Bangladesh needs stronger economic integration with emerging Asia: Rehman Sobhan

Chairman of the Centre for Policy Dialogue (CPD) Prof Rehman Sobhan has said Bangladesh needs to respond to the changing global economic order by focusing primarily on its economic interests and urged the country to integrate its value chains more strongly with the growing opportunities in Asia.

He said Bangladesh's position as a relatively minor player in the global system gave it flexibility, and its interest lay in a stable world order where external factors will not frustrate its economic opportunities.

"What we need, obviously, to do is to do the most obvious things, to strengthen our value chains across the world," he said while speaking on the "New International Economic Disorder: Implications for Bangladesh" on the opening day of the three-day international conference Bay of Bengal Conversation at a city hotel yesterday (3 October).

Sobhan said Bangladesh has remained constrained by a narrow range of export markets, while its major import sources and, increasingly, its sources of capital are located within the Asian region. One of Bangladesh's major advantages, he said, is its location between China and India, which he described as two major economic powers. "In fact, in another decade or so, China will be the largest economy. India will be the third largest economy. We have not fully exploited this opportunity," he said.

Although Bangladesh has integrated parts of its manufacturing process into the value chains of China and India, the CPD Chairman said it has not sufficiently integrated its export opportunities with the expanding markets of those countries.

He identified strategic planning and implementation as key weaknesses. "There are many ideas on paper for economic diversification of our linkages, but in terms of thought processes and implementation capacities, they have remained weak," he said.

Bangladesh's strategic economic location

Sobhan said Bangladesh's central strategic advantage lies in its economic location, particularly its land connectivity.

"The real central position of Bangladesh lies in its strategic economic location, and it is not in the Bay of Bengal that that location is important. It is really in our land areas," he said.

The renowned economist said the Padma Bridge and Jamuna Bridge are helping provide land links between Southeast Asia, South Asia, West Asia and eventually to Europe.

He recalled the Bangladesh-China-India-Myanmar (BCIM) initiative, saying such connectivity has been envisaged through the initiative.

"I was one of the founders of the BCIM, and we know how we actually worked on this," Sobhan said.

India-China ties key to Asia's future

The CPD chairman said one of the major challenges for the future of Asia is the "still uncomfortable relationship" between India and China.

At the same time, he noted that China is one of India's major trading partners and that the objective economic relationship between the two countries remains strong.

Sobhan said stronger India-China relations could provide Bangladesh with an opportunity to play a role in the emerging regional order.

"China-India partnership in the global system will create for, in perpetuity, the possibilities of a more balanced order," he said.

Such a partnership, the CPD chairman added, could help challenge attempts to create disorder in the international system and allow Asian countries to draw on the region's markets, technology and resources to build a more balanced and just world order.

The changing balance of global economic power has catalysed perverse responses from the traditional dominant powers, which has contributed to instability and unpredictability across the international economic system, particularly for less empowered countries such as Bangladesh, he said.

"In such circumstances, our policymakers may need to explore more creative coping strategies which can strengthen resilience to navigate across this uncertain terrain and guide us in repositioning ourselves within the global economic landscape," Sobhan said.

He said the world is witnessing the emergence of a new international economic order, marked by the relocation of economic power and influence towards Asia.

The economist and public policy thinker said the growing competitiveness of Asian economies, particularly in manufactured goods, has resulted in the accumulation of substantial economic surpluses in the region, creating alternative sources of aid, foreign direct investment and capital for developing countries.

"This has created the opportunity for a more balanced and less unequal economic world order," he said.

Sobhan said the shift has reduced the traditional dependence of developing countries on Western sources of capital and resources and has created an alternative economic space centred around Asia.

He said Asia is progressively becoming the dominant global trading power, with major Asian economies increasingly trading among themselves rather than remaining primarily tied to Western markets.

The CPD chairman also pointed to growing technological cooperation and advances within the region, saying China is now leading the world in areas related to artificial intelligence in terms of patents and research publications.

He said economic linkages have also strengthened across Asia, with countries in South Asia, Southeast Asia, Latin America and sub-Saharan Africa increasingly having major trading partners within the Asian region.

Sobhan said China has emerged as the largest supplier of official capital transfers to the rest of the world, including aid, loans and other forms of credit - a position historically held by the US and Western Europe.

Weaponisation of economics

The economist said the emergence of a more balanced, bipolar economic order has not occurred as expected because developed countries that historically dominated the global economic system are challenging the process through intervention in markets.

He described this as the "weaponisation of economics", saying the US, and to a lesser extent European countries, have increasingly been using their markets as a strategic resource by rationing access through tariffs and other economic measures.

Sobhan said countries are being pressured to buy goods from particular markets or invest in particular countries, not necessarily on economic grounds but because of tariffs and other forms of pressure.

He said such measures represent a departure from the process of globalisation that has contributed to the creation of a new international economic order.

The CPD chairman questioned the sustainability of compelling countries to buy goods or invest through tariff pressure, arguing that competitive markets should normally provide the stronger incentive.

"If you are compelling countries to trade with you, and to, in fact, open up their markets for exportive goods, if you are compelling countries to invest in your own country, then it means that there is a certain sort of malfunction in your own economy," he said.

Sobhan also criticised the use of economic pressure to pursue political objectives, referring to pressure on countries including Brazil, Canada, China and India.

He said the use of protectionism to revive declining industrial bases in advanced economies was also problematic.

The economist warned that such policies are accompanied by a progressive erosion of international institutions designed to preserve a rules-based international economic order, citing the World Trade Organization as an example.

"The WTO, for example, has been marginalised and many of the accepted ground rules of that organisation are being perpetually violated," he said.

Asia to become centre of economic universe

Sobhan said Asia will progressively emerge as "the centre of the economic universe", predicting that China will overtake the US as the dominant economic power.

He said China has already surpassed the US in purchasing-power terms and will eventually do so in nominal terms as well.

The CPD chairman, he added, will become an increasingly important source of capital exports and contribute to the construction of global value chains.