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Ministry of Strategy and Finance, Republic of KoreaGovernment Complex, Sejong, 30109, Republic of Korea www.mosf.go.kr The Export-Import Bank of Korea38 Eunhaeng-ro, Yeongdeungpo-gu, Seoul, 07242, Republic of Korea www.koreaexim.go.kr
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2016/17 KSP-ADB Joint Consulting Project
Project Title Support for Development of an Economic Corridor in Bangladesh (Industrial
Sector)
Financed by Ministry of Strategy and Finance, Republic of Korea
Supported by The Export-Import Bank of Korea (Korea Eximbank)
- Seung Ho Sohn, Director General
- Jae Jeong Moon, Director of KSP Team
- Jin Young Kwon, Senior KSP Specialist of KSP Team
- Kyung Jin Kim, Researcher of KSP Team
- Ye Rin Jeong, Researcher of KSP Team
Asian Development Bank (ADB)
Prepared for Ministry of Finance, Government of Bangladesh
Project Manager Kye Hwan Kim, Korea Institute for Industrial Economics & Trade
Researchers Dae Young Joo, Korea Institute for Industrial Economics & Trade
Im Ja Rhee, Korea Institute for Industrial Economics & Trade
Hyeok Ki Min, Korea Institute for Industrial Economics & Trade
Doo Hee Lee, Korea Institute for Industrial Economics & Trade
Hye Seon Na, Korea Institute for Industrial Economics & Trade
Yoon Ju Cho, Korea Institute for Industrial Economics & Trade
Contents 2016/17 KSP-ADB Joint Consulting Project
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Summary
2. Project Scope & Expected Outcomes ························································································3
3. Summary of the Research Findings ····························································································4
. Key Challenges to the Industrializaion of Bangladesh ···································· 6
1. Key Challenges to the Industrialzation of Bangladesh ·························································6
2. Industrialization Policy and International Benchmarking by the Bangladesh
Government ·······································································································································24
. Capability Analysis of Priority Industries ···························································· 43
1. Assessment of Priority Industries ······························································································43
2. Supply Chain & Capability Analysis of Priority Industries ·················································48
. Measures to Promote Supply Chain for Targeted Industries ······················ 70
1. Framework of the Target Industry Development Policy in Bangladesh ·······················70
2. The Textile & Apparel Industry ·································································································72
3. The ICT Industry ·····························································································································83
4. The Footwear Industry ··················································································································92
5. The Food Processing Industry: Focused on Shrimp Farming ········································100
. Policies to Attract FDI & Promote Industry in Bangaldesh ······················· 110
1. Bangladesh’s Investment Promotion Policy ··········································································112
2. Korea’s Experience with attracting FDI ·················································································121
3. Vocational Education & Training for attracting FDI ·························································127
4. Implications & Policy Suggestions ··························································································131
. Industrial Cluster Policy for Developing GPN ················································ 136
1. Current Status of Cluster Policies in Bangladesh ······························································136
2. Implications of Industrial Cluster Policy in Korea ······························································156
3. Policy Recommendations ············································································································174
Table 2-2. Growth Rate of Industrial Sector (2011~2015) ·················································8
Table 2-3. GDP & Rate of Growth Rate in Manufacturing, by Period,
1973-2010s (%) ···········································································································8
Table 2-7. Subsectoral Sources of Manufacturing Growth, 1988∼2010 ······················13
Table 2-8. Bangladeshi Exports Unit: ·······················································································15
Table 2-9. Gross Value Added by Company Size ································································17
Table 2-10. Gross Value Added by Industry (2 digit BSIC) and Share ··························18
Table 2-11. No. of Firms by Industry, Firm Size (BSIC 2 digits) ·····································19
Table 2-12. Cost of Raw Materials(in BTD million), Stratum and Source ····················20
Table 3-1. Factors of Selection of Target Industries in Bangladesh ·····························45
Table 3-2. Criteria for Evaluating the Industrial Location of Target Industries
in Bangladesh ·············································································································47
Table 3-3. Examining the Suitability of Locations for Target Industries
in Bangladesh ·············································································································48
