Warren Buffet, CEO of Berkshire Hathaway, investor in Wal-Mart and whose current net worth is more than $60 billion, one of the richest men in the world gives six tips to living a successful life. One of them 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 other words he advocates diversification of economic activities for financial success.
It is applicable for everyone - individuals, institutions or even for a nation. In an age of digitisation, the world is now a global village. Every state of the world is competing with each other for advancing their own interests and economy. They seek to diversify their export baskets to earn more income from exporting their goods. They research, develop and innovate for competitive new products to expand their domestic production and explore new countries to expand their markets.Diversifying export products help reduce risk of uncertainty of export income of a country. Diversification of exports increases foreign export earnings and also promotes export income stability. When we depend on only a few export items, we run the risk of a large magnitude. If our export portfolio expands to include more items, the specific risk will reduce.
Sector specific risks get minimised 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.
Bangladeshi exports depend on a few items like RMG, semi or unskilled labour, leather, fishes, jute, jute goods, tea, vegetables, papers, etc. We can add new items in our export basket like rod, cement, ICT products, outsourcing software, skilled manpower, chemicals, medicines, natural medicines like Unani and Ayurvedic, 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 to be competitive in 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 (R&D) cell can be formed to find out the possible export goods of our country and the potential markets abroad. The fruits of these research activities can help both the expansion of products and markets.
We can export to the war ravaged countries like Afghanistan, Iraq, Syria, South-West African countries, South Asian Association for Regional Countries (SAARC), OIC (Organisation of Islamic Conference) countries, Commonwealth countries, Association of South-East Asian Nation (ASIAN) countries and other states including Latin America, Europe and South-East Africa.
If we analyse 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 percent higher than the export earnings in 2014-2015, which stood at US$31,209 million. This is an increasing trend of our exports.According to Bangladesh Export Promotion Bureau the main destination of our exports is the USA. We shall have to find out other potential export destinations also to reduce dependency on a single market country. Government of Bangladesh is trying to liberalise export policies and rules to increase export from the country to add export income to our GDP growth. Our Honorable Prime Minister Sheikh Hasina underscored the importance of more export to other countries for our rapid economic development. There is no alternative to increasing export income for our targeted 8-10 per cent 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 expedite this endeavour of export expansion to reach target. Expansion and diversification of exports will reduce trade deficit with other countries and significantly promote positive Balance of Payment for Bangladesh economy. A coordinated economic and business diplomacy is necessary to fulfill this purpose.
Md. Muzibur Rahman
The writer is a contributor to the daily sun and writes on development and economic issues