impact of trade liberal-

isation has been favourable to the domestic economy. There is a lack of consensus on the issue as well (World Bank 1999). There is also debate over the future direction of trade liberalisation in Bangladesh. Questions have been raised over whether Bangladesh ought to undertake further drastic wholesale liberalisation of trade or adopt a more gradual approach. Against this backdrop, the chapter attempts to examine the link between trade liberalisation, growth and poverty in Bangladesh.