Table 3-4. Analysis of Potential Lighrt Engineering Sector Products ····························61
Table 4-1. Policy Frameworks for the Promotion of Target Industries
in Bangladesh ·············································································································71
Table 4-2. Focal Points of the Development of Korea’s ICT Industry ··························87
Table 4-3. Summary : Korea’s Experience with Rapid ICT Development ····················89
Table 4-4. Driving Forces behind Development of Korea’s ICT Industry ·····················89
Table 4-5. Examples of Products for Bangladeshi Electronics Companies
to Produce ···················································································································91
Table 4-7. SWOT Analysis for the Bangladeshi Footwear Industry ·······························95
Table 5-1. FDI Indicators, by Major Developing Country (2012) ·································113
Table 5-2. Bangladesh’s Investment Environment Ranking (of 189 countries) ·······113
Table 5-3. FDI Inflow Trend by Sector ·················································································115
Table 5-4. Bangladesh’s Regulations Related to FDI ························································117
Table 5-5. BIDA: Major Roles ···································································································118
Table 5-6. Bangladeshi FDI Policies ························································································119
Table 5-7. Major Incentives for Foreign Investors ·····························································120
Contents 2016/17 KSP-ADB Joint Consulting Project
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Table 5-9. Phase of FDI Promotion Policies (Korea) ························································122
Table 5-10. FDI Regulations in Korea ······················································································124
Table 5-11. Incentives for FDI ····································································································125
Table 5-12. Definitions & Support Policy by SEZ Type ····················································126
Table 6-1. Comparison of the 5 Options for ADB Economic Corridors ·····················140
Table 6-2. Summary of Potential Industries for ADB Economic Corridors ················141
Table 6-3. Performance of Export Processing Zones (2012-13) ·································144
Table 6-4. Incentvies for Developers of Bangladesh Economic Zones ·······················145
Table 6-5. Incentives for Tenants of Bangladesh Economic Zones ·····························146
Table 6-6. Demographic Profile of Districts in Dhaka SMA ···········································150
Table 6-7. Status of Urban Infrastructure in Dhaka SMA ··············································150
Table 6-8. Compatible industries for GPN Industrial Clusters in Dhaka SMA ··········151
Table 6-9. Demographic Profile of Districts in Khulna SMA ··········································152
Table 6-10. Status of Urban Infrastructure in Khulna SMA ·············································153
Table 6-11. Compatible industries for GPN Industrial Clusters in Khulna SMA ·········154
Table 6-12. SWOT Analysis of GPN Industrial Clusters in the
ADB Economic Cooridor ························································································156
Table 6-14. Industrial Complexes in Korea (2016) ·····························································159
Table 6-15. Industrial Complex Types in Korea ···································································161
Table 6-16. Procedures for Development & Management of
Industrial Complexes ······························································································162
Table 6-17. Mini-clusters vs. Theme Clusters (GPN Industrial Clusters) ····················167
Table 6-18. Industry Changes in Seoul Digital Industrial Complex,
by Type of Business ······························································································171
Table 6-19. Overview of the Mini-clusters of Seoul Digital Industrial Complex ·······172
Table 6-20. Overview of the Mini-clusters of Gumi Industrial Complex ·····················173
Table 6-21. Suggestions for Management of GPN Industrial Clusters in
Bangladesh ················································································································177
Figure 2-2. Bangladeshi GDP & GDP per Capita ···································································7
Figure 2-3. Share of Value Added by Industry, 2011 ························································11
Figure 2-4. Value Added by Industry, 2011 ···········································································12
Figure 2-5. Changes in Bangladeshi Exports & Imports ···················································14
Figure 2-6. Export Concentration Ratio (Bangladesh) ························································15
Figure 2-7. Export Structure in Bangladesh (by sector), 1975-2015 (%) ····················16
Figure 2-8. Bangladesh's Top 10 Export Items ····································································21
Figure 2-9. Export Share of Garment Industry by Production Stage (Bangladesh) · 22
Figure 2-10. Export Share of Garment Industry by Sector (Bangladesh) ·····················22
Figure 2-11. Apparel Industry (Clothing &Knitwear) Exports by Region/
Major Country Destination ····················································································23
