Competitiveness of Bangladesh as an Emerging Market

1. Competitiveness of Bangladesh as an Emerging Market Dr. A. N. M. Waheeduzzaman Professor of Marketing and International Business Texas A&M University-Corpus Christi USA United International University Dhaka, Bangladesh March 11, 2012

2. Self-Introduction • Educated in Bangladesh and USA • MBA in Marketing-Institute of Business Administration (IBA), Dhaka University, Bangladesh • MBA in International Business-George Washington University • Ph.D.-Kent State University • Taught at IBA, Dhaka University and North South University, Dhaka • Taught at University of Toledo (Ohio), Kent State University (Ohio), University of New Haven (Connecticut), and Salisbury State University (Maryland) • Teaching and Research Interest: Marketing and International Business

3. Presentation Outline Introduction Understanding competitiveness Understanding emerging markets Where does Bangladesh stand? Where should we go and how can how can we get there? Conclusion

4. Understanding Competitiveness Traditional notion of competitiveness: performance of a nation in trade, investment and reserve, i.e., the Balance of Payments (BOP) Account Porter’s Model: Dynamic Diamond Global Competitiveness Index (World Economic Forum) Competitiveness Studies in Economics, Management, History, Politics and Culture Do competitiveness literature/models have a Western/ North American bias?

5. Definition of Competitiveness Regan Administration’s President's Commission on Industrial Competitiveness (1985): "Competitiveness is the degree to which a nation can, under free and fair market conditions, produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens."

6. Balance of Payments (BOP) Account BOP account must balance: A+B = C+D

7. Porter’s Diamond and Competitiveness Determinants of Competitive Advantage Chance and Government also affect the model

8. Global Competitiveness Index Source: World Economic Forum

9. Competitiveness Studies Source: Waheeduzzaman, A. N. M., “Competitiveness and convergence in G7 and emerging markets” Competitiveness Review, Volume 21 (2), 110-128.

10. Summary-Understanding Competitiveness Competitiveness is an integrative concept involving a nation’s success in global trade and investment while simultaneously upgrading the economic and social well-being of its citizens. We do not have one explanation or a model that can explain the competitiveness of a nation In fact, each and every country is uniquely positioned to compete in a globalized world. A country needs to determine that position and devise the right strategy for success. What would be that position or strategy for Bangladesh? What can we do to increase our competitiveness? What role our business or education sector should play in that?

11. Where do we stand? To determine our position in the world we first need to understand where do we stand…. in terms of global governance, geo-political standing and global economic growth with respect to our friendly competitors in the east and west (five countries are taken as examples) India Malaysia Pakistan Thailand Turkey what is our unique competitive position?

12. Understanding Global Governance • Politics/Peace- United Nations • Trade- World Trade Organization (WTO) • Money/Finance- International Monetary Fund (IMF) • Development- World Bank • Overall- G8 Nations (USA, Canada, UK, France, Germany, Italy, Japan, and Russia) • Other international bodies: e.g., World Economic Forum, International Labor Organization, Social Organizations, NGOs

13. Understanding Emerging Markets • Who are the emerging markets? • Antoine van Agtmael, an officer of the International Finance Corporation, wrote a bestseller The Emerging Markets Century in 2007 published by The Free Press. • Why study them • Growing proportionately faster than developed markets in terms of GDP, trade, investment, and production • Has short and long term demographic, cultural and political implication

14. Who are the Emerging Markets?

15. Top Seven Economies Based on GDP measured at PPP (in billions), 2009 US Dollars Source: Waheeduzzaman, A. N. M., “Competitiveness and convergence in G7 and emerging markets” Competitiveness Review, Volume 21 (2), 110-128.

16. Comparative Position with Friendly Competitors Source: Euromonitor, Year = 2011

17. Population

18. Life Expectancy

19. Gross Domestic Product (GDP)

20. Per capita GDP

21. Real GDP Growth

22. Productivity

23. Trade as a % of GDP

24. Per Capita Trade

25. FDI as a % of GDP

26. Remittance Inflows

27. Personal Computer in Use

28. Students in Higher Education

30. Comparative Position with Friendly Competitors

31. Exports to and Imports from Bangladesh In million US $

32. Where should we go? Revisiting competitiveness: it is an integrative concept involving a nation’s success in global trade and investment while simultaneously upgrading the economic and social well-being of its citizens. Our competitiveness will depend on our unique positionin the world and in the region- historically, economically, socially and culturally What is our uniqueness as a nation?

