External Sector: A Pathway for Meeting Expectations

 In mid 1990s, it was an imagination to think of internet. Mobile was in black and white. Creative destruction gives birth to new ideas. Newness is true. History can resonate but can give nothing. Present is everything. Future is uncertain despite different forward looking policies are prepared and action matrices are set to achieve the target. Now it is the year of 2024. What will be the situation in the year of 2124? We can make a time travel and go to the periphery of the year-1924. Open sources show worldwide economic downturn beginning in late 1920s and lasted until late 1930s. It was the longest and most severe depression ever experienced by the industrialized Western world, sparking fundamental changes in economic institutions, macroeconomic policies, and economic theories. Although it originated in US, the great depression caused drastic declines in outputs, severe unemployment, and acute deflation in almost every country of the world. Century back economic situation shows negative situation. Century forward may be different. It is can be predicted in different ways. Technological improvements cannot be imagined. However, the changes may increase economic outputs to a higher level. People are expected to work maximum 20 hours in a week. It is just an projected imagination. Different situations may come across. Uncertainty is rarely possible to be hedged.

Given the area of our country, it is rarely possible to be expanded. But population can be tamed to a reasonable level. Time will speak of the reality in future. Cultivable lands are reported to decrease. They are used to build up infrastructure for different purposes ranging from shops to residential houses. Population needs to be accommodated at anyway. High rise buildings can accommodate many without wastage of land. Despite, land is lost for different purposes including home construction. Land is the single source for food grains. Technology advancement can invent food grains and different cereals to be manufactured in factories. This is forward looking talk. In other ways, alternative foods may be invented phasing out the items people now eat for survival. These are not impossible. This may happen in the days to come. Before going to the level, prevailing food stuff cannot be avoided, rather sources need to be created alliteratively to meet the increasing needs. The ‘alternatively’ is nothing but buy from other countries producing the same. There are few leading countries producing food stuff. Considering Bangladesh as an example, it depends on external sectors for everything.

We depend on others; they should also depend on us reciprocally. This is a win-win game. But the prevailing situation does not indicate such a game. The economy is dependent on external sectors since its independence; the needs were supported by aids and grants. The necessity forwarded to earn income from external sources. The same was very insignificant because it relied on foreign money sent by people living abroad and export of jute and tea. In late 1980s, radical changes were observed in export trade. Readymade garments became included in export basket. With the establishment of export processing zones, the sector got new momentum. It led to increase economic activities to a larger extent. The sector helped to expand background linkage industries likes spinning mills, textile mills, accessories industries and many more. Economic expansion can be exemplified by a simple item. In the last century, consumer goods in mini-pack are found in the market. This indicates a sign of progress. The country is in the pace with dependence on trade.

Basic cereals like paddy and different other essentials are produced locally. In addition, there are other manufactured goods necessary for everyday livelihood. These are edible oil, sugar, pulse, papers, etc. The country is in capacity to produce such items considering different factors of production available. But the country is in lack of inputs contents. These need to be imported. Development of export sector supports to procure inputs for manufacturing factories known as import substitution industries. These industries started developing at the beginning of the current century. A new momentum was observed with establishment of economic zones in different locations of the country.

The country is now in a sound position both in export sector and manufacturing sector for domestic market. But exports are confined in few goods. Readymade garment is still at the top. Significant exports from other items are rare. There are different theories behind the development of readymade garment industries. It is a sector supported by different policies. They are duty free imports, inputs procurements under back to back arrangements, cash incentives, etc. The stated policies cannot be set applicable for other exportable items due to different causes, as per business insiders. Another development is observable during the recent decades. Cross border service sector is at upward moving level. Different business services including IT enabled services are contributing to the economy.

The country is already out of LDC status. The new status has cost, but bears honor. The graduation is not an easy task. It requires to fulfill different criteria. They are national income level, human assets index, and economic vulnerability. Achievement in income level can lead to strengthen other criteria. As said earlier, income level reached a level with the help of different factors; they are increases in export income, transfer payments from people living abroad, and production of manufactured goods by import substitution industries. These are basically external sectors oriented. There may be many talks against the propositions. Whatever the criticism is, the supports cannot be ignored.

With the growing needs, cultivable space is expected to be exhausted for accommodation of housing needs of people. Basic production in the next century may face reduction unless miracle in technology is achieved. Food stuff needs to be procured from external sources. The proposition seems to be absurd. Really is it absurd? Once service means delivery goods from production to consumers. But definition has come to changes; services become an industry consisting a major pie of national income. So the proposition may come true. We need to face the challenges.

Cross border service deliver is as good as export trade. There are different business services without limiting to IT services. This is a part of knowledge economy. Service delivery does not require physical infrastructure as necessary for export of goods; it is moved through non-physical form. Human as well as intellectual capital takes works into consideration and produces services. The years to come may be the age of professionalism.

Outputs in physical form will face challenges due to different constraints in the future. Consequently export of goods may encounter problems. Without adequate earnings from external sectors, necessary imports will come to a halt. Output gap compared to needs in internal sector is required as supports from external sources. It means external sectors will sell goods to us in exchange of foreign money. We need sources of such money. Service delivery can facilitate to earn money, in addition to traditional exports. The country once will be a city state like Singapore, Hong Kong leaving insignificant space for production of food stuff. As a result, auto-dependency on imports will be inevitable. We are not so farsighted. Despite preparedness is needed to face the situation to come in future. Let us think the country becomes a professional economy without limiting to medical services to legal consultancy.

Future is uncertain. Nowness is reality. This is true. Despite, future will come across. If it appears in adverse way, nothing but external sectors will be the route for solution. Knowledge based work is expected to generate income from rest of the world which will be used in a much better way for our livelihoods sourced from external sectors.

 
Mehdi Rahman works in
the development sector.