Local is the new global: Post-globalisation development strategy

The current proposed blanket of tariff chaos by the US is being felt everywhere and might multiply the ongoing economic agony of the countries irrespective of their economic status. The economic volatility intensified manifold because of already existing challenges of high unemployment, increasing prices, and lower growth which seem quite adamant in recent times globally. 

With the changing geopolitical matrix, it seems quite difficult to retaliate against this unexpected tariff threat.  It started global economies to rethink the self-reliance development strategy, which was fairly overlooked for decades, as one of the safest self-defence strategies to restrain such volatility. 

Additionally, the World Trade Organisation (WTO) driven globalisation practice through expanded international trade in achieving growth is becoming quite misleading, which has weakened the belief in the self-reliance strategy. 

We cannot deny that the WTO is deeply embedded in the countries and has perhaps accelerated the growth through international trade in member countries. It has given countries a broader market expansion scope and an abundance of products at a fairly competitive price. It has also opened the door for countries to specialise in some goods and their exports, and for countries to import where the comparative cost is higher. 

Ironically, it is also evident that mostly the big businesses and multi-national corporations got the advantage to expand their market to grab higher profitability, and the majority belonged to developed countries.

Only in a few occurrences, there is evidence of using tariffs for protectionism by mainly the least developed and developing countries to safeguard the domestic producers and sometimes against dumping. Unfortunately, all these developments have put a big question mark on the survival of local and small businesses. And ultimately, they have been struggling to come up to par with the international competitive cost and pricing, and could hardly sustain. 

Over the period, the big foreign brands and hi-tech gazettes became abundant and gradually came to be part and parcel of the daily life of the common people through WTO-advocated globalisation. And somewhere, the traditional and authentic cultural sense started disappearing from the social and economic periphery of the developing countries as the local and small businesses, which usually carried the legacy, became vulnerable players. 

Multinationals and big foreign brands, due to their cost efficiency, pricing, and branding, became the top priority for consumers and, potentially, to the government for higher tax revenue as well. The lucrative expanded market turned up as the pivotal point, and countries generally ignored the risk of over-international interdependency, the major drawback of economic globalisation. 

The past instance of the Covid pandemic and lockdown measures experience has also witnessed the adversity of over-international interdependence and aftermath severe effects in the form of a shortage of some essential goods when international trade got interrupted. It alarmed the world to introspect and reassess the development strategy. 

The current US's declared tariff threat and expected retaliatory counter-tariff by the other countries are also knocking on our door to rethink and redesign the strategy framework for better fight back tools.

Bangladesh is not falling into all these uncertainties and reverse impacts because of the US tariff trap. Somewhere, our actions were lacking accountability, and our policy and overreliance and dependency on the handful of export areas for foreign currency earning made it a risky affair. It may not support the long-run sustainability growth target of Bangladesh. 

However, when it comes to the balance of trade, it has been negative for the last few decades.  Over-reliance on the garment sector has hindered other areas of growth, especially agriculture. Scaling up the existing business strength and potential redesigning of new business opportunities, and their alignment with the supply chain to support the production process is a must. 

In the due course of time, it may result in ample business scope, employment opportunities, and wider revenue opportunities for the businesses and the government. 

On the other hand, giving due importance to the existing big businesses, re-structuring the friendly business environment for domestic producers and small businesses might be a policy target. Cluster development to support small businesses should get due attention in reducing the overall production cost and becoming price-competitive. 

Nevertheless, Bangladesh, being an agricultural-based economy and still majority population is dependent on agriculture, emphasises the need for support to the agro and related businesses may strengthen the entrepreneurial environment and could fulfil the food self-sufficiency for the country as part of the self-sufficiency policy goal. 

Strengthening and supporting the agriculture and related sectors, and new additions to the export basket, could bring control over the essential food import and minimise the outflow of foreign currency. Incorporation of customised bank loans and agricultural insurance may revolutionise the agricultural sector in minimising risk and uncertainties. And for that, agricultural commodity market development is crucial.

Often big businesses can develop their supply chain internally in alignment with local small businesses to narrow down their dependency on foreign countries, especially for the raw material and specialised skills. Somewhere, the discovery of an innovative raw material or substitute raw material may minimise the cost. 

Embracing sustainable business practices, along with recycling and reusing, could be another option which businesses could consider. Research and development in this regard should be an integral part of policy initiatives and should not be neglected. The government could play a vital role in supporting all those initiatives and whether it's by subsidies and other methods, if necessary. 

Often, the crisis becomes the mother of inventions and compels us to peep into the new potentials around us. And truthfully, a self-reliant strategy can restructure in shaping a stronger economic environment.  

It has high potential in capacity development and stronger bargaining power, whether it's agriculture, industry, or any other sector, which untimely leads to greater return. Rethinking and evaluating ongoing strategies to strengthen inner capacity might be a trigger point at this moment for Bangladesh. 

The international interdependency, by importing more, may be fatal for economic prosperity and long-run sustainable growth. Framing a better self-sufficiency design and its accurate alignment with the existing and potential business strengths might work better. 

Deep introspection to assess the strengths and weaknesses, and cooperation from various stakeholders, could help in fighting back the current tariff threat. 

When it comes to human resources and needful skills to support the industry, agriculture, and other sectors, Bangladesh's biggest strength, with a majority young population, could be considered for better efficiency. Moreover, the young graduate population has high potential and could be upskilled if necessary, as per the industry's needs. The competitive low cost of labour in its own policy strategy can strengthen the production units in Bangladesh. 

On a different note, it is the perfect time to utilise the young labour force and intelligent minds in research and technological upgradation of the country for the maximum outcome, and it will be helpful in achieving the self-sufficiency goal. It is well known that a significant number of Bangladeshi talents are contributing to diverse fields nationally and internationally. Philosophy of growth mindset, professionalism, and strong branding are equally important in redesigning the overall skeleton for self-reliance.

To support domestic production and other sectors, demography also plays an enormous role. Moreover, there is a need to reassess the nature of demography and its consumption patterns to address the current market. Through quality control and strong branding, the local brands could address the entire domestic market and become popular. 

In addition, continuous effort is needed in searching the new business opportunities and potential new markets for export. Keeping an eye open on the changing geo-political scenario is equally important to turn the economy into a more export-oriented. 

The world is never static, nor are the factors affecting trade. Reliance in any form, especially economic, makes a nation fragile; however, self-sufficiency brings strong bargaining power and is one of the strongest strategies for higher economic growth. 

A strong desire, progressive mindset, efficient allocation of resources, and collective effort targeting long-term sustainable growth may shape the framing and embracing of the path for self-reliance in the current environment. 

Pinki Shah is a former Professor of Business Administration at the University of Liberal Arts Bangladesh (ULAB). She is a currency mentor (volunteer) at ONE Hub & CCI, Ottawa, Canada. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.