Figure 2-12. Apparel Industry (Clothing &Knitwear) Exports by Major Country
Destination, Excluding USA & Europe ······························································23
Figure 2-13. Changes in Proportion of Employment in Manufacturing &
Production, 1970-2012 ··························································································27
Figure 2-14. Structure of Value Added Production, 1970~2014 ·······································28
Figure 2-15. Changes in Korean Manufacturing, 1970-2014(%) ······································29
Figure 2-16. Typology of Industrial Upgrading ·······································································30
Figure 2-17. Exports: Textiles, Electrical Goods, Electronics, Automobiles,
1967~2014 ·················································································································31
Figure 2-18. Share of Four Major Industrial Sectors: Textiles, Vehicles,
Electrical Goods & Electronics, 1967~2014 ····················································32
Figure 2-19. Export Structure: The Textile Industry, 1967~2014 ·····································33
Figure 2-20. Export Structure: Electronics, 1967~2014 ·······················································33
Figure 2-21. Export Structure: Vehicles, 1967~2014 ····························································34
Figure 2-22. GVC Development Paths ························································································36
Figure 2-23. The Middle Class Could Spend USD 10 Trillion More by 2022 ···············39
Figure 2-24. Middle Class Consumption­Top 10 Countries, 2020, 2030 ······················40
Figure 3-1. Growth Trend of the Leather Industry Bangladesh ······································56
Figure 3-2. Export Trend in Footwear & Leather Goods ··················································58
Figure 4-1. Direction for Target Industry Development and Role
of the Government ··································································································70
Contents 2016/17 KSP-ADB Joint Consulting Project
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Figure 4-3. Textile & Apparel Industry Value Chain ···························································73
Figure 4-4. General Structure of Value Chains in the Electronics Industry ················84
Figure 4-5. Value chain in the Footwear industry ·······························································93
Figure 4-6. Shrimp Farm in Algeria ························································································104
Figure 4-7. Shrimp Farm in Bangladesh ···············································································105
Figure 5-1. World Trade Over the Years ·············································································110
Figure 5-2. Developing Country Shares of World Exports & Imports ························111
Figure 5-3. Bangladesh FDI Inflows ························································································114
Figure 5-4. FDI by Sector (2015) ···························································································116
Figure 5-5. FDI Inflow by Country/City (2015) ··································································116
Figure 5-6. Korea’s FDI Inflow Volume & FDI Freedom Index ·····································123
Figure 5-7. Support System for Foreign Investors ····························································125
Figure 6-1. Conceptual Map of Industrial Clusters ····························································137
Figure 6-2. Industrial Cluster Theories ··················································································138
Figure 6-3. Planned Economic Corridors in Bangladesh ··················································139
Figure 6-4. 5 Options for ADB Economic Corridors in Bangladesh ·····························139
Figure 6-5. The Different Economic Zones in Bangladesh ·············································143
Figure 6-6. Location of Economic Zones in Bangladesh ·················································147
Figure 6-7. Potential Nodes in the ADB Economic Corridor Area ································148
Figure 6-8. Potential Nodes in the ADB Economic Corridor Area ································149
Figure 6-9. Contribution of Industrial Complexes to Korea’s National
Economy (Manufacturing Sector) ·····································································160
Figure 6-10. Techno Parks & Other Major Centers of Innovation in Korea ··············169
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BEC Bangladesh Economic Corridor
EPZ Export Processing Zone
GPN Global Production Network
GVC Global Value Chain
RMG Ready Made Goods
SEZ Special Economic Zone
TNC Transnational Corporation
UNIDO United Nations Industrial Development Organization
2016/17 KSP-ADB Joint Consulting Project
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Summary
Development
1.1. Current status and challenges of industrialization in Bangladesh
The Bangladesh economy has shown robust economic growth of more than 6% per year
up to the present. With its huge population of more than 160 million people and geopolitical
advantageous location surrounded by huge emerging markets such as China, India, and ASEAN,
the outlook for economic growth is also very most promising. However, Bangladesh economy
have faced many challenges to resolve manufacturing industry expansion and acceleration,
which is the driving force of economic growth.
