Economic Drivers Shaping Bangladesh as a Trading State: The Relevance of Geopolitical Neutrality

Abstract

The sustained economic growth of Bangladesh and its gradual integration into a globalized economy has influenced its foreign policy. The concerns are to increase merchandise exports; to ensure uninterrupted supply of raw materials, intermediate commodities, and electricity via reliable import channels; to attract much-needed Foreign Direct Investment and technology transfer to close the resource gap; and to leverage itself to become a regional hub of multimodal connectivity to reap maximum benefits from regional integration. Thus, Bangladesh behaves like a Trading State in the global arena, and it is precisely because of these economic determinants that it opts to pursue a policy of geopolitical neutrality. Bangladesh has significant economic dependence on USA, UK and EU for its exports. China and India are the leading sources of much needed import of agricultural produce, raw materials, intermediate goods and machinery. USA, UK and EU member nations are significant investors in Bangladesh. However, long-term Chinese investment commitments under the ‘Belt and Road Initiative’ (BRI) and generous credit facilities have caused the Chinese to acquire greater clout over the last five years or so. Competing regional integration initiatives by India and Japan pose opportunities to counter Chinese influence in Bangladesh and provide the host country with a unique opportunity to select future projects prudently. Due to Bangladesh's diverse economic engagements, it is prudent to maintain its geopolitical neutrality and avoid becoming entangled in a New Great Game.