In an era marked by ever-expanding interconnectivity, open economy has evolved from a just theoretical idea to a reality that affects both the future of countries and the lives of individuals. The winds of globalisation have swept across the globe; economies and cultures are now knitted together in a complex and intricate tapestry. It is imperative that we consider the effects of open economies and globalisation in our modern environment as we navigate through the 21st century.
An open economy is like a wide-open doorway to international trade - it's all about keeping things flowing freely, where goods, services, and capital can move across borders with minimal barriers. This interdependence encourages economic development, innovation, and rivalry but also exposes nations to global risks and volatility, creating a complex and dynamic web of global trade. An open economy is primarily a testimony to the strength of integration. The old limitations of time and distance have been eliminated in this era of digital communication, instantaneous trade, and international supply chains. Global trade in products, services, and ideas transcends physical boundaries. As a result, nations have discovered that they are intertwined, with each thread of the global tapestry tying the others together. For ages, nations with free-market economies have served as the centers of innovation. We can look at free-market economies like the United States, which are the hotbeds of innovation. Silicon Valley in California, is a prime example, where tech giants like Apple, Google, and Facebook were born, driving global technological advancements. Japan, a country devoid of abundant natural resources, has evolved into a tech hub because of its free-market economy. Remarkable companies like Sony, Toyota, and Nintendo have led groundbreaking advances in consumer electronics, automobile manufacturing, and video gaming, exerting a profound influence on global industries. In open economies, individuals have more opportunities for economic advancement within income brackets but in closed economies, the government controls resource distribution. Efficiency and productivity increases are driven by the survival-of-the-fittest dynamic in open economies, as inefficient enterprises quit the market, guaranteeing consumers choose superior products. Therefore, open economies tend to have greater GDPs because of increased output and exports. Additionally, the wealth produced by open economies makes it easier to collect taxes, which in turn helps to fund substantial social programs and public spending.
Bangladesh, a country with a large population, faces many difficulties that impede its ability to advance economically. Its development attempts are hindered by high rates of poverty, widespread illiteracy, and frequent natural calamities. Since attaining independence in 1971, economic growth has been constrained by political unpredictability and a dearth of highly skilled human capital. The country's capacity to effectively use finances is constrained by its reliance on foreign help and the strict loan terms. Food shortages, unbalanced exports, and growing imports are some of the factors contributing to the continued unsatisfactory GDP growth pattern. Infrastructure issues and energy crises make it harder for Bangladesh to have a successful open economy. Still Bangladesh has seen significant change as a result of globalisation and the adoption of an open market economy, particularly in the garments industry.
However, the trajectory of open economies is not without its complications and difficulties. The continual discussion over the advantages and disadvantages of globalisation echoes across the corridors of politics and economics. Critics contend that it promotes a race to the bottom in terms of labour and environmental norms, exacerbates wealth inequality, and disrupts local industries. For instance, multinational corporations may seek out countries with lax labour laws to cut costs, potentially exploiting workers. Additionally, unrestricted global competition can squeeze out local businesses which may lead to economic dislocation.
These worries deserve careful study and are not without merit. Despite the positives, open markets and globalisation present issues that some see as serious risks. Inequality between the rich and the poor may get worse as a result, both domestically and internationally. Conflicts and societal unrest may ensue from this widening income inequality.
Another problem is environmental degradation, which is brought on by unrestrained industrial waste production. Due to incentives, multinational firms have the capacity to control local markets and push local industries out of business. Another effect of globalisation is the deterioration of cultural traditions and the spread of standardised methods in numerous industries. In the end, the impact of globalisation on countries like Bangladesh can be a double-edged sword, presenting both potential and serious difficulties, such as worker exploitation, environmental damage, and economic dependence.
Yet, in this ever-evolving world, the alternative to an open economy seems even more daunting.
Isolationism may provide momentary comfort, but in the long run, it stifles creativity and slows down development. History has demonstrated that societies that value openness, promote competition, and value diversity often experience economic success. The COVID-19 pandemic has offered a stark reminder of our interconnectedness. Supply chains were broken, transportation came to a complete stop, and economies were completely upended. The international community must unite in the face of such difficulties rather than splinter off into isolation. Open economies are better able to withstand these kinds of storms due to their resilience and agility.
Bangladesh may benefit from globalisation through generating income through export-driven growth, increased international trade, and access to new technology and ideas. It also comes with considerable difficulties which demand skillful management. Several suggestions are made in order to effectively utilise the advantages of globalisation while reducing its risks. Among these are expanding diplomatic initiatives to make it easier for more Bangladeshi workers to get employment overseas, promoting English as a world language to increase workforce competitiveness, and negotiating unique market access agreements to reduce trade imbalances. In order to efficiently mobilise resources, reducing poverty is considered crucial. Additionally, enhancing the investment climate to draw in foreign capital is stressed, with political stability serving as a precondition. Along with the initiatives to build a positive international reputation and invest in information and communication technologies, a development strategy to suit the situation is important. To draw in foreign direct investment (FDI), it is crucial to ensure an efficient energy supply, change the regulatory culture, and improve infrastructure. Finally, it is believed that managing the effects of globalisation depends on encouraging cooperation between the public and private sectors through institutional processes.
In conclusion, the idea of an open economy is more than just a theory of economics; it is the pulse of our contemporary society. At this vital juncture in history, it is critical to strike a fine balance between taking advantage of globalisation and resolving its drawbacks. In order to encourage innovation, we must make sure that the benefits are distributed fairly. We can create a better future by accepting the challenges of an open economy, one in which the ties of globalisation unite us rather than drive us apart. The opportunities are as real as the obstacles. It is up to us to create a world that benefits everyone as the creators of this vast tapestry.
Rehnuma Tarannum Oishi, Junior at the Institute of Business Administration (IBA), Dhaka University.