The industry of Bangladesh, especially manufacturing industry, is a growth engine that drives
the growth of Bangladesh economy across the board. It is still an initial phase of industrialization,
which is highly concentrated on a small number of industries and products. It is urgent task
to expand and diversify sources of production through diversification of industrial structure
especially due to its high dependence on clothing, textile and related products.
Exports are extremely weighted in a small number of industries, especially apparel and
related products which explain over 80% of exports. From 1980s, the export structure has
been accelerated, in that the proportion of agricultural products would be lowered, in addition,
the proportion of manufacturing industry would be higher. However, the structure of exports
have shown the limitation that it has been entirely depended on textile and apparel.
Under current state of the manufacturing industry, the number of manufacturers is too small
comparing with its population scale. Depend on the industrial scale, the proportion of large
companies which employ more than 250 employees is very low, thus the prerequisite to realize
Summary
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economies of scale adopting modern technology is not fully enough to be occupied.
Last but not least, the characteristic factor is an OEM-centric business model. The textile
and apparel industry, which is a core export industry, has been developed in such a way that
raw materials and intermediate goods are imported from emerging markets such as China
and India, then exported an final product which utilize low-wage labor force. There is a
limitation that the added value per product unit is relatively low, in addition, the ripple effect
on the domestic economy is also low. They can do with to extend the OEM business model
to other areas by using comparative advantage such as low-wage labor force. But it is
necessary to accelerate to a higher added value segments.
1.2. Implication of South Korea Industrial Development Experience
S. Korea’s achievement with respect to an industrial development can also be interpreted
in terms of industrial acceleration. On the macroscopic perspective, it has achieved the
advancement of the industry from the labor-intensive industry to the capital-intensive industry
to the technical and knowledge-intensive industry. At the same time, in terms of internal
structure of each industry has gradually expanded from the low added value product to the
high added value product. In addition, in terms of each industrial function, it started from
the simple assembling of the final products and then expanded to the production of higher
value-added material and intermediate goods and marketing. After that, it had been gradually
expanded to R&D.
Bangladesh also needs to set the direction of industrial development from a comprehensive
viewpoint that considers various aspects of industrial acceleration. The direction of policy for
the industrial development of Bangladesh is to expand and enhance the global value chain
participation, parallel to development of the export market and the domestic market,
strengthening the role of the private sector and the government’s facilitating role, and
development regional production hub by using the geopolitical advantages.
2. Capability Analysis and Challenges of Strategic Industries
The construction of the Southwestern Bangladesh Economic Corridor will provide a
advantageous condition for the development of the Bangladesh industry through participation
in the global production network. In particular, food processing, leather and footwear and ICT
are thought to be highly strategic industries in the region, as well as textile and clothing, which
is a growth engine.
x
The textile and apparel industry has already played a leading role in the overall export of
Bangladesh, but more than 90% of the textile and apparel factories are converged on the
province of Dhaka and the southwestern region is neglected with respect to the development.
The main reason is lack of transportation infrastructure as well as lack of other infrastructure
such as gas, electricity. The construction of the Southwest Economic Corridor could help
improve these conditions.
The food processing industry is now growing rapidly based on the expansion of the middle
class in Bangladesh and the expansion of the domestic market. The food processing industry
is a large industry employing 19% of industrial workers, but most of those firms is too small.
Shrimp and other processed products such as seafood and juice are likely to expand exports.
With the construction of the economic corridor, the food processing industry will be more likely
to develop in the southwestern region, rich in raw materials for agricultural and marine
products.
The leather and footwear industry is one of the leading industries that the Bangladesh
government wants to develop for the export diversification, and aims to export $50 billion
in 2021. In addition, the leather goods and footwear are rapidly developing on the basis of
a large supply of domestic leather and skins, competitive wage levels, improvement of banking
and financing systems, and rapidly improving road and port infrastructure.
The construction of the economic corridor will enhance the competitiveness of logistics,
which is a condition for developing the leather and footwear industry in the Southwest region,
but the power infrastructure must also be improved at the same time. It will be necessary
to respond to the challenges of logistics and energy infrastructure through the improvement
of construction and operation of exclusive industrial zone.
