Role of Technological Advancement on the International Trade of Bangladesh

Ahsanullah University of Science and Technology
Assignment on “Role of Technological Advancement on the International
Trade of Bangladesh”
Submission Date:
07/10/2021
Submitted To:
Mr. Md. Shak Forid
Assistant Professor
School Of Business
Submitted By:
Md Rakib Mia
ID: 170202087
Section: B

Letter of Transmittal:
October 10, 2021
To
Mr. Md. Shak Forid
Assistant Professor
School of Business
Ahsanullah University of Science & Technology.
Subject: An application to provide a final report on the "Role of Technological Advancement in
Bangladesh's International Trade."
Dear Sir,
This is to inform you with profound respect that I have completed the report on “Role of Technological
Advancement on the International Trade of Bangladesh” prepared for the completion of the course,
Export-Import Management. I have strictly maintained the report format instructed by you.
I'd like to express my gratitude to you, my respected professor, for allowing me the honor and
responsibility of writing this report. This has been an incredible learning experience for me. I really hope
that by submitting this report, I will be able to properly complete the course requirements and that it will
meet your expectations.
Please note that this report has been written under your supervision. Under no circumstances will this
report or information in this report be shared or republished without your authorization.
Yours Sincerely,
Rakib mia
-----------------
Md Rakib Mia
School of Business, AUST

Students Declaration:
First of all, I would like to express my gratitude to Allah, the Almighty, for preparing this report.
In this Report, I have put in a lot of work. It would not have been feasible without the generous
support and assistance of a number of websites and individuals.
Mr. Md. Shak Forid, Assistant Professor in the School of Business, Ahsanullah University of
Science and Technology, for his advice, insightful and intelligent remarks, and suggestions, I am
really grateful. I owe him a debt of gratitude for providing me with helpful advice.
Finally, I want to express my heartfelt appreciation to my senior and other classmates who
worked tirelessly on this report, which was clearly required.
Despite my best efforts, the report may have some gaps. Please accept my deepest apologies for
any unintentional errors.

Summary:
This research focuses on the relationship between technical innovation and international trade.
International trade refers to the export and purchase of goods and services between nations in
order to meet the requirements of their populations. In a variety of ways, advanced technologies
have an influence on international trade. They speed up all operations necessary for international
trade and facilitate trade between nations that have and do not have such technology. They also
facilitate worldwide communication and encourage changes in international business, assisting in
the establishment of global manufacturing networks. A trade gravity model is used to investigate
the influence of technical factors on sectoral exports. Today, Bangladesh's international trade
exceeds USD 80 billion. The Bangladesh government spends about USD 70 billion, with up to
USD 20 billion going toward development and technology purchase. If we want to get into the
exclusive club, both government procurement and private business must be accelerators of
technology and innovation.

Table of Contents
Letter of Transmittal:...................................................................................................................................2
Students Declaration:...................................................................................................................................3
Summary:....................................................................................................................................................4
Introduction:................................................................................................................................................6
Literature Review:.......................................................................................................................................7
Objective of the study:.................................................................................................................................7
Methodology of the study:...........................................................................................................................8
Sourcing of Data......................................................................................................................................8
Observation.............................................................................................................................................8
Analysis of Technology & International Trade:..........................................................................................8
Export......................................................................................................................................................9
Import....................................................................................................................................................10
Findings and Discussion............................................................................................................................11
Conclusion:................................................................................................................................................13
References.................................................................................................................................................14

Introduction:
Technology is crucial to a country's international trade, and both technology and international
trade are popular concepts. The export and import of products and services between nations to
fulfill the needs of their people is referred to as international trade. Nations can sell their locally
produced goods and services to foreign countries through international trade. Such trade is based
on nations' comparative advantages in the manufacture of certain commodities. These benefits
serve as the foundation for the worldwide division of labor (production location). The ability of
organizations to do more with less and provide better outcomes is improving as a result of
technological advancements. Artificial intelligence (AI), big data, and the Internet of things (IoT)
all work together to build algorithms that firms may employ to reduce the time it takes to transfer
products from export to import. By using advanced technology (like Big data, AI) may help to
achieve efficiency and responsiveness in international trade, where using fewer workers, entering
the worldwide market swiftly, and costs can be cut (Kathleen M. Wilburn, 2018).
The Bangladesh government spends about USD 70 billion, with up to USD 20 billion going
toward development and technology purchase. Following the government's lead, the private
sector must engage in research and development (R&D) to fulfill increasing domestic demand
and to support the government's export-led economic plan. Today, Bangladesh's international
trade exceeds USD 80 billion. As a result, the private sector has four times the potential to
support R&D as the government. To put it another way, if we want to get into the exclusive club,
both government procurement and private business must be accelerators of technology and
innovation (Karim, 2021).
International trade promotes innovation, technical development, and efficient production by
exposing people to new items and allowing them to import high-tech inputs.