33. Our Uniqueness (and pride too?) Young Emerging Nation: a very young nation poised to become a middle income country by the middle of next decade (World Bank), an emerging nation to watch (Goldman Sachs). Moderate GDP growth: 5%-6% Market Potential: tremendous market potential with a population base (160 million). Labor Force: skilled, semi-skilled, unskilled labor force Education/Higher Education:if properly guided this can decisively change the competitive strength of Bangladesh

34. Our Uniqueness ….continued We have a working (?) democracy Language Movement-our identity and pride Peace loving nation-participation in global peace under the United Nations Historically, we were a colony-never colonized anyone Moderate (?) in attitude and values Entrepreneurship is rising-is it globally competitive Micro credit-changing the notion of development Young cricket team- our image builder?

35. Our Uniqueness ….continued Some negatives, not so unique, still… Poor aid dependent country Flood and natural disasters A very corrupt country Political violence and instability Governance issues- bureaucracy Inequality and social justice Mixed (or negative?) international image

36. How can we get there? Views in General Faith can move mountains:believe that we can change our destiny Look from their perspective:why should the international community trade with or invest in Bangladesh (over our friendly competitors) Openness and freedom:keep faith in the democratic process, allow business to work, let the collective spirit of the nation (re)emerge Safety, rule of law and effective government:establish rule of law, make government more effective (by making it smaller or how?) Connectivity and infrastructure:connect with the world with transportation, trade, investment, travel, education, telecommunication, computer etc. Brand Bangladeshas a nation

37. How can we get there?Role of our Business Find value-added products or industries that offers higher gains from trade Conduct sector-wise analysis- especially labor-intensive industries like garments, IT etc. If need be, go for “industrial targeting” Invest in education Commercialize agriculture Popularize tourism (ecotourism) Use NGOs and micro credit to our favor

38. Conclusion Competitiveness of a nation is a long term issue, needs hard work, perseverance and patience Proper leadership with foresight is a sine qua non for achieving it One more time, “faith can move mountains”

39. Thank you for your time Questions/Comments?

40. Appendix 1Global Competitiveness Index Source: World Economic Forum, 2008

41. Appendix 2Index of Economic Freedom Heritage Foundation, a Washington based think tank, measures Index of Economic Freedom on the basis of 10 criteria. Countries are evaluated on a total of 100 points. Each criteria initially gets 100 points which is later converted to 10% in the total score. Criteria are given below.

42. Appendix 3The Economist ‘s Democracy Index The EIU measures democracy on a 10-point scale based on five criteria: Electoral process and pluralism Civil liberties Functioning of government Political participation Political culture. They divide 165 independent states into four groups: Full Democracies (28 countries): 7.96-10.00 Flawed Democracies (54 countries): 5.98-7.91 Hybrid regimes (30 countries): 4.01-5.91 Authoritarian (55 countries): 1.03-3.92

43. Appendix 4Human Development Index Human Development Index (HDI) was introduced by the United Nations Development Program (UNDP) to measure the economic and social aspect of development in a country. UNDP annually measures HDI on the basis of three criteria. A score of 0-1 is assigned to a country based on a mathematical formula. Three equally weighted criteria are as follows. Per capita income (1/3) Literacy rate (1/3) Life expectancy at birth (1/3)

44. Appendix 5Governance Indicators The Worldwide Governance Indicators (WGI) project reports aggregate and individual governance indicators for 212 countries and territories over the period 1996–2007, for six dimensions of governance. It is a -2.5 to +2.5 scale. Voice and Accountability Political Stability and Absence of Violence Government Effectiveness Regulatory Quality Rule of Law Control of Corruption

45. Appendix 6Corruption Perception Index The Corruption Perceptions Index (CPI) is a composite Index based on business surveys and assessments by country analysts. All sources employ a homogeneous definition of “extent of corruption”. Non-parametric statistics are used for standardizing the data and for determining the scores. It is a 10-point scale, higher score means less corruption. In 2008, 180 countries of the world were evaluated on the basis of CPI.

46. Appendix 7Brazil: Exports and Imports Data

47. Appendix 8Russia: Exports and Imports Data

48. Appendix 9India: Exports and Imports Data

49. Appendix 10Emerging Markets Economic Indicators (Year=2010)

50. COMPETITIVE DIALECTIC Thesis Synthesis (Thesis) Synthesis (Thesis) Antithesis Antithesis