Welcome to Applied Macroeconomic Centre

A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Monday, December 27, 2010

China opportunity for Bangladesh!

A timely and solid analysis by Dr. Zaidi Sattar published in the Financial Express on a new window of export opportunities opened for Bangladesh because of the fast erosion in China’s global competitive advantage of abundant, cheap and productive labor.

Global recovery has fueled up huge demand for Chinese exports. However, internal developments in China such as rapid wage rises, and acute labor shortages made it impossible for it to remain as a competitive destination in terms of labor costs. Moreover, if global pressures on China to reduce its huge trade surplus against developed economies including the US through appreciating yuan from its alleged under-valuation become successful, will also make Chinese exports dearer and therefore less competitive in the world market. The erosion of Chinese cost competitiveness in labor-intensive products will drive investors for reallocating their investments to the next best location. Bangladesh may become as one of those destinations by a large improvement in ports, customs and safety and labor standards.


  1. Opportunity if only Bangladesh prepares to take a greater slice of the market... If only political instability, labor unrest, poor working environment and fierce external competition from other countries do not pose additional troubles....

  2. You are absolutely right, Mahin bhai. I like the words of Mr. Zaidi Sattar 'We have to be proactive rather than reactive,' at least in this case.