The engineering industry encompasses a wide variety of industries, with more than 50,000
small firms still dependent on the domestic market. Exports are about $500 million annually,
including agricultural machinery, automobile filters, bicycles and so on. The export market is
the market around Southwestern Asia and Africa. Companies that have accumulated capital
and technology in textile apparel industries are gradually expanding into the engineering and
electronics industries. The engineering industry will be able to develop in such a sectors that
large-scale labor force is required to participate in assembly stages in cooperation with
overseas large corporations. In order for the next generation of growth engine such as
engineering and ICT to develop, in addition to improvement of the logistics infrastructure by
constructing the economic corridor, education and training should be strengthened to supply
new skilled manpower.
3. Measures for the Promotion of Supply Chain by Industry
3.1. The Textile & Apparel Industry and Footwear Industry
The biggest problem faced by Bangladesh textileapparel industry and footwear industry are
the OEM production and export structure. This makes it difficult to improve innovative
capabilitiess and competitiveness in high value-added sectors such as planning, design,
branding, R&D, marketing, and distribution in the value chain. Bangladesh textileapparel and
footwear industries are delayed to make high value-added products because they have a
structure that only carries out the simple assembly works using import raw materials based
on abundant labor force at low wage level. Therefore, in textile and apparel industry in
Bangladesh, as in Korea's development experience, it is required to make efforts to improve
industrial competitiveness such as strengthening its own planning and production capacity and
design power in a production structure that assembles finished products.
To this end, Bangladesh can strengthen its capacity to produce raw materials such as yarns,
fabrics, shoe materials and parts, thereby achieving import substitution and increasing the
added value of the value chain. In order to achieve sustainable growth over the long term,
new growth fields such as industrial textiles, fashion apparel, high-function shoes and parts
should be cultivated. In order to strengthen the innovation capability of the industry, there
is a need for a field-based human resources education and training system.
3.2. ICT Industry
The ICT industry in Bangladesh remains in its infancy. It is recommended that Bangladesh’s
government recognize the ICT industry as its source of innovation and economic growth. The
establishment of “techno parks” in universities is recommended. This report suggests the
creation of small industrial clusters within universities where research in electronics technology
is active and can be applied to the operation of these industrial clusters.
3.3. Food Processing Industry
Shrimp farming is concentrated in southwest Bangladesh, and entirely conducted in outdoor
ponds. Small, individual agriculture farmers with land which includes one or more ponds make
up the majority of pond owners. A superior shrimp breeding and aquatic processing complex
would benefit the southern province of Khulna, in the Mongla district. It is desirable for Korea
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and Bangladesh to build a cooperative system through strategic alliance for the development
of the shrimp industry.
Industries
Over the past few decades, the expansion of trade in global economic growth has played
an important role. The expansion of global trade is naturally made in the process of expanding
the global production network. Bangladesh is also contributing to this change, and its role
is expanding with its the recent economic growth.
Growth through attracting foreign investment can be a very effective way for developing
countries to take advantage of this change of global economic environment. Bangladesh's
attractiveness of foreign investment has been steadily increasing in recent years, but the level
of FDI to Bangladesh is still lower than that of comparable developing countries. In particular,
foreign direct investment into the manufacturing sector is concentrated only on the RMG sector,
which can limit economic growth through industrial diversification.
The most important point for expanding foreign investment attraction is not only the
completion of related laws and regulations regarding FDI, but also the institutional framework
for implementing it. In fact, almost all countries have established very open FDI policy including
various types of incentives which aim to expand foreign investment. Hence, the important
aspect is how to effectively implement such as laws and regulations in the field. In this respect,
Korea’s experience to establish supporting system to implement laws and regulations provides
important implications for the government of Bangladesh.
Recently, high quality labor force is considered another important factor to attract FDI. In
Bangladesh, at the present time, the government is making efforts to improve the industrial
structure. For this purpose, establishment of training system should be done as soon as
possible. Korea’s experience of development of training system in 1970s is telling an important
fact which Bangladesh government should take into account. In 1970s, Korea began to foster
the heavy and chemical industry by deviating from the growth policy based on the existing
light industry. In order to supply the labor force needed by heavy and chemical industry, the
government introduced a human resource development program and established human
resource development system.
