Assignment #2

Growth Model
Export-Led Development of Bangladesh
Prepared by
Naimat Ali FA17-BBA-010

Wasil Baig FA17-BBA-065

Prepared for
Ma’am Hina Amir
Introduction to Economy of Bangladesh
Bangladesh's economy has grown roughly 6% per year since 1996 despite prolonged periods of political
instability, poor infrastructure, corruption, insufficient power supplies, and slow implementation of
economic reforms. Although more than half of GDP is generated through the services sector, almost half
of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product.

Exports Overview
Garment exports, the backbone of Bangladesh's industrial sector, accounted for more than 80% of total
exports and surpassed $25 billion in 2016. The sector continues to grow, despite a series of high-profile
factory accidents that have killed more than 1,000 workers and crippling strikes, including a nationwide
transportation blockade orchestrated by the political opposition during the first several months of 2015.
Steady export growth in the garment sector combined with remittances from overseas Bangladeshis -
which totaled about $15 billion and 8% of GDP in 2015 - are key contributors to Bangladesh's sustained
economic growth and rising foreign exchange reserves.

Act of 1980
As we all know after separation Bangladesh was suffering from a decline period. In 1980’s policy makers
decided to take few steps to improve the economy of the country

(i) Greater efficiency and international competitiveness

(ii) Faster growth of export-oriented industries
(iii) Reduction of regulation and control along with tariff rationalization
(iv) A liberalized market-based competitive structure
(v) Disinvestment of public sector enterprises

Step to improve exports

(i) Export processing zone in Chittagong in 1980
(ii) Tax breaks for export-oriented enterprises and income tax rebates
(iii) Export processing zones were established in Dhaka and Khulna
(iv) Leading export oriented industries such as garments, leather and jute manufacturing use
sophisticated technology relative to that of leading non-export industries, such as food
grains, housing and non-traded services
In Result

Conclusion
A common problem facing policy-makers in UDCs like Bangladesh is how to efficiently allocate scarce
resources to increase the productive capacity of the economy. The essence of the problem is how to
determine an optimal allocation of resources between the export and non-export sector of the
economy.
If the sum any marginal reallocation of resources from the non-export sector to the export sector will
increase economic growth.

Bangladesh, has done use of a well-structured ARCH model (autoregressive conditional

heteroskedasticity)