Bangladesh has beaten India on exports in the past decade, and the Economic Survey 2021 explains why. Bangladesh exports posted a compounded annual growth rate of 8.6% over 2011-2019 versus India’s export growth of 0.9% and a world average of 0.4%, the survey said.
This outperformance, the survey said, is because Bangladesh “exports those commodities in which it has competitive advantage”.
Based on 2017-19 data, the survey showed that four of the top five export commodities, in terms of share and value, are items in which Bangladesh has the largest revealed comparative advantage. Whereas, none of the export commodities in which India has highest RCA is among its top export commodities.
India’s top RCA export commodities are mainly labour-intensive such as cotton, carpets and other textiles, etc. (second quadrant in the chart), while India exports more of capital-intensive products such as transport equipment, machinery and mechanical appliances (fourth quadrant in the chart), etc.
For Bangladesh, the top five export commodities such as textiles and apparels, footwear, etc account for more than 90% of total exports since 2015. These are highly labour-intensive and employs unskilled and semi-skilled labour.
India, on the other hand, the survey said, has more broad-based exports. The top five export commodities contribute to 40% of overall exports. And these commodities are capital and technology-intensive such as transport equipment, machinery and mechanical appliances, etc.
Courtesy – Bloomberg