September 5, 2024 – Vietnam and Bangladesh have significantly improved their positions in global manufacturing, gradually replacing India as low-cost manufacturing and export centers. According to the latest World Bank report, this change reveals the realignment of global trade patterns and its profound impact on the economic development of various countries.
As global supply chains adjust and low-cost manufacturing continues to shift, Vietnam and Bangladesh have rapidly risen due to their competitive advantages. The World Bank report points out that although India’s economy has grown rapidly over the past decade, its share in global trade has not increased correspondingly. In contrast, Vietnam and Bangladesh, as emerging export manufacturing bases, have shown strong growth momentum, gradually surpassing India.
According to the report’s data, India’s share in global exports of textiles, leather, and footwear rose from 0.9% in 2002 to 4.5% in 2013, then declined to 3.5% in 2022. Meanwhile, Vietnam and Bangladesh’s export shares in these sectors reached 5.9% and 5.1% respectively in 2022. This indicates a significant increase in the competitiveness of Vietnam and Bangladesh in the global low-cost manufacturing sector.
Cost and Policy Advantages Drive Growth
Vietnam and Bangladesh’s rise as low-cost manufacturing centers is attributed to their low labor costs, favorable policy environments, and active government support. Both countries have successively introduced a series of policies to attract foreign investment, including tax reductions, export subsidies, and quality investment environments. Additionally, both countries have actively participated in regional and global trade agreements, such as Vietnam’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), which provide broader markets for their product exports.
In comparison, India still faces some challenges in attracting foreign investment and promoting exports. Despite India’s strong economic growth, expected to maintain a 7% growth rate in the current fiscal year, its competitiveness in global manufacturing has relatively weakened. The World Bank suggests that India should reduce trade costs, lower trade barriers, and deepen trade integration to maintain its competitiveness.
Reshaping Global Trade Patterns and Industrial Transfer
As Vietnam and Bangladesh’s positions in global manufacturing improve, pressure on India continues to increase. This is not only a challenge to India’s manufacturing industry but also a re-examination of its role in the global value chain. To address this change, India needs to accelerate economic reforms, improve manufacturing efficiency, enhance infrastructure, and strengthen trade cooperation relationships with other countries.
For other emerging market economies, the successful experiences of Vietnam and Bangladesh provide valuable references. By enhancing policy transparency, improving business environments, and promoting technological innovation, these countries can seize opportunities in global industrial transfer to drive economic growth and export diversification.
Multiple Countries Compete for Global Manufacturing Leadership
In the future, the landscape of global manufacturing may continue to change. With technological advancements and the rise of green manufacturing, low-cost manufacturing is no longer the only competitive advantage. Vietnam and Bangladesh will face challenges in further enhancing the added value of their industrial chains while ensuring their important positions in global supply chains.
This reshaping of the global manufacturing landscape reveals the complex challenges and opportunities faced by countries in the context of economic globalization. As global market competition intensifies, how to drive industrial upgrading through innovation and reform has become a key