While many South Asian countries became economically unstable during the Covid-19 pandemic, Bangladesh reshaped its economy and continued its GDP growth, achieving an impressive 5.2% GDP growth rate in fiscal year 2019-20.
According to research by one of the United Kingdom's leading economic consultants, the Centre for Economics and Business Research, Bangladesh will become the 25th largest economy by 2035 and will surpass many economically powerful countries.
According to many researchers, if this economic revolution continues till 2024-30, Bangladesh will outshine Malaysia, Singapore and Hong Kong to become an economic giant.
Though Bangladesh earned massive success because of remittances, it lost its exporting reign in North American countries and Europe. Not only agricultural sectors, but also ready-made garments industries and manufacturers lost their positions of obtaining the highest amount of GDP contributions. Additionally, during this pandemic, European and American containment policies made Bangladesh suffer a lot. They were the parts and parcels of consuming Bangladesh garment products and other raw materials. Bangladesh lost tremendous amounts of foreign currency reserves from the garment industry in the early six months of Covid-19.
What was the shortcoming that Bangladesh's economic policy faced in this pandemic? Though many assumptions can be made, the main and root cause of this shortcoming is nothing but the absence of a good and effective policy of economic regionalism encircling South Asian countries.
Economic regionalism covers the free flow of services and goods between, or among, countries in the same geographic region. Further, it coordinates foreign economic policies of economic unions, common markets, free trade, and custom unions; for instance, economic regionalism of European Union and Association of Southeast Asian Nations (ASEAN) countries.
Many can argue that these countries were unable to evolve as competent to make substantial barriers against Covid-19, but their supranational and cooperative economic policies are always serviceable – though they followed containment policies among themselves during this pandemic.
Regarding South Asian countries, mutual economic trade – more specifically free trade – has become an indispensable economic modus operandi for Bangladesh. Although the South Asian Association for Regional Cooperation and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation can play a great role in economic regionalism, none of us is stranger to their failures and hopelessness.
However, Bangladesh should become aware of its economic policy to uphold its interests through economic regionalism. If Bangladesh had strong free trade economic ties with South Asian countries, it could maximise its interest and achieve the highest amount of GDP growth and economic development from exporting raw materials and products in this pandemic. Thus Bangladesh needed not to be the victim of Europe's economic containment policy.
In November 2020, ASEAN nations signed the most prominent and remarkable trade deal of a free trade agreement (FTA), collaborating with: Australia, China, Japan, New Zealand and South Korea. Analysts say it is a landmark achievement of these Asia-Pacific Nations in terms of GDP, cooperation and economic development.
Utilising this mutual economic cooperation, specifically the FTA, the economic condition of this Southeast region is going to boom tremendously. Focusing on the South Asian region, it feels a significant presence of rainy days of economic regionalism and cooperation.
Import substitute industrialisation in Bangladesh could greatly contribute to our GDP during this pandemic. Agricultural commodities contain a significant amount of economic support in GDP.
By minimising imports, maximising exports and increasing agriculture-centric industrial sectors, Bangladesh can attain the highest level of economic interest – as Malaysia did in the last twenty to thirty years in the name of industrialisation. Also, in the context of regionalism and free trade, it could become an astute policy of Bangladesh.
Considering the free movement of goods, capital and people, regional connectivity is one of the critical areas of concern. In terms of trade and commerce, South Asia is the least integrated region in the world. Though South Asia comprises about 1.4 billion people and an economy of $3 trillion, it can be compared with the canvas of a painter; numbers of cultures, traditions and beliefs shaped the fate of South Asian people.
In terms of economic development, people-to-people cooperation is essential. The state as a unitary actor may have its own interests and goals but it should not create constraints to the free movement of people. Economically "One South Asia" can be a prosperous, more resilient region creating jobs to lift people out of poverty.
Transport is the backbone of economic activity and inclusive social development. A major shortcoming of South Asian connectivity is a closed mindset towards a particular country. For instance, Indo-Pak rivalry is one of the major constraints towards greater regional connectivity.
In this situation, spreading trade and commerce can ease the tension. Areas of connectivity can be diverse, some countries are expanding and developing their rail networks by building new tracks, double-tracking or upgrading electrical signalling systems.
But, the whole South Asia region has yet to understand the potential of its railway. China's Belt and Road Initiative is set to connect major economies of Eurasia and Africa. South Asia should join in this initiative irrespective of their political motives.
Recently, Bangladesh and India agreed to use inland waterways for transporting goods to Tripura, though it is not fully operational yet. More comprehensive border haats or small markets near India and Bangladesh border should be established, where locals interact and buy and sell household goods.
Maritime connectivity is crucial for large-scale trade volume, though shipping connectivity is still poor between these two South Asian countries. Moreover, three landlocked countries and an island country in South Asia depend on transhipment ports in neighbouring countries for their own trade. Bangladesh's economy can benefit if we utilise this opportunity.
Bangladesh has been investing a huge amount of money in making new ports, including Matarbari deep seaport. We can start a route for freight transportation services among the ports of Sri Lanka, Pakistan, Bangladesh, India, and the ports in the neighbouring countries of Southeast Asia and the Gulf.
Moreover, our export production sector should be diversified for greater sustainability. Bangladesh is set to graduate from Least Developed Country by 2024 and has the vision to be a developed country by 2041. Achieving these goals means handling greater responsibilities. Bangladesh will be floating here and there in a very competitive market if we do not take the necessary measures to handle the upcoming challenges.
According to Montesquieu, a prominent French enlightenment scholar, trade and commerce have an enlightening effect on those engaged in it because it involves people in different activities. Spreading trade means the spread of knowledge, customs and cultures. It enhances cooperation between and among the states as people come closer to each other. Thus, it ensures peace and stability.
The authors are students of the Department of International Relations at the University of Dhaka
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.