1. What is Economic System?

Economic systems are the means by which countries and governments distribute resources and trade
goods and services. They are used to control the five factors of production, including: labor, capital,
entrepreneurs, physical resources and information resources. In everyday terms, these production factors
involve the employees and money a company has at its disposal, as well as access to entrepreneurs, the
people who want to run companies or start their own businesses. The physical materials and resources
needed to run a business, along with the data and knowledge companies use to be successful, are also
factors in production. Different economic systems view the use of these factors in different way.

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2. Types of Economic System.

The way scarce resources get distributed within an economy determines the type of
economic system. There are four different types of economies; traditional
economy, market economy, command economy and mixed economy. Each type of
economy has it’s own strengths and weaknesses.
1. Traditional Economic System

The traditional economic system is the most traditional and ancient types of economies in the
world. Vast portions of the world still function under a traditional economic system. These areas
tend to be rural, second- or third-world, and closely tied to the land, usually through farming. In
general, in this type of economic system, a surplus would be rare. Each member of a traditional
economy has a more specific and pronounced role, and these societies tend to be very close-knit
and socially satisfied. However, they do lack access to technology and advanced medicine.

2. Command Economic System

In a command economic system, a large part of the economic system is controlled by a

centralized power. For example, in the USSR most decisions were made by the central
government. This type of economy was the core of the communist philosophy. Since the
government is such a central feature of the economy, it is often involved in everything from
planning to redistributing resources. A command economy is capable of creating a healthy
supply of its resources, and it rewards its people with affordable prices. This capability also
means that the government usually owns all the critical industries like utilities, aviation, and
railroad. In a command economy, it is theoretically possible for the government to create enough
jobs and provide goods and services at an affordable rate. However, in reality, most command
economies tend to focus on the most valuable resources like oil. China or D.P.R.K. (North
Korea) are examples of command economies.
Advantages of Command Economic Systems

 If executed correctly, the government can mobilize resources on a massive scale.

This mobility can provide jobs for almost all of the citizens.
 The government can focus on the good of society rather than an individual. This focus
could lead to a more efficient use of resources.
Disadvantages of Command Economic Systems

 It is hard for central planners to provide for everyone’s needs. This challenge forces the
government to ration because it cannot calculate demand since it sets prices.
 There is a lack of innovation since there is no need to take any risk. Workers are also
forced to pursue jobs the government deems fit.

3. Market Economic System:

In a free market economy, firms and households act in self-interest to determine how resources
get allocated, what goods get produced and who buys the goods. This is opposite to how a
command economy works, where the central government gets to keep the profits. There is no
government intervention in a pure market economy (“laissez-faire“). However, no truly free
market economy exists in the world. For example, while America is a capitalist nation, our
government still regulates (or attempts to control) fair trade, government programs, honest
business, monopolies, etc.In this type of economy, there is a separation of the government and
the market. This separation prevents the government from becoming too powerful and keeps
their interests aligned with that of the markets.
Historically, Hong Kong is considered an example of a free market society.

Advantages of a Free Market Economy

 Consumers pay the highest price they want to, and businesses only produce profitable
goods and services. There is a lot of incentive for entrepreneurship.
 This competition for resources leads to the most efficient use of the factors of production
since businesses are very competitive.
 Businesses invest heavily in research and development. There is an incentive for constant
innovation as companies compete to provide better products for consumers.
Disadvantages of a Free Market Economy

 Due to the fiercely competitive nature of a free market, businesses will not care for the
disadvantaged like the elderly or disabled. This lack of focus on societal benefit leads to
higher income inequality.
 Since the market is driven solely by self-interest, economic needs have a priority over
social and human needs like providing healthcare for the poor. Consumers can also be
exploited by monopolies.
 4. Mixed Economic System

A mixed economy is a combination of different types of economic systems. This economic

system is a cross between a market economy and command economy. In the most common types
of mixed economies, the market is more or less free of government ownership except for a few
key areas like transportation or sensitive industries like defense and railroad.
However, the government is also usually involved in the regulation of private businesses. The
idea behind a mixed economy was to use the best of both worlds – incorporate policies that are
socialist and capitalist.
To a certain extent, most countries have a mixed economic system. For example, India and
France are mixed economies.
Advantages of Mixed Economies

 There is less government intervention than a command economy. This results in private
businesses that can run more efficiently and cut costs down than a government entity
might.
 The government can intervene to correct market failures. For example, most governments
will come in and break up large companies if they abuse monopoly power. Another
example could be the taxation of harmful products like cigarettes to reduce a negative
externality of consumption.
 Governments can create safety net programs like healthcare or social security.
 In a mixed economy, governments can use taxation policies to redistribute income and
reduce inequality.
Disadvantages of Mixed Economies

 There are criticisms from both sides arguing that sometimes there is too much
government intervention, and sometimes there isn’t enough.
 A common problem is that the state run industries are often subsidized by the government
and run into large debts because they are uncompetitive.

