BANGLADESH'S EXTERNAL ECONOMIC RELATIONS

This article provides a comprehensive overview of Bangladesh's external economic relations in the early 1990s. It analyzes the main components of the country's economic engagement with the world, including international trade, foreign aid, and remittances from migrant workers. The study examines the structure and direction of Bangladesh's trade, highlighting the heavy dependence on the ready-made garment (RMG) sector and the persistent trade deficit. The research provides a critical assessment of the role of foreign aid, analyzing the country's deep dependency on development assistance and the associated challenges of conditionalities and effective utilization. The paper also underscores the growing importance of remittances as a vital source of foreign exchange. The analysis concludes by identifying the key challenges for managing the country's external economic relations, particularly the need for export diversification and a reduction in aid dependency to achieve sustainable economic growth.

Understanding the external sector is critical to understanding the development challenges of Bangladesh. This paper provides a holistic overview of the country's external economic relations at a time of significant domestic and global change. The analysis is structured around the three key pillars of this relationship. The first is trade. This section details the composition of Bangladesh's export basket, noting the phenomenal growth of the RMG sector but also warning of the dangers of over-reliance on a single product. It also examines the import structure and the chronic trade imbalance that necessitates external financing. The second pillar is foreign aid. The paper traces the history of aid dependency and provides a critical perspective on the role of the World Bank, the IMF, and major bilateral donors. It discusses the debate surrounding structural adjustment policies and the challenges of ensuring that aid contributes effectively to poverty reduction. The third pillar is remittances. The study highlights the rapidly growing importance of the funds sent home by Bangladeshi workers abroad, recognizing it as a crucial and more stable source of foreign currency than aid. The findings reveal a national economy deeply integrated with the global system but in a position of significant vulnerability. The paper concludes that the central strategic challenge for the 1990s was to transform this dependent relationship into one based on greater self-reliance, primarily through a dynamic and diversified export sector.