WB suggests technological progress in manufacturing

The World Bank (WB) has said Bangladesh's low wages is not sufficient to be competitive in the global trade, rather it needs technological improvements in the manufacturing sector.

The global lender has suggested improvement of the country's competitive environment for strengthening its footprint in the global trade arena.

WB expressed such opinions in a report - "Trouble in the Making? The Future of Manufacturing-Led Development" - published at its Washington headquarters on Thursday.

According to WB, Bangladesh's connectedness, capabilities and competitiveness are not so well, like some of its competitor countries including India, Vietnam and China.

In the logistic performance index, Bangladesh has acquired 2.66 points out of 5.0, while in the service trade restriction index 35 points out of 100, and in the doing business index 40.8 out of 100.

WB said many small countries, although small in terms of their share in global manufacturing, have seen the share of manufacturing in raising their Gross Domestic Product (GDP) over time.

Among the small global players, industrialised between 1994 and 2014, Myanmar, Slovak Republic and Hungary experienced the largest percentage point increases in the GDP share of manufacturing - from 8.0 per cent to 21 per cent, 9.0 per cent to 22 per cent, and 12 per cent to 25 per cent - respectively.

Cambodia and Sri Lanka also made marked strides in the industrialisation process, with the 1994-2014 share of manufacturing in GDP increasing from 9.0 per cent to 17 per cent and from 14 per cent to 18 per cent, respectively.

Bangladesh experienced a more modest increase, with its share of manufacturing in GDP rising from 15 per cent in 1994 to 18 per cent in 2014, the report revealed.

In Sub-Saharan Africa, Botswana, Lesotho, Nigeria and Uganda were the biggest gainers, with 2-4 percentage point increases in the GDP share of manufacturing between 1994 and 2014, albeit from lower base shares.

WB said at the same time, several low- and lower-middle-income countries in South Asia and Southeast Asia maintained their revealed comparative advantage in labour-intensive tradables between 1993-95 and 2011-13: Bangladesh, Cambodia, India, Indonesia, Pakistan, Sri Lanka and Vietnam.

Meanwhile, the WB report said advances in technology and changing trade patterns are affecting opportunities for export-led manufacturing.

"Smart automation, advanced robotics and 3D printing are new factors, influencing which locations are attractive for production. While these shifts threaten significant disruptions in future employment, particularly for low-skilled workers, they also offer opportunities."

The report underscores the resulting changes in the manufacturing sector's ability to create jobs and lift people out of poverty in the developing countries.

WB encourages policymakers to adjust their approach to spurring job creation in manufacturing as well as readying workers for the jobs of future.

It said changing technologies and shifting globalisation patterns are destined to reshape manufacturing-led development strategies.

"Global value chains remain concentrated among a relatively small number of countries. Smart automation, advanced robotics, 3D printing and other advances, being incorporated by global manufacturers of cars, electronics, apparel, consumer and other goods, are shifting how countries and firms compete for production."

While such trends raise fears that manufacturing will no longer offer an accessible pathway to growth for the low- and middle-income countries, the WB report suggests identifying policy priorities that can help these economies face the challenges and embrace the opportunities they bring.

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