Summary
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Couple of policy suggestions in order to expand FDI and train high quality labor force can
be suggested. First, the establishment of FDI support system is needed. Laws and regulations
related to FDI should be established. In addition, it is essential to establish a supporting system
to implement those laws and regulations. Second, infrastructure needs to be improved. In order
to efficiently construct infrastructure under scarce resources, there is a great need to improve
through the selection and concentration of projects with large economic impacts. Third, it is
necessary to establish a practical manpower training system. Such a manpower training system
should be complementary to the public sector and the private sector. The importance of
vocational training centers within the workplace in addition to public vocational training system
should be emphasized.
Recently Bangladesh is pursuing various industrial economic development policies for
catch-ups in the global economy where the fourth industrial revolution is in the process. The
questions of how to foster industrialization and where to establish key industrial facilities bear
particular importance to the governments of developing countries today. A typical characteristic
of catch-ups in industrialization is that location policy is an important pursuit factor as well
as horizontal industrial policy such as R & D just as the experience of Korea. In this study,
we explored Korean experience with industrialization, particularly concerning the development
of industrial clusters with global production network (GPN), in response to the request from
Bangladesh Government and Asian Development Bank (ADB) for a detailed account and plans
for development of GPN industrial clusters of ADB’s economic corridor in Bangladesh. Thus
the objective of this study is to suggest and analyze policy implications and the feasibility
of establishing GPN industrial clusters of ADB’s economic corridor in Bangladesh.
To achieve this goal, in Section 1, we first reviewed the condition of Bangladesh industrial
cluster policies and related circumstance in the regions (Dhaka SMA and Khulna SMA) of the
economic corridors of ADB in Bangladesh and also analyzed the SWOT analysis for developing
the GPN industrial clusters of ADB economic corridors in Bangladesh. In Section 2, we reviewed
the characteristics of industrial complexes and GPN industrial clusters in Korea, and then
explored the history and current status of industrial complexes and GPN clusters in Korea,
including benchmarking case studies of GPN industrial clusters in Korea. Sharing the Korean
experience of industrial cluster policies, we drew up some implications for Bangladesh's GPN
industrial cluster policy through benchmarking case studies. Finally, in Section 3, we suggested
the development policies of GPN industrial clusters from the regions of ADB economic corridors
in Bangladesh with targeting industries in more detail. We also suggested the implications
for the operation of the GPN industrial clusters in Bangladesh, including the establishment
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of Techno-parks suitable for Bangladesh based on the experience of Korean GPN cluster policy.
With sharing the know-how and policy implication of GPN industrial clusters in Korea, it is
expected that Bangladesh GPN industrial clusters and industrialization will be well done in a
practical way in future.
The Bangladeshi government is pushing its 7th Five-Year Economic Development Plan
(2016-2020) with the aim of entering the ranks of middle income countries by 2021. Included
in this is the construction of basic infrastructure, the lack of which serves as the most important
bottleneck to economic development. In addition, Bangladesh will promote balanced
development of the Southwest and Northeast regions. The Southwest, with resources and
geographical advantages, has the potential to become a hub for regional industry, trade and
investment. However, this region is relatively underdeveloped when compared to the existing
economic centers of Dhaka and Chittagong. Asian Development Bank(ADB) has also set up
the Economic Corridor in Bangladesh as a core strategy for supporting the country in
consideration of the economic development strategy of its government and linking the
southwest region with the economic centers of Dhaka and Chittagong.
ADB's Economic Corridor Development (ECD) is a comprehensive tool that involves
simultaneous development of industry, infrastructure and cities in accordance with long-term
plans. It also provides productivity and efficiency improvements through infrastructure, market
access, promotion of trade and investment and networking. The main direction of the ADB
strategy for Bangladesh is to mitigate infrastructure bottlenecks through support with
investment and policy reform in key areas such as energy, transportation, and urban
development. It especially involves the construction of an economic corridor connecting cities
that are centers of growth, promoting industrial diversification and linking markets (regional,
domestic, international) and supply chains. The southwest part of Bangladesh, which is ADB’s
target for construction of the economic corridor, is underdeveloped when compared to the
Dhaka-Chittagong line in the southeastern province where industrial activities are
concentrated. It is also an area that requires active infrastructure and industrial investment
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Although the economic corridor is the essential part of infrastructure construction, the
ultimate goals are to increase incomes through economic and employment expansion in the
region and achieve balanced development of the country. Infrastructure construction, economic
development, and especially industrialization in the Bangladesh context, need to be closely
linked if these goals are to be achieved. This is a joint KSP-ADB project closely linked to ADB
efforts to construct the aforementioned economic corridor in southwest Bangladesh.