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3. What is fourth industrial revolution?

The fourth industrial revolution is the current  and developing environment in which disruptive
technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR) and
artificial intelligence (AI) are changing the way we live and work.
The third industrial revolution, sometimes called the digital revolution, involved the
development of computers and IT (information technology) since the middle of the 20th century.
The fourth industrial revolution is growing out of the third but is considered a new era rather
than a continuation because of the explosiveness of its development and the disruptiveness of its
technologies. According to Professor Klaus Schwab, Founder and Executive Chairman of
the World Economic Forum and author of The Fourth Industrial Revolution, the new age is
differentiated by the speed of technological breakthroughs, the pervasiveness of scope and the
tremendous impact of new systems.

The first industrial revolution, in the 18th and 19th centuries, involved a change from mostly
agrarian societies to greater industrialization as a consequence of the steam engine and other
technological developments. The next technological age, the second industrial revolution, was
driven by electricity and involved expansion of industries and mass production as well as
technological advances.

The World Economic Forum provides a brief presentation about the fourth industrial revolution:

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4. What is the impact of fourth industrial revolution in BD economy?

Currently 4th Industrial Revolution (4IR) is one of the most discussed issues in Bangladesh.
Seminars, conferences and round table discussions are organizing by different stakeholders on 4IR &
its problems and prospects. Scholars are trying to make stakeholders aware about 4IR concept and
inspiring entrepreneurs to adopt newer technologies to get advantages out of it. They are reminding
that businesses are to adopt 4th & 5th generation technologies to remain them up-to-date with
concurrent market demands. Let’s try to have a look at the history of industrial revolution from its
very beginning.

