Some Aspects of the Foreign Trade Policies of Bangladesh

Abstract

It would be useful to distinguish between the two sets of problems — the short run and the long run — that have beset the formulation of foreign trade policies for Bangladesh since liberation. The short-run problems relate to readjustments in the domestic arrangements to changed sources of supply and demand for tradeable commodities, changed price relationships both because of devaluation and protective duties and other barriers against all importables from non- Pakistan sources, the necessity of creating suitable new trading institutions, and so on. The long-run problems relate to resolving such questions as what constitutes the optimal trade pattern for the economy, and the exchange rate policy and the investment policy that need to be pursued to this end. The distinction is essentially artificial, made in the interest of descriptive and analytical convenience, for it is easy to see that the two sets of problems and their policy solutions have common elements. For example, the abolition of the common external tariff with Pakistan against the rest of the world necessitates adjustments in the pattern of tradeables. These adjustments necessitate both short-run decisions to maintain domestic activity and consumption levels as well as long-term investment choices so that the evolving production and trade pattern could gravitate towards what could be described as normatively optimal.