Bangladesh Studies
Bangladesh Studies
  • Home
  • Bangladesh
    • Foreword
    • Acknowledgements
    • Preface
  • Country Profile
    • Country
    • Geography
    • Society
    • Economy
    • Transportation and Communications
    • Government and Politics
    • National Security
  • Introduction
    • bangladesh studies>
      • Chapter 1 - Historical Setting >
        • EARLY HISTORY, 1000 B.C.-A.D. 1202
        • Islamization of Bengal, 1202-1757
        • European Colonization, 1757-1857>
          • Early Settlements
          • The British Raj
        • Pakistan Period , 1947-71>
          • Transition to Nationhood, 1947-58
          • The "Revolution" of Ayub Khan, 1958-66
          • Emerging Discontent, 1966-70
          • The War for Bangladeshi Independence, 1971
        • Birth of Bangladesh>
          • Early Independence Period, 1971-72
          • Fall of the Bangabandhu, 1972-75
          • Restoration of Military Rule, 1975-77
          • The Zia Regime and Its Aftermath, 1977-82
      • Chapter 2 - The Society and Its Environment>
        • Geography>
          • The Land
          • Climate
          • River Systems
        • Population>
          • Population Structure and Settlement Patterns
          • Migration
          • Population Control
        • Social System >
          • Transition to a New Social Order
          • Rural Society
          • Urban Society
          • Women's Role in Society
          • Social Classes and Stratification
        • Religion>
          • Islam
          • Hinduism
          • Buddhism
          • Christianity
        • Education>
          • The British Legacy
          • Education System
          • Religious Education
          • Education Planning and Policy
        • Health>
          • Disease and Disease Control
          • Health Care Facilities
          • Medical Education and Training
      • Chapter 3. The Economy>
        • Economic Context >
          • Historical Perspective
          • Economic Reconstruction after Independence
        • Managing the Economy>
          • Economic Policy and Planning
          • Government Budget Process>
            • Revenue Budget
            • Development Budget
        • Joint Ventures and Foreign Investment
        • Money and Banking>
          • Currency Fluctuation
          • The Banking System
        • Foreign Assistance >
          • Test Case for Development
          • Aid Dependence>
            • International Banks
            • United Nations
            • Foreign Governments and Private Donors
        • Agriculture>
          • Structure of Agricultural Production
          • Food Crops
          • Industrial Crops
        • Industry>
          • Traditional Sectors
          • Ready-made Garments
          • Other Industries
          • Mineral Development
          • Technological Advances
        • Foreign Trade >
          • Export Sectors
          • Balance and Terms of Trade
        • Transportation and Communications>
          • Inland Waterways and Ports
          • Road Transportation
          • Railroads
          • Civil Aviation
          • Telecommunications
          • Tourism
        • Problems and Prospects
      • Chapter 4 - Government and Politics>
        • Structure of Government>
          • Constitution
          • Legislature
          • Executive>
            • Presidency
            • Council of Ministers
          • Judiciary
          • Civil Service
          • Local Administration
        • The Ershad Period>
          • Achieving Stability, 1982-83
          • Emerging Opposition, 1983-86
          • Relaxation of Martial Law, 1986-87
          • More Opposition Pressure
        • Political Dynamics >
          • Local Elites
          • The National Party
          • Party Politics>
            • Awami League
            • Bangladesh National Party
            • Islamic Parties
            • Alliances
            • Workers and Students
            • Women in Politics
        • The Media
        • Foreign Policy >
          • South and Southeast Asia>
            • India
            • Pakistan
            • Other Nations
          • China and Other Asian Nations
          • The Islamic World
          • The Superpowers>
            • United States
            • Soviet Union
          • Western Europe, Canada, Australia, and New Zealand
          • International Organizations
      • Chapter 5 - National Security>
        • Armed Forces and Society>
          • Colonial Origins
          • Pakistan Era
          • The Liberation War
          • Postindependence Period
        • Organization of the Armed Forces>
          • Legal Basis
          • Recruitment
          • Mission>
            • National Defense
            • Intelligence and Security
          • Security Environment
          • Defense Spending
          • Foreign Acquisitions and Ties
        • The Three Services>
          • Army
          • Navy
          • Air Force
        • Auxiliary Forces >
          • Bangladesh Rifles
          • Ansars
          • Police
          • Village Defence Party
        • Public Order and Internal Security>
          • Violence and Crime
          • Insurgency in the Chittagong Hills
          • Criminal Justice
          • The Military in the Late 1980's
  • Bibliography
  • Glossary
  • About us
  • Contract us
Balance and Terms of Trade

