The economic emergence of China and India: Trade implications for Bangladesh

This thesis seeks to address the impact of China and India's economic emergence on Bangladesh through international trade. This phenomenon has further implications for Bangladesh due to the recent phasing-out of the Multi-Fibre Arrangement (MFA) and the importance of the textile and clothing industry for Bangladesh's exports. In order to analyze the effects of China and India's increased growth on Bangladesh, four key channels of impact have been identified: (i) the growth of Bangladesh's exports to India and China due to an expansion of the Indian and Chinese markets; (ii) increased competition from India and China in third markets; (iii) increased competition from India and China in Bangladesh's home markets; and (iv) the potential for Bangladesh to squeeze into Indian and Chinese value chains. Based on values found for two trade indices, the coefficient of specialization and the coefficient of conformity, and current economic trends, it is shown that the channel through which Bangladesh will be most affected is through increased competition from China and India in third markets. Ultimately, in order to remain a competitor in the global economy, Bangladesh must overcome several challenges in the upcoming future.