1.2. Purpose
The purpose of this KSP project is to provide policy consultation on the ways the Bangladeshi
manufacturing industry can participate in regional and global supply chains through
development of the economic corridor.
Towards realizing this goal, we would like to recommend strategies for participation in the
global production network centered on development of the economic corridor in Bangladesh.
We use the Korean experience with industrialization and economic development in the 1960s
and 1970s and identify policy implications for Bangladesh’s export manufacturing industry.
Of special note is our proposed industrial strategy of developing the labor-intensive export
industry to absorb manpower given the rapid increase in population and in the numbers of
young people entering the labor market. We also offer some suggestions based on Korea's
experience with diversification and improvement of the export industry sequentially after
entering the industrial take-off phase, specializing in labor intensive industries such as textiles
and apparel.
It is necessary to refer to Korea’s experience and to suggest policy measures considering
the specifics of Bangladeshi industrialization in terms of time and the political, institutional
and cultural environment. To do this, we analyze the strengths and weaknesses of each supply
chain stage through industry-specific analysis using industry-level data, and propose directions
for improvement of supply chains. In addition, with the economic corridor, the Bangladeshi
manufacturing industry will be able to participate in the global production network and we
propose a policy to realize sequential upgrades.
In addition, we introduce specific policy measures that promoted Korea's industrial
development strategies and concrete policy measures appropriate to the situation in
Bangladesh. We would also like to propose policies for participation and improvement of the
global production network, such as development of export industrial complexes, a human
resource training system, establishment of a government-led export marketing support
. Introduction
organization, and methods of attracting foreign investment.
We present specific policy measures, based on Korea's policy and institutional development
experience, by key policy area such as foreign direct investment (FDI), investment promotion,
cluster development, local development and vocational training.
2. Project Scope & Expected Outcomes
2.1. Scope
This project is largely composed of research and policy consultation, training of policy
practitioners and a seminar for sharing the research findings. Policy advice is a core component
of the project, with Bangladesh writing a policy advisory report on how to participate in regional
and global supply chains for manufacturing.
The research and policy advisory report includes analysis of major issues in the industrial
sector in Bangladesh, screening strategic industries, analyzing supply chains by strategic
industry, presenting strategies for development of those supply chains, and presenting
customized policies for the development of global production networks (GPN). We seek to
use as much local information as possible to increase relevance and applicability of policy
advice. We intend to increase the field and suitability of the research through basic data
collection for the second time, collecting such data to analyze the supply chain situation by
industry, conducting company surveys using local companies and workshops with local experts
during the actual survey period.
In addition to preparation of the advisory report, training of policy practitioners in Korea
and investment briefing sessions are the other main components of the project. We have invitee
10 experts from Bangladesh's Ministry of Economy and Industry to train policy practitioners
and hold investment seminars on Bangladesh, especially on the economic corridor, for Korean
companies participating in this training period.
2.2. Expected Outcomes
Not only is Bangladesh a larger country than Korea with a total population of more than
160 million in 2016, it also has a youth-centered demographic structure as of 2016, with youth
aged 15-29 numbering 52 million, or 33% of total population. Bangladesh has seen strong
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economic growth of greater than 6% per annum for more than a decade.
As noted in many reports on Bangladesh, the lack of infrastructure is one of the most
important obstacles to growth of the economy. Various forms of infrastructure developed with
the support of advanced donors will contribute to resolving some of the bottlenecks in
Bangladesh growth. For example, Japan is promoting the Southeastern Economic Corridor
linking Dhaka and Chittagong, while