Using Input–Output Analysis Framework to Explain Economic Diversification and Structural Transformation in Bangladesh
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Understanding the interlinkages of firms and sectors in the production process and how that leads to higher value added and trade growth has attracted increasing interest.
Existing literature on economic growth and structural change relies on trade data to make pronouncements about a country’s competitiveness and long-term growth prospects through the acquisition of capabilities. However, insufficient data give us a limited view of what is happening within the domestic economy, and how the development of manufacturing through links in the production process leads to the export of intermediate or final products.
Using input–output tables, this paper develops a framework for considering economic diversification across manufacturing and services and global value chain insertion as an integral part of economic development. New indicators are developed to characterize the structural transformation that occurs across production sectors and the links required to ensure broad-based development. Bangladesh’s export-led growth in the last two decades, which has been concentrated in ready-made garments, is also examined.