BANGLADESH INSTITUTE OF INTERNATIONAL AND STRATEGIC STUDIES

REALISING THE POTENTIAL OF BANGLADESH’S LOCATION THROUGH CONNECTIVITY

Author: Mahfuz Kabir & Shaheen Afroze

DOI Link: DOI: https://www.doi.org/10.56888/BIISSj2013v34n4a2

ABSTRACT

Bangladesh is geographically located between two Asian economic power houses-China and India. The gravity model of international trade theory implies that geographical proximity leads to higher volume of bilateral trade. However, very little or no trade takes place among the smaller countries in South Asia that are closely located even though individually they trade more with distant industrialised countries. This clearly implies that there may be other factors, such as lack of transport connectivity and related logistical constraints that give rise to high transaction costs leading to low trade. Nevertheless, Bangladesh has the potential to establish itself as a regional economic and financial hub. It has also been stipulated in the Vision 2021 of the Government of Bangladesh and demonstrated political will through a number of initiatives. Given this backdrop, this paper tries to explain the avenues for tapping the potential of Bangladesh’s location through greater connectivity. It also attempts to uncover the whole issues of connectivity given the locational advantage of Bangladesh, identifies the existing bottlenecks that are hindering in deriving multiple economic benefits and suggests how to address these constraints. It reveals that the country has got unique location in the middle of two economic power houses, which, if wisely utilised, can provide wide ranging benefits to vibrate economically.