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Comparative Advantage and Industrial Priorities for Bangladesh

Abul Kalam Azad

 

Abstract

This paper formulates a linear programming model in order to determine the industrial priorities for Bangladesh in a general equilibrium framework. The model is then solved on the basis of alternative assumptions about the saving capacity, availability of foreign aid, expected growth of agricultural sector, and possibility of export expansion. An industrial priority list for Bangladesh is derived from these alternative solutions of the model. It is found that the country’s comparative advantage is greater in the agro based industries like sugar, edible oil, tobacco, jute textiles etc. Labour-intensive handloom produced cloth and leather goods also rank high in the present study. Among the capital-goods industries, the present study points to the comparative advantage in domestic production of wood goods, metal products and transport equipments. The domestic production of cotton yarn, paper, fertilizer, cement and so on is found to be less advantageous. In this connection it is pointed out that all of these industries are highly capital intensive, and in a situation of general scarcity of capital, the domestic production in these industries is very likely to prove economical.

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