Before 17th century world economy was mainly agriculture dependent. Agriculture production was
the prime mover of world GDP. Till then people used to made products in their homes by using
handmade tools or by bear hand. 1st Industrial Revolution (1st IR) took place in Europe and North
America in 17th Century with invention of steam engine. 1st industrial sector i.e. textiles and iron
industry begin journey in Europe. Handmade textile industry started to be mechanized. Starting in
1765 first industrial revolution last till the beginning of 19th century. Initiation of mechanization,
introduction of industrial base based on agriculture crops, advancement of mining industry
especially iron and coal extraction and invention of steam engine were the success stories of the 1st
IR.
2nd Industrial revolution was driven by invention of new sources of power like electricity, oil and gas
in the beginning of 19th century. After one century of 1st IR 2nd one took place in 1870. Textile
industry progressed into synthetic age, fertilizers were invented to increase agricultural production,
oil and gas mining sectors  were added with iron and coal mining, communication technologies like
telegraph, telephone were invented during this period. A remarkable invention of 2nd industrial
revolution was invention of assembly line by ford motors. Large scale production concept and
concept of mass factory were invented by the 2nd IR and lasted till middle of the 20th century. Main
players of the 2nd IR were the European countries like UK, French, Italy and Germany etc. US
economy started to lead the world at the same period.
3rd industrial revolution begins in 1969 with invention of newer sources of energy like nuclear
power, innovation of computer technology, massive progress of semi-conductor and microchips,
electronic and electrical sector started its miracle from the beginning of 3rd IR. Telecommunication
sector especially mobile communication technology, invention of internet, email communication,
massive progress of medical technologies, biotechnologies, pharmaceutical industry, etc. took place
during 3rd IR. Massive progress in ICT sector changed peoples life style and rural civilizations
transformed into urbanized communities. Open flow of goods, globalization, e-commerce, e-business
use of ICT and computer technology in production, communication, consumption etc. everywhere
have a significant spot of human civilization. Newer economies like Japan, China, Brazil, India,
Russia etc. became part and parcel of world economy during this period. Intellectual property
became more valuable than the tangible products and properties during this era. Industrialization,
globalization, free market economy etc. concept got maturity in this period. The world became into
fingertip of global citizen. 3rd IR projected matured forms of each and every innovations of the
previous two IRs. Therefore production, processing, transportation, storage, distribution,
consumption, post consumption feedback, post-sale service, everywhere positive changes became
visible. At the same time massive progress of war technologies put human civilization into a bigger
threat at this period. Though nuclear warhead were used during the 2nd IR but world observed a
long list of wars and measurable human sufferings in the Middle East and other parts of the world
during 3rd IR era.
4th Industrial Revolution is much discussing now a days, scholars are describing concurrent
innovations like artificial intelligence, robotics technology, 3D printing, block chain and big data etc.
as beginning of 4th IR. 3D printing technology will create a new era of production concept. People
are capable to manufacture quick and as like things by 3D printing technology. From construction
into healthcare, from production into post consumption behavior of the consumers everywhere a
new quick and perfect age is started. It is very essential for the entrepreneurs to adopt newer
technologies, use newer machineries and produce products or provide services according to the
change demand of consumers. Many successful companies like Kodak, Fuji, Blockbuster etc. being
abolished due to their inability to innovate or adopt with newer technological advancement.
Now come to the context of Bangladeshi industries and our readiness to adopt 4IR technologies.
Major Bangladeshi business sectors are readymade garment, leather and leather goods, plastics, light
engineering, agro processing, electrical and electronics, fashion designing and personal effects, IT
and ITES, ship building, tourism, textiles, ceramics, pharmaceuticals, infrastructure development,
healthcare and diagnostics etc. Bangladeshi export is mainly dependent upon a single sector i.e.
readymade garment (Knitwear and Oven) during last 3 and more decades. It is yet to get a second
export earning sector during this long three decades. Few other sectors like leather goods,
pharmaceuticals, Outsourcing, human resource export, and agro-processing have potentials to
become major export earners. But none of these are becoming so bold like readymade garment. Local
scholars are advising government and private sector to look into the matter of diversifying export
basket but yet to select the right products for export diversification.
If we would like to the history of industrialization in Bangladesh we get existence of 177 naturally
grown SME clusters throughout the country. All of the SME clusters are established by following
success stories of one or few individual initiatives. All of the clusters are using mainly similar and
technologies of the 2nd or 1st IR era with minor modification or as it is. Therefore products quality,
design and productivity of the industries located in the SME clusters are very old fashioned, and poor
performing. As a result products of these clusters are fighting to retain existing local market against
imported products of the same sector. Some of these clusters are in the verge of abolishment due to
their inability to cope with the modern technologies. For example Bagerhat Coconut oil cluster was a
concentration of more than one hundred enterprises even one decade ago. But with passage of time,
improved quality imported coconut oil entered into the market and they became uncompetitive.
Because local entrepreneurs don’t know where appropriate refining technology is available to make
locally produced coconut oil clear and transparent like the imported one. Thus a pure but backdated
technology used local production hub is going to be abolished.
My send example goes to the Kumarkhali Textiles Cluster at Kustia. It is a concentration of more
than ten thousand hand and power looms producing various types of old fashioned textiles products
including bed sheet, bed cover, Lungi etc. Only 3-5 factory became medium sized here in this cluster.
But all of the factories and households are producing same designed products during last half of the
century. Due to their inability to diversify their product design they are losing local market to the
imported products. But these factories and households of the Kumarkhali Textiles Cluster can be
competitive around the world if they can be trained up on how to create a new design in textiles.
Some of the entrepreneurs in Kumarkhali dreams to export their products to European markets but
they do not know which machineries are appropriate to produce export oriented product. They does
not know where these machineries are available and how to procure these.
Not only the above mentioned clusters but also the potential new young entrepreneurs of the country
are also suffering from lack of information what should be the appropriate product to produce, what
are the relevant machineries to produce their selected products? Where these machineries are
available to purchase? How to collect relevant raw materials? How to procure an appropriate
machine and install it in their factory premises? There are many online portals like Indiamart,
Alibaba, Amazon etc. helps to bridging up potential entrepreneurs and machine suppliers in India,
China and many other countries. But these types of platforms are till absent in Bangladesh.
Therefore rate of new entrepreneurship development is too low in Bangladesh than the expected
number. Government and scholars who are talking about 4IR and organizing seminars, conferences
with big shots on these issues can emphasis on such practical barriers we do have to make our micro
and cottage scaled potential entrepreneurs functional in the ground. Who could be graduated into
small, medium as well as larges scaled corporations in coming future. Therefore with talk shows in
the media we need practical initiatives to play role of business intermediary organizations or
supporting hand for the entrepreneurs to procure and install appropriate technologies in respective
fields. Thus we can support graduation of our 1st IR technologies into 2nd or 3rd IR era. That is even
more important than that of making people knowledgeable on the 4IR issues.  
The writer is Executive Director, DCCI Business Institute
(DBI)http://www.theindependentbd.com/printversion/details/184416

