EFFECT OF INTERNATIONAL TRADE ON ECONOMIC GROWTH

Role of tourism in Bangladesh

GROUP MEMBERS

Serial no

Name Roll no

1 SHARMIN JAHAN 06

2 NUSRAT JAHAN 36

3 MD.NIZAM UDDIN 56

4 TANVIR AHMAD SAEM 94

5 MAMUNUR RASHID 100

International Trade

BRIEF HISTORY OF MODERN TRADE

MERCANTILISM

BRIEF HISTORY OF MODERN TRADE

ADAM SMITH ABSOLUTE ADVANTAGE THEORY

DAVID RICARDOCOMPARATIVE ADVANTAGE

THEORY

BRIEF HISTORY OF MODERN TRADE

OVERVIEW OF THE ECONOMY OF BANGLADESH

Ruin to middle income country

The 32nd largest in the world by purchasing power parity

The second fastest growing major economy of 2016, with a rate of 7.1%

Dhaka is the wealthiest Bangladeshi division and has an annual GDP of US$231 billion

Chittagong Division serves as the largest export hub of the country

GDP growth of 6.5%

The country is leading to an export-oriented industrialisation

Bangladesh have seen a major surge in export as Bangladesh textile industry, second largest in the world, along with emerging Pharmaceutical, Defense, and IT industry

The country's exports are projected to cross US$50 billion by 2021

Bangladesh have seen a drastic improvement in its energy infrastructure, which is required to implement and achieve the Vision 2021

International Trade of Bangladesh

Major Import Items of Bangladesh

Wheat

Major export Items of Bangladesh

The traditional export items Raw jute Jute manufactures Hessian sacking Carpet backing Carpets Jute products Tea Leather and leather products

Non- traditional export items Garments Frozen shrimps Other fish products Newsprint Paper Naphtha Furnace oil Urea Ceramic products

Effect of International tradeMeasuring Bangladesh

Measuring the Impact of International Trade on the Economy

• GDP is a good indicator of measuring the impact of International Trade and GDP can be calculated by the following formula:

GDP= C + I + G + (X – M)Where,C= Consumer SpendingI= Capital InvestmentG= Government ExpenditureX= ExportM= Import

Measuring the Impact of International Trade on the Economy

• If exports exceed imports, the net exports figure would be positive, indicating that the nation has a trade surplus

• If exports are less than imports, the net exports figure would be negative, and the nation has a trade deficit

• Positive net exports contribute to economic growth• More exports mean more output from factories and

industrial facilities, as well as a greater number of people employed to keep these factories running

Effect of Exchange Rate on the International Trade• A weaker domestic currency stimulates exports and

makes imports more expensive. • Conversely, a strong domestic currency hampers

exports and makes imports cheaper

Effect of Inflation and Interest Rate on International Trade• A currency with a higher inflation rate (and

consequently a higher interest rate) will depreciate against a currency with lower inflation and a lower interest rate

Real export and import of Bangladesh

Fiscal Year Total Export Total Import Foreign Remittance

Earnings2007–2008 $14.11b $25.205b $8.9b

2008–2009 $15.56b $22.00b+ $9.68b

2009–2010 $16.7b ~$24b $10.87b

2010–2011 $22.93b $32b $11.65b

2011–2012 $24.30b $35.92b $12.85b

2012–2013 $14.4b

2013–2014 $30.10b $29.37b $14.2b

2014–2015 $31.2b $40.69b $14.23b

Role of tourism

on the economic growth

Tourism Profile of Bangladesh in Global Context• 55 yrs average growth rate

- 6.5%• No of tourists arrivals

(globally):- 1950 : 25 mil- 2005 : 806 mil- 2014 : Over 1.13 billion

• Bangladesh witnesses 11% growth rate of foreign tourist arrivals from 2008-2012.

• Global Earnings in 2014: 1225 billion US$

• Bangladesh’s Earnings in 2014 :158.09 million US$.

Tourism Profile of Bangladesh in Global Context

• Tourism emerged as one of major sector contributing to socio-economic development.

• Tourism tends to grow about 1.5 times faster than GDP, if GDP growth is 4% or above, and vice-versa

• Investment in Tourism generates 50% indirect and 50% induced growth in other related sectors.

• Travel & Tourism investment of BD in 2014 was BDT 60.9bn, or 1.4% of total investment. It should rise by 7.8% pa over the next ten years to BDT 132.1bn in 2025 (1.6% of total).

TOURISM CONTRIBUTIONS TO BANGLADESH ECONOMY

GDP: Direct ContributionThe direct contribution of Travel & Tourism to GDP was BDT 296.6 bn (1.9% of total GDP) in 2014It is forecasted to rise by 6.1% pa, from 2015-2025, to BDT 566.3bn (2.0% of total GDP) in 2025.

GDP: Total Contribution

The total contribution of Travel & Tourism to GDP was BDT 627.9bn (4.1% of GDP) in 2014It is forecasted to rise by 6.5% pa to BDT 1,252.8bn (4.4% of GDP) in 2025.

EMPLOYMENT GENERATIONDirect Contribution

• In 2014 Travel & Tourism directly supported 0.903 million jobs (1.6% of total employment).

• This is expected to rise by 1.4% pa to more than 1 million jobs (1.5% of total employment) in 2025.

Total Contribution

• In 2014 the total contribution Of Travel&Tourism to employment, including jobs indirectly supported by the industry, was 3.6% of total employment (1.98 million jobs).

• This is expected to rise by 2.1% pa to 2.5 million jobs in 2025.

Visitor Exports and Investment in Bangladesh Tourism

• Bangladesh generated BDT10.2bn in visitor exports in 2014.• The country is expecting to attract 0.5 million international

tourist arrivals this year.• By 2025, international tourist arrivals are forecasted to total

0.65 million generating expenditure of BDT 18.4bn, an increase of 5.7% pa. (All values are in constant 2014 prices & exchange rates)

Multiplier analysis

1.Transactions or sales multipliers: An increase in tourist expenditure will generate additional business revenue. This multiplier measures the ratio between the two changes.2.Output multiplier: This relates to the amount of additional output generated in the economy as a consequence of an increase in tourist expenditure. The main difference with the transactions or sales multiplier is that the output multiplier is concerned with changes in the actual levels of production and not with the volume and value of sales.3.Income multiplier: This determines the extra income created in the economy as a consequence of the increased tourist expenditure.4.Government revenue multiplier: This measures the impact on government revenue as a consequence of an augment in tourist expenditure.5.Employment multiplier: This measures the total amount of employment created by an additional unit of tourism expenditure.

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