Bangladesh has had a negative trade balance since independence in 1971. In the mid-1980s, the annual pattern was for exports to cover only around 30 percent of the cost of imports (see table 14, Appendix). Merchandise exports reached the value of US$1 billion in FY 1987 for the first time, and in that year import payments were US$2.6 billion, leaving a trade deficit of over US$1.5 billion, about average throughout the 1980s. The annual deficit was limited by government controls to between US$600 and US$700 million on capital goods and US$500 million on nonagricultural industrial commodities. The largest component in the latter category was crude oil and petroleum products. In addition, Bangladesh incurred a debt each year for grain and other food needs, always higher than US$200 million, and sometimes going to double or even more (at least US$607 million in FY 1985). The country had a positive balance on nonfood agricultural production, because jute and ready-made garment exports eliminated the deficit in fibers, textiles, and garments.

One way the society has been able to turn its economic problems and overpopulation to some advantage is by exporting workers to wealthy, Islamic countries, chiefly in the Persian Gulf. The remittances from these workers have come to constitute one of Bangladesh's greatest sources of foreign exchange. In FY 1986 remittances were nearly US$575 million, covering 23.5 percent of import financing requirements and substantially exceeding the total receipts from jute, the chief export. The government maintained records only of new recruits working abroad each year--a peak of 77,694 in 1985--but knowledgeable observers believed that possibly as many as 450,000 were overseas at any one time. Throughout the 1980s, more than a third went annually to Saudi Arabia with a peak of 39,350 new recruits in 1987 (see table 6, Appendix). Other countries receiving large number of Bangladeshi workers in 1987 included the United Arab Emirates (9,953), Kuwait (9,559), Qatar (5,831), and Iraq (3,847). Such workers normally contracted to remain abroad three years and often stayed several years longer. They worked as laborers, under terms negotiated government to government, and generally lived under segregated conditions that effectively prevented Bangladeshi men (who cannot bring their families with them) from assimilating with the local population or experiencing non-Bangladeshi ways of life. When they have returned to Bangladesh with savings and material acquisitions, they generally have had no difficulty fitting back into their society.

Other remittances have come from the more highly educated elite who are able to take advantage of educational resources at home or overseas and who advance to high positions in business, the professions, the civil service, or even the military. Some have gone abroad--mostly to Britain, the United States, and Canada--and many remit savings to relatives in Bangladesh. The government extends incentives to all expatriate Bangladeshis to send back some of their savings. They are granted a preferential exchange rate, and a portion of their remittances can be turned back into foreign currency for purchases from abroad.

Including remittances as a form of export revenue still left Bangladesh with a deficit ranging between US$1.5 billion and US$1.8 billion each year during the 1980s. Foreign aid was the essential element allowing Bangladesh to steer clear of a critical shortage of foreign exchange.

In FY 1986, the United States was the leading buyer of Bangladeshi exports, taking some 25 percent of the total. The American portion had increased from 16 percent the year before and 12 percent the year before that. The dynamic new element was readymade garments; the United States purchased over 80 percent of this new industry's production, adding to Bangladesh's traditional base of jute manufactures (mostly carpet backing) and seafood. The next biggest customer for Bangladesh (but with only 28 percent of the American volume) was Japan, which chiefly purchased frozen seafood. Other important customers in FY 1986 were Britain, Italy, Pakistan, Singapore, and Belgium. Trade with communist countries was also significant. Almost 10 percent of exports were under barter terms with the Soviet Union, China, Bulgaria, Hungary, and Czechoslovakia.

The list of suppliers to Bangladesh is eclectic. In FY 1986, Singapore was the leading supplier, with 14 percent of the total (up from 12 percent the previous year). Major supplies were petroleum and petroleum products and also vegetable oils and fats. Next was Japan, with 13 percent of the total, selling iron and steel, transportation equipment, and machinery. In third place was the United States with 8 percent (food grains and machinery), followed by South Korea (textiles), the United Arab Emirates (petroleum), India (textiles and machinery), West Germany (machinery and transportation equipment), China (assorted products), and Britain (machinery, equipment, and sugar products). Other major suppliers were Canada, Pakistan, Saudi Arabia, Malaysia, the Netherlands, and Iran (see table 15, Appendix).

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