1. Opportunities of international business for jute industry

According to the Export Promotion Bureau (EPB), in the last fiscal year, Bangladesh export earnings from
jute and jute goods fell to $816.27 million from $1.02 billion in last fiscal year
Export earnings from jute and jute goods witnessed a fall by 20.41% to $816.27 million in the just
concluded fiscal year despite government efforts to restore the lost glory of what used to be called the
country's golden fibre. 
According to the Export Promotion Bureau (EPB), in the last fiscal year, Bangladesh export earnings from
jute and jute goods fell to $816.27 million from $1.02 billion in last fiscal year. 
Of the total amount, raw jute earned $112.48 million, down by 27.75% from $155.68 million. Jute yarn
and twine, the largest contributor to the sector, fetched $512.42 million posting a 20.89% negative
growth compared to previous year’s earnings of $647.72 million.
On the other hand, jute sack and bags saw a 32.54% decline to $83 million, which was $123 million and
other products earned $108.51 million, which is 9.24% higher compared to previous year’s earnings of
$99.33 million. 
Expressing deep concern over the down trend in export earnings from jute and jute goods, the sector
people have blamed the anti dumping duty by India and slump in demands in global market. 
“A good quantity of jute and jute goods including sacks and fabrics are exported to India. But it saw
decline due to imposition of anti-dumping duty on import of jute goods from Bangladesh,” Md Rashedul
Karim Munna, managing director of Creation Private Limited, a jute goods manufacturer, told Dhaka
Tribune.
In 2017, the Indian government imposed anti-dumping duty ranging from $6.30 to $351.72 per ton on
imports of jute and its products from Bangladesh and Nepal to protect local industry. This duty will
remain effective for the next five years.
As a result, export earnings from the sector saw a down trend in the last fiscal year, he added. 
"On the other hand, US dollar appreciated against Indian rupee, which enabled Indian jute goods makers
to offer lower prices than those offered by Bangladesh. As a result, global buyers shifted sourcing
destination from Bangladesh, as our manufacturers lost competitive edge in the global market," said
Munna. 
Besides, global economic slowdown has caused cuts in demands for goods, while political instability in
Syria and Turkey is another reason.
“Turkey is the number one market for Bangladeshi jute yarn, used for carpet industry mainly. But due to
the economic crisis of Turkey, the carpet industry is suffering, which affected the demands of yarn
negatively,” Shahidul Karim, general secretary of the Bangladesh Jute Spinners Association, told Dhaka
Tribune. 
Demands for raw material and raw jute in jute industry fell due to closure of jute mills in different
countries such as Pakistan, which now had only three to four mills out of about 15 in the past, said the
business leader. 
How to turn around
"It is quite possible to revive the heritage of jute as the government has enough willingness and taken
numerous initiatives," Shahidul Karim said. 
"As the supply is more than demands, we have to move for industrial diversification along with the
product diversification," he suggests.
European Union and a good number of states in the United States were going to ban use of polythene
and plastics products and move towards environment-friendly jute products, said Rashedul Karim
Munna. 
In addition, uses of jute diversified goods in home decor and domestic purpose were growing and
Bangladesh could take the lead as it had enough raw materials, Munna mentioned.

https://www.dhakatribune.com/business/economy/2019/07/08/earnings-from-jute-jute-goods-fall-by-
20-41

