Evaluate the problems a developing country faces when it relies on a narrow range of exports.
4.3.2
Serious problems- Garments ~81% of exports (2024-25).
- Exposed to tariffs, buyer boycotts and shifts in fashion demand.
- Little bargaining power over prices set by global brands.
Less serious than it looks- Manufactured, not primary products: prices more stable than commodities.
- Sold to many buyers in several markets.
- Remittances are a second source of dollars.
ChainWorld demand for clothing ↓ or tariff ↑ → garment export orders ↓ → factory closures and job losses → incomes and AD ↓ → fewer dollars, pressure on the taka and reserves.
JudgmentDependence on one manufactured export is less risky than dependence on one commodity, but the risk rises when trade preferences end. The answer depends on how fast leather, pharma, electronics and services can grow.
Assess the likely impact on a developing economy of losing preferential access to export markets.
4.1.6 · 4.1.5
Large impact- EU is the biggest market; duty-free EBA access ends after a transition.
- Garments could face EU tariffs of around 12%.
- Rivals such as Cambodia keep LDC preferences for now.
Manageable- Can apply for GSP+ by meeting labour and human rights conventions.
- Transition period gives time to adjust.
- Vietnam competes successfully without LDC status, via FTAs.
ChainTariff on Bangladeshi garments ↑ → price in EU ↑ → buyers switch to cheaper suppliers → export revenue ↓ → output and jobs ↓, especially for women workers.
JudgmentImpact depends on PED for Bangladeshi clothing, on securing GSP+ or new FTAs, and on raising productivity. A deferral buys time but does not remove the need to compete without preferences.
Evaluate microfinance as a strategy to reduce poverty.
4.3.3 · 4.4.1
Effective- Grameen and BRAC reach tens of millions of borrowers, mostly women.
- Loans for livestock, shops and small trade raise income.
- Empowers women within the household.
Limited- High interest rates; some borrowers fall into debt traps.
- Funds tiny businesses that rarely grow.
- Studies find modest average effects on poverty.
ChainSmall loan without collateral → poor household buys a cow or sewing machine → extra income → spending on food and schooling ↑ → absolute poverty ↓.
JudgmentMicrofinance smooths consumption and supports women's independence, but mass factory jobs did more to cut poverty. It works best alongside jobs, schooling and health care.
Assess the importance of remittances for economic development.
2.1.4 · 4.3.3
Very important- Record $30.3 bn in 2024-25, rivalling garment exports.
- Finance imports and rebuild reserves.
- Raise rural incomes, housing and schooling.
Limits- Depend on Gulf oil economies and Malaysian demand.
- Mostly spent on consumption and land; little goes into productive investment.
- Migrants face high recruitment fees and poor conditions.
ChainMigrants send money home → current transfers inflow → reserves and taka supported → households spend more on food, health and education → poverty ↓ and human capital ↑.
JudgmentFor Bangladesh remittances are a lifeline. They support spending more than they drive growth. Their development value depends on whether they fund human capital and businesses, and on cheaper, safer migration.
Discuss whether low wages are a sustainable source of comparative advantage.
4.1.2 · 4.1.9
Yes, for now- Minimum wage Tk12,500 a month (~$100), below China and Vietnam.
- Built the world's second-largest garment export sector.
- Huge labour supply still moving off farms.
Not in the long run- Rana Plaza (2013) showed the human cost and brought pressure from buyers.
- Wages must rise as workers and unions push back.
- Automation may cut the value of cheap labour.
ChainAbundant low-skilled labour → low unit labour costs → comparative advantage in labour-intensive goods → export growth → but rising wages erode the advantage unless productivity rises.
JudgmentLow wages are a good starting point only. Sustainable advantage needs productivity: skills, better machinery, reliable power and faster ports.
Evaluate the effects of a currency devaluation on a developing economy.
4.1.8 · 2.1.4
Benefits- Taka fell from ~Tk86 to over Tk120 per dollar.
- Garment exports more competitive.
- Formal remittances rose as the official rate moved closer to the informal one.
Costs- Imported fuel, food and cotton dearer: inflation near 10%.
- Exporters import most inputs, so gains are partly offset.
- Dollar debts cost more to repay.
ChainTaka ↓ → exports cheaper and imports dearer → (X−M) improves if Marshall–Lerner holds → but import prices ↑ → cost-push inflation and lower real wages.
JudgmentDevaluation was needed to stop reserves draining, but with inelastic demand for imported essentials the inflation cost fell on the poor. Short-run pain; longer-run gains depend on export supply responding.
To what extent does economic growth lead to improvements in development?
4.3.1 · 2.1.1
It did- Poverty 40% (2005) to 18.7% (2022).
- Under-five deaths ~145 → ~30 per 1,000 (1990–2022).
- Women's jobs in garments raised girls' schooling.
Not always- Poverty rose again to ~21% (2025) despite growth.
- Income Gini rose to 0.50.
- NGOs and aid explain much of the health progress.
ChainLabour-intensive growth → jobs for women and rural migrants → household income ↑ → spending on food, health, schooling ↑ → HDI ↑.
JudgmentGrowth helped, but the type of growth and the role of NGOs mattered more. Bangladesh's social indicators beat many richer countries, so development is not only about GDP.
Discuss the impact of climate change on economic development in low-income economies.
1.3.2 · 4.3.2
Severe- Low-lying delta: floods, cyclones, salt water on farmland.
- Destroys capital and crops; pushes people to Dhaka's slums.
- Diverts public money into repairs.
Can be reduced- Early warning and shelters cut cyclone deaths 100-fold since 1970.
- Salt-tolerant rice and raised homes.
- Climate finance from rich countries.
ChainRich-country emissions (negative externality) → sea-level rise and stronger storms → farmland and homes lost → lower output and income → poverty ↑ and migration to cities.
JudgmentThe costs fall on those who caused least of the problem. Adaptation works, but needs money Bangladesh's low tax base cannot raise alone.
Evaluate the role of institutions and political stability in economic development.
4.3.2
Matter a lot- 2024 uprising and transition: private investment and growth slowed.
- Politically connected loans left banks with ~31% bad loans (2025).
- Weak tax collection (~6.7% of GDP).
But- Bangladesh grew 6%+ for years despite weak governance.
- Garment exports kept growing through the upheaval.
- 2026 election restored an elected government quickly.
ChainPolitical uncertainty → investors delay projects → I ↓ → AD and capital stock grow slower → fewer jobs and slower growth of LRAS.
JudgmentWeak institutions did not stop early, labour-intensive growth, but they become a binding constraint later, when growth needs a sound banking system, tax revenue and reliable power.