Comparative Analysis of Trade Competitiveness between Bangladesh and Vietnam

Abstract

Bangladesh and Vietnam have been the largest garments exporters to the world in recent decades after China. Therefore, competition between Bangladesh and Vietnam in the textile industry is getting intense day-by-day. Nonetheless, both the country shared some of the similar traits in policy reformation. Such as, both the nations became independent during the 1970s and reformed export-oriented policies during the 1980s. However, except for the apparel industry, Bangladesh had not gained any extraordinary success that can be comparable to Vietnam. Moreover, Vietnam’s trade competitiveness had always been better than Bangladesh in most of the period. The paper aims to identify the areas where Bangladesh is lagging behind Vietnam in terms of trade. In this regard, the various international index had been compared. From the comparisons, it has been linked with the trade scenario associated with both the nations. The findings are Vietnam’s policy has always been investing more in human capital, infrastructure and chances of export diversification. Additionally, Vietnam had been prosperous in attaining FDI inflows in different sectors of the economy. Hence, the country gained strong trade competitiveness through diversified export basket especially in electronics. In Bangladesh, FDI inflows and export growth rates had increased over the years. Then again, most of the foreign investments go towards the textile industry. Therefore, the export basket is highly concentrated around the garments sector. Moreover, Bangladesh had not been able to produce productive human capital and economic infrastructure. As a result, competitiveness did not improve noticeably. For a successful export diversification, increasing FDI inflows in other sectors rather than garments is necessary for Bangladesh to achieve akin success like Vietnam.