Jute goods diversification to boost export

They also emphasized on research and development to develop new jute goods
Diversification of jute goods and comprehensive policies would boost jute goods export, as the demand
for the natural fiber was growing across the globe, experts said on Thursday.
Policy makers, private entrepreneurs and think tank made the observations at a round table discussion
titled “Revitalizing Export of Jute Goods from Bangladesh” organized by Bangladesh Enterprise Institute
at its office in Gulshan, Dhaka.
They urged the government to provide sufficient fund for installation of latest technologies and
machinery in the jute mills to help manufacturers produce diversified jute products. 
They also emphasized on research and development to develop new jute goods.
“There is a huge demand of jute goods as it is environment friendly. So, Bangladesh has to explore the
opportunity to boost jute goods export,” said Manzur Ahmed, a former director of the Federation of
Bangladesh Chambers of Commerce and Industry (FBCCI).
He said as a state trading enterprise Bangladesh Jute Mills Corporation (BJMC) should be more efficient
in dealing with jute.
The management of BJMC could be outsourced from private sector for improving its efficiency and
services To bring new technology for the sector, the government can bring foreign direct investment to
revitalize the ailing sector,’ he said.
The keynote paper was co-authored by Bangladesh Institute of International and Strategic Studies
research director Mahfuz Kabir and BEI consultant Mohammad A Razzak.   
Mahfuz in the keynote speech said the demand of natural fibers was increasing around the world and
Bangladesh should tap the opportunity.
‘There is a billion dollar market around the world for jute related products. Exporting jute sticks for
charcoal and carbon fiber could be a game changer for the economy. Besides, supplying the natural fiber
for automobile industry will be another millstone as the global automobile giants started using natural
fiber for cars’ interior,’ he said.
He said jute-tin, jute leaf tea, viscose and geotextile all have enormous potential for Bangladesh.
‘The BJMC should strengthen its research capacity and update machineries. The public corporation is
overburdened with administrative inefficiency and financial troubles,’ he said.
BJMC chairman Shah Muhammad Nasim said although the corporation had some limitations but in
recent times it made significant progress.
‘We have a large variety of jute products in the offering. Recently, we have explored new markets in
Ghana, Sudan and Syria,’ he said.
He said that there was syndication in jute export sector, creating problem for the industry.
‘We are trying to break the syndication in the industry.’
Former ambassador and BEI president Farooq Sobhan said there remained huge potential in jute export
and the BEI was trying to facilitate the process.
‘We will have further dialogue with the government and we are hopeful that the outcome will be
positive,’ he hoped.

https://www.dhakatribune.com/business/2019/10/10/jute-goods-diversification-to-boost-export-say-
experts

Jute ‘Made in Bangladesh’ has a renowned global reputation and demand for jute products are
skyrocketing day by day. However, every year Bangladeshi state-owned jute mills are counting tens of
billions of BDT losses. On the contrary, India is securing its share in the global jute market importing raw
jute from Bangladesh.
Whereas India buys raw jute materials from Bangladesh and exporting it after processing it, making a
sizable profit. And here the question arises why Bangladesh can’t able to do it?
French people use a variety of jute made products but the users don’t know the jute produced in
Bangladesh.”
“Even in five-star hotels, I see jute made carpets purchased from India – which originated in Bangladesh
– but sadly no one even knows the jute came from Bangladesh.”
Varieties of Bangladesh made jute products are becoming globally popular. As nowadays people are
opting this sustainable natural fiber made products. On the contrary, this lucrative ‘golden fiber’ sector
in Bangladesh is counting loses every year. The state-owned jute mills count tens of billions of BDT in
loses.
According to the latest Bangladesh Jute Mills Corporation (BTMC) information in FY 2019-20, 22 state-
owned jute mills have counted a 3.95 billion BDT in lose.
Lack of efficient manpower, old machinery, poor branding capability are the prime causes for
Bangladesh to fall behind in grabbing more international market share, thinks the Director of Jute
Diversification Promotion Center, MD. Abul Kalam Azad.

https://www.textiletoday.com.bd/bangladesh-losing-international-jute-product-market-india-due-poor-
marketing/
2. Barriers of international business for jute industry.

1. A lack of skilled labour in the JDP sector leads to production of inferior quality products resulting in
loss of competitiveness in the export market

2. A lack of skilled designers and specialized craftsmen in the JDP sector leads to production of typical
non-demanded products resulting in loss of additional opportunities in both the domestic and
international markets

3. A lack of international exposure of the local designers on the JDPs leads to inability to develop
designs as per global trends resulting in inability to increase export orders

4. The absence of continuous product development by JDP producers leads to production of stereotyped
products resulting in an inability to penetrate newer markets

5. Inadequate R&D facilities at both the public and private levels in the JDP sector leads to an absence of
continuous product innovation resulting in loss of growth opportunities

6. A lack of market development knowledge by the exporters leads to ineffective promotion of products
in both international and domestic markets resulting in loss of potential market opportunities

7. Insufficient cost effective market development tools for exporters leads to using expensive means
resulting in an inability to promote their products adequately

8. A lack of effective initiatives to develop the local market by the retailers leads to a loss of market
potentials resulting in a loss of income opportunities for the JDP producers

9. A lack of awareness in the domestic market about JDPs leads to customers that often prefer to buy
available substitutes resulting in loss of potential income and an inability to strengthen the domestic
market

10. The absence of government policies to develop the JDP sector leads to a loss of sectoral growth
opportunities resulting in slower development of SMEs in this sector

Source: Value chain assessment for the jute sector in Bangladesh, 2006