POST TIME: 11 September, 2019 11:12:04 PM
Expansion and diversification of export is the need of the hour
Expansion and diversification of exports will reduce trade deficit with other countries

Expansion and diversification of export is the need of the hour

Buffet, CEO of Berkshire Hathaway, investor in Walmart and whose current net worth is more than $60 billion, one of the richest men in the world, says six tips to living a successful life. One is on earning, “Never depend on single income. Make investment to create a second source.”  In another tip on investment, he said, “Do not put all your eggs in one basket.” In his words, he indicates diversification of economic activities in life. It is applicable for everyone either on individuals, businesses, industries, institutions or for a nation. In the age of digitization, globalization, the world is now a global village. Every state of the world is competing with each other for their own interests and economic development. They always want to diversify their export baskets to earn more income from their exporting goods.

They research, develop and innovate new products for their marketing and expand domestic production and try their best to explore new world markets for export their products. Diversification of product exports help to reduce risk of any uncertainty of getting foreign export income of a country. Diversification of export items increases foreign export earnings and also promotes export income stability. When we only depend on a few export items for export, we run the risk of a large magnitude. If our export portfolios expand to include more items, the exporter’s specific risk will reduce. Hence, any adverse event related to export earnings would not expose and will reap the benefits of diversifying.

Sectors specific risks get minimized when export of other sectors are added to the export portfolios. This is because a recession or a downtrend is not usually seen in all sectors together at the same time. It also reduces negative balance of payments with other countries. Our (Bangladesh) export is now on a few items like Ready Made Garments (RMG), leather, fishes, jute, jute goods, tea, vegetables, papers etc. We can think to add more new items in our export baskets like rod, cement, ICT products, outsourcings soft wares, skilled manpower, chemicals, medicines, natural medicines (Aurvedic), finished leather goods, agro-products (potatoes, cabbage, cauliflowers, beans, tomatoes, wheat, rice, rice bran oil, different kinds of fruits etc.), processed foods, frozen foods, light engineering products like plastic goods, wood goods, sea foods, marine resources etc. We should also innovate new agricultural and industrial finished products to add to our export baskets.

We should find out a fitting strategy to diversify our export goods and export earnings. A Research and Development cell can be formed to find out the potential and possible export goods of our country. Research and development is necessary for a country to find out possible new products to export and possible export to potential countries. The fruits of these research activities help both expansion of exporting products and more export to other countries. We can choice for export the war ravaged country like Afghanistan, Iraq, South-West African countries, South Asian Association for Regional Countries (SAARC), Association of South-East Asian Nation (ASEAN) countries and other state including Latin America, Europe and South-East Africa. If we analyze our export position and composition of export commodities, we can see country’s  total export earnings stood at US$34,242 million in 2015-2016, which was 9.77 per cent higher than the  export earnings stood at (US$31,209 million) in 2014-2015. This is an increasing trend of our exports. Country-wise export shows.

That USA (United States of America) is the main destination of our export. We shall have to find out other potential export destinations also. Government of Bangladesh is trying its best to liberalize export policies and rules to increase more export from the country to add more export income to our GDP growth. Our  Prime Minister Sheikh Hasina also underscored the importance of diversification of exports and more export to other countries for our rapid economic development. There is no alternative to increasing export income for our targeted 8-10% growth in the year 2030 for attaining Sustainable Development Goals (SDG). Domestic and International Trade Fair (DITF), exposition and exhibition of our new products in foreign land can help and expedite this endeavour (export expansion) to reach the targets.

Expansion and diversification of exports will reduce trade deficit with other countries and balance of payment of Bangladesh economy will increase in a significant level.  A strong economic diplomacy and business diplomacy is necessary for this purpose.

The writer specializes in development and economic issues. E-mail: muzibur64@gmail.com