Almost every country was struggling to ensure supply of essential products, especially cleaning materials at the beginning of corona outbreak. People hardly found items such as masks, hand gloves, hand sanitisers in grocery stores. Personal protective equipment (PPEs) were not sufficient for medical service providers. For household items, some were ordering online but there was delay in supply due to the lockdown.
Indeed, major portion of supplies came from China. So, the Western countries realised they are dependent on China for manufacturing items even at crucial times, with the 'factory of world' already dominating the world trade. This has not been created in a day; rather China has enjoyed comparative advantage over others for decades. In this context, Bangladesh has the potential to exploit some manufacturing prospects.
Before the Industrial Revolution, Asian countries dominated world trade with India and China being two trade giants. India under the Mughal rule accounted for 27 per cent of the word economy (Source: The World Economy: A Millennial Perspective by Angus Maddison). And Bengal had significant contribution to India's exports, especially of textiles products. As the British occupied India, and started deindustrialising, the region's share in the world economy came down to 3.0 per cent when the colonial rulers left India in 1947 ( Source: Inglorious empire: what the British did to India, by Shashi Tharoor).
The British shattered the entire socio-economic pattern characterised by thousands of rural industrial units since the Mughal rule. In his monumental work The Capital, Karl Marx wrote, "Those small and extremely ancient Indian communities, some of which have continued down to this day, are based on possession in common of the land, on the blending of agriculture and handicrafts, and on an unalterable division of labour, which serves, whenever a new community is started, as a plan and scheme ready cut and dried."
The caste system somehow ensured unalterable division of labour, resulted in sustainability of Indian rural economy for thousands of years. Will Durant, an American historian, who visited India in 1930, wrote, "The British conquest of India was the invasion and destruction of a high civilisation by a trading company (the British East India Company) utterly without scruple or principle, careless of art and greedy of gain, over-running with fire and sword a country temporarily disordered helpless, bribing and murdering, annexing and stealing, and beginning that career of illegal and legal plunder which has now (1930) gone on ruthless for one hundred and seventy-three years (Source: The Story of Civilisation).
During the last century, there were some major events that changed the fundamentals of the world economy. In 1917, the Bolshevik Revolution created fears of communist movement in the Western world. The Great Depression in the 1930s created devastating unemployment and showed ineffectiveness of 'supply side doctrine'. John Maynard Keynes' book titled "The General Theory of Employment, Interest and Money," focused on extending budgetary expenses by implementing fiscal policy.
Colonial rule came to an end and many independent nations emerged in Asia and Africa. Over the past 50-60 years, the developed countries gradually chose shifting of labour-intensive industries to third world countries, especially in Asia.
Now, importers of manufacturing goods may look for new manufacturing countries once the coronavirus crisis is over. In such a situation, Bangladesh has a great potential. The advantages that China has enjoyed in attracting manufacturing units, as explained by trade economists, may be relevant for Bangladesh in the coming days.
Firstly, China has huge labour force with comparably lower wages. Secondly, China's business ecosystem of networked suppliers, component manufacturers, and distributors has evolved to make it a more efficient and cost-effective place to manufacture products. Thirdly, Chinese manufacturers generally operate under a much more permissive regulatory environment in various health, safety, employment, and environmental regulations. And fourthly, China has been accused of artificially depressing the value of its currency in order to keep the price of its goods lower than those produced by western competitors.
Bangladesh has a huge workforce and the wages are still low. The regulatory compliance is also more permissive than that of the western countries. The only issues that need to be addressed are that manpower requires to gain higher skills and the government should take proper initiatives. If these are implemented, Bangladesh will be able to grab manufacturing prospect in the post-corona world.
Forhad M Masum is a freelance writer and banker living in Canada.