Structural Changes In Bangladesh

6. Structural Changes (or Disequilibrium):

Structural changes bring about disequilibrium in BOP over the long run. They may result from the following factors:

• Technological changes in methods of production of products in domestic industries or in the industries of other countries. They lead to changes in costs, prices and quality of products.

• Import restrictions of all kinds bring about disequilibrium in BOP.

• Deficit in BOP also arises when a country suffers from deficiency of resources which it is required to import from other countries.

• Disequilibrium in BOP may also be caused by changes in the supply or direction of long-term capital flows. More and regular flow of long-term capital may lead to BOP surplus, while an irregular and

Although the economy observed a comfortable current account balance, the decreasing rate of remittance and manpower exports might cause a serious hamper to the economy by reducing employment opportunities and output levels. One way of looking at a trade deficit is that we’re getting richer, we’re gaining access to more imports, the very thing we conduct trade for in the first place. Imports are the reason that we trade, exports being just the hard work we’ve got to do to be able to afford them. Historically, Bangladesh faces trade deficit balances because we have to import various items in order to meet our domestic demand. We are lagging behind in exporting because of our inefficiency in the utilization of our indigenous resources. Poor quality of our products is another reason which retards to compete with foreign competitors. We are gradually improving in international trade, but it is not satisfactory because of our high imports. For now, our current account deficit is not big enough to be too concerned about. There are many economies which run deficits of 2-3 percent of GDP—ours is less than 1 percent. But steps need to be taken to address the slump in exports and remittances, and to stem illicit financial outflows through trade miss-invoicing so that the deficit does not spiral out of control. Some will argue for better administrative and technological capacity to identify such illicit outflows. But perhaps we should think more about incentivizing people to keep their money inside the country by generating more confidence in our economy, institutions and political