Literature Review:
In this study, technology dramatically positive impact on international trade that is exports and
imports, as well as has some issues of causality between them as follows:
 Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan, stated
that Bangladeshi manufacturers must urgently change their focus away from low labor-
intensive productivity and toward greater productivity. Firms will need to embrace better
technology across business activities and manufacturing processes in order for this to
happen.
 According to Joseph Schumpeter, Trade and industry drive economic expansion, which
is a dynamic process. Many causes for economic development linked to trade, according
to this author, include the introduction of a new item quality or a new application of an
existing good, a new manufacturing method, the opening of a new market, and a change
in economic structure. Technical innovation may be defined as a country's ability to turn
fresh ideas into reality by developing creative items and processes that play a significant
role in international commerce and economic growth. Developing relevant criteria to
evaluate the degree of technological innovation across nations is critical in a knowledge-
based economy with a strong and growing concentration on information technology and
human resources.
 .Márquez Ramos, Martínez Zarzoso, Sanjuan Lucas and Suárez Burguet addressed
that have lately created a variety of indices and factors to assess technological innovation
success. Nonetheless, a country's technical achievements are extremely complicated. As a
result, capturing them in an index that reflects the complete variety of technologies and
measures some elements of technology innovation, dissemination, and human capabilities
is challenging. To address these issues, the Technological Achievement Index (TAI) has
been employed in empirical studies.
Objective of the study:
The objectives of the study are:
 To understand the basic relationship between technology and international trade.
 To determine the significant impact of advanced technology on international trade in
Bangladesh.

 To recognize the findings of the effect of technology on international trade.
Methodology of the study:
Sourcing of Data:
This study is conducted mainly based on secondary data was gathered from Journal, Books,
Wikipedia, Google Scholar, Qoura, and other websites. In addition, a thorough literature review
was conducted by browsing several online libraries.
As well as data obtained from primary data collection source, observation-
Observation:
To perform the study, collected data from the class observation where teacher and students
attitude, perception, and responsiveness on international trade i.e. export and import and what the
significant impact of technology on it thereby generate idea and has done it.
Analysis of Technology & International Trade:
Technology and International trade or business is interconnected. In the modern era, international
business would not possible to conduct properly without technology modes or tools. Electronic
communication, such as emails, messages, faxes, and virtual conferences, are among the most
significant means of technology in international trade. Another significant technical
advancement is tracking techniques for shipping and purchasing, which allows firms to verify the
delivery of items and the quantity of inventory acquired. Other technologies that make it easier
for the country's firms to handle and preserve their data include electronic spreadsheets and
databases.
According to a research by the World Bank and the Confederation of British Industry (CBI)
(Yunfan Gu, 2021), Bangladesh's manufacturing sector may enhance productivity through
improving innovation and technology adoption in businesses. Three pillars were highlighted in
the report: managerial and worker competencies, linkage to foreign markets, and complementary
markets and institutions. According to the research, adopting new technology and business
processes will aid trades in recovering faster from the COVID-19 crisis. Technology contributes
to export diversification in the RMG sector of Bangladesh.

Technological developments have benefitted both individuals and companies. Technology has
benefited society in a variety of ways, including increasing the range of items available on shop
shelves, decreasing the cost of products and services, and increasing access to information. In the
realm of international trade, technological developments are extremely important (Capozzi,
2017).
Export:
Export is simply defined that is the flowing out of a country and sold overseas. Export, in its
broadest sense, refers to products and services produced in one nation and purchased by citizens
of another. It doesn’t matter how it is sent. It may be sent, emailed, or transported in personal
luggage on an aircraft. It is an export if it is manufactured in the United States and sold to a
customer in another country. Bangladesh's entire export of goods and services from July 2020 to
June 2021 is shown here.

Import:
Imports are products and services purchased from another nation by people, businesses, and
governments. Countries that purchase products or services from another nation owing to either
production constraints in domestic sectors or the desire to get more efficient and cost-effective
imported commodities. Importer refers to the person who receives products or services, while
exporter refers to the person who sends them. Import refers to the acquisition of a product or
service developed in another country by the home country. Bangladesh's total imports of goods
and services from 2008 to 2017 are shown below.

