http://fe-bd.com/2015/05/06/91516 VOL 22 NO 172 REGD NO DA 1589 | Dhaka, Wednesday, May 06 2015
Enhancing business competitiveness M S Siddiqui Competitiveness depends upon regulatory institutions, policies and factors that determine the level of productivity of a country, which, in turn, influences the level of prosperity and the rates of return obtained by investments earned in an economy. The concept of competitiveness thus involves static and dynamic components. Although the productivity of a country determines its ability to sustain a high level of income, it is also one of the central determinants of its return to investment, which is one of the key factors explaining an economy's growth potential. Competition among countries to attract local or foreign direct investment (FDI) relies heavily on the relative strengths in business environment, source of raw materials, production facility and market opportunities. Bangladesh is one of the major economies in South Asia, and although it belongs to the group of least developed countries (LDCs), over the last decade it has shown some degree of success in addressing the economic problems and alleviating poverty. With its steady GDP (gross domestic product) growth of about 6.0 per cent, it is far ahead of most low-income countries. There is, however, a mystery about the source of invested capital for such steady growth. Bangladesh has to see its competitive advantage in more creative terms than just to think in terms of cheap labour and garments. Lack of enough resources for investment has been considered one of the major obstacles for coming out of the underdevelopment trap. In the coming years, the country will require a considerable increase in investment - perhaps worth almost US$50 billion or 40 per cent of the GDP but the current investment is well below 30 per cent. The additional investment would require resource mobilisation by increased revenue earnings, larger inflows of foreign aid, and increased foreign and domestic investment. To attract investment, whether domestic or foreign, the country's policy makers will need to focus on how to create a good investment environment. This environment is generally seen as having three main features: macroeconomic conditions, governance and infrastructure. Macroeconomic factors include such issues as fiscal, monetary and exchange rate policies, and political stability. Governance relates to government interactions with business, which typically mean regulation and corruption, both of which affect the cost of starting and running a business. Infrastructure refers to the quality and quantity of physical facilities (such as power, transport and telecommunications). More broadly, it can also refer to financial infrastructure or access to finance.