Impact of Trade Liberalisation On Employment In Bangladesh

The Centre for Policy Dialogue
International Labour Organization
JEL codes: 
Employment is a major concern in the context of trade liberalization. At one level, productive employment is a major route out of poverty, and hence, in a country such as Bangladesh, it should be of an issue of major concern. There is a vast body of literature which shows that trade is good for economic growth which in turn should be good for poverty reduction. However, it is to be noted here that there are a number of assumptions behind this line of causation which may not hold in reality. First, while high rate of economic growth is a necessary condition for poverty reduction, experience has shown that it is not sufficient. The pattern of growth, and in that context, the employment outcome of growth is an important element in determining the poverty reducing outcome of growth. Second, while trade may be good for growth, it does not necessarily imply that trade liberalization per se is good for growth. Indeed, trade liberalization, if pursued without due consideration to the strategic context of a given economy, can have a negative impact on growth itself. Third, the impact of trade liberalization on employment may not always be positive. And if that turns out to be the case in a country like Bangladesh, then one will need to closely examine the related issues.
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