Findings and Discussion:
To assess a country's export potential, revealed comparative advantage (RCA) measures have
been employed. In contrast to circumstances where the number of items that may be
competitively exported is static, the RCA shows whether a country is in the process of expanding
the products in which it has trade potential. As stated in Equation 1, the index is determined by
dividing a country's proportion of worldwide exports of a certain good by its percentage of
overall world exports.
RCAik =
X ik
Xwk
X¿
X wN
∗100
Here,
 RCAik is the RCA index of products k for Bangladesh i
 Xik is the value of product k exported by country i,
 X wkis the value of world exports of product k,
 X¿ is the value of the exports of all the products by Bangladesh i,
 And X wN is the value of world exports of all the products.
When RCAik is higher than one, Bangladesh I has a competitive advantage in exporting items k,
according to Equation.
Now recognizing the technological achievement of Bangladesh in trade. Understanding how
successfully a country participates in producing, employing, and disseminating technology as
well as establishing a human skill base to acquire knowledge is possible thanks to the technical
achievement index (TAI). Bergstrand, Deardorff has defined a gravity equation and calculated
for the disaggregated data in order to analyze the influence of technological innovation on trade.
The following is the approximated equation:

lnX ijk=a0+a1 ∙ lnY i +¿ a2 ∙ ln Y j +¿ a3 ∙ Adjij +¿ a4 ∙ Landi+¿ a5 ∙ Land j + a6 ∙ GM +¿ a7 ∙∈ Distij +¿
a8 ∙ Langij +¿ a9 ∙ Colonyij +¿ a10 ∙ TAIi+ ¿ a11 ∙ TAI j +a12 ∙ ¿Tariffsik +¿ a13 ∙∈TCi +¿ a14 ∙∈TC j +¿
a15 ∙ high¿ techk a16 ∙ homk
Where,
 In is natural logarithms.
 Xijk is the value of exports of products k from Bangladesh i to j.
 Y i and Y j are the incomes in the exporter’s market and in the destination market.
 Adjij indicates the partners of trading is contiguous.
 When the exporting or importing nations are both landlocked, Landi and Land j assume
the value of one, and zero otherwise.
 GM denotes global market where products import and export to a country.
Then has used such functions that are indicated the regional area to trade internationally.
 Distij is the geographical area of a country i and j.
 Langij indicates the official language to trade in the world.
 When trading partners have had a colonial relationship at any point in time, this is
referred to as Colonyij
The TAI, as previously mentioned, is used to assess technical innovation in nations I and j. The
TAI factors are listed below-
 TAIi and TAI j are using these variables to measure the technological innovation in the
exporting and importing countries and able to recognize the effect of technology on
international trade.
 Tariffsik is used to define the average tariff for importing commodities of all the countries
from the exporters.
 TCi and TC j are the exporting and importing nations' transportation and other expenses.
 high¿ techk is the high technology commodity, whereas
 homk is the homogeneous commodities of a country.

The TAI gives an overview to Bangladesh in where the situation for the country to perform
technology on the trade, we make a distinction the technological innovation into four groups
earlier.
 Leader (TAI > 0,5): Technology creation and innovation capability are fundamental for
all countries to achieve the highest levels of technological advancement. Leaders who
possess technical innovation have a significant competitive edge in the global economy.
There is existed only developed countries.
 Potential Leaders (TAI = 0,35-0,49): Most of the countries in Potential Leaders are
developing countries.
 Dynamic Adopters (TAI = 0,20-0,34): Some countries in this group have human skills
levels and diffusion recent and old technologies comparable with Potential Leaders
 Marginalized (TAI ˂ 0,20): In nearly every element of technical advancement, these
countries fall behind. This group of nations has a low degree of technical advancement
and has a long way to go in terms of technology dissemination and human skill
development. People in many regions of these nations still lack access to "old"
technology.
As a consequence of the debate above, prospective leaders in international business exist in
Bangladesh, and they are improving their technology to trade throughout the country on a daily
basis.
Conclusion:
The primary goal of this research is to look at Bangladesh's interaction with technology and
international trade, as well as how much technology plays a part in international trade (export
and import). The data are collected from both primary and secondary methods like websites,
journals, newspapers, books, and observations. The result obtained in the analysis of RCA and
TAI shows technology plays a significant role in international trade. With the empirical research,
the study tries to reveal the overall impact of technology on the export and import of Bangladesh.
Hence, low and high levels of these components result in fewer exports, but an intermediate level
results in increased exports.

References
Capozzi, C. (2017, September 26). Bizfluent. Retrieved from bizfluent.com:
https://bizfluent.com/about-7542416-importance-technology-international-business.html
Karim, H. N. (2021, Feb 21). Bangladesh and the ongoing technological revolution. The Daily
Star. Retrieved from https://www.thedailystar.net/supplements/30th-anniversary-
supplements/aspirations-the-next-50-years/news/bangladesh-and-the-ongoing-
technological-revolution-2047309
Kathleen M. Wilburn, H. R. (2018). THE IMPACT OF TECHNOLOGY ON BUSINESS AND
SOCIETY.
Yunfan Gu, G. N. (2021). Gearing Up for the Future of Manufacturing in Bangladesh. Retrieved
from https://documents1.worldbank.org/curated/en/702731624306432211/pdf/Gearing-
Up-for-the-Future-of-Manufacturing-in-Bangladesh.pdf
L. (n.d.). Http://www.economics-ejournal.org/dataset/comments/comment.2009-07-
08.3750567228.pdf. The Effect Of Technological Innovation On International Trade.