The Enclave Approach Has Outlived Its Usefulness for Bangladesh

The rest of the bonds are given to RMG firms and deemed exporters, which are mostly suppliers of accessories and inputs to the RMG industry. [...] The dummy variables includes the following: a dummy for special bonded warehouse taking the value of 1 from 1978 (when it was introduced) for RMG and 0 otherwise;1 MFA = 1 over 1975–2004 for RMG and 0 otherwise to capture the effect of the Multi-Fiber Arrangement; BBLC = 1 over 1987–2017 for RMG and non-RMG and 0 otherwise, to control for the impact of back-to-back letters of credit; and EBA = 1 o. [...] The target for revenues, usually set up during the time of the annual budget, has a significant bearing on the trade policy stance of the country. [...] The current trade policy stance, while allowing a free trade regime in the RMG sector, perpetuates the high degree of protection to the domestic (import substituting) industries, at the expense of emerging and potential export industries. [...] In view of this, Bangladesh needs to bring an urgency to articulating a roadmap for trade reform that will promote export diversification and maintain the dynamism of the RMG sector, and then implanting the roadmap in a calibrated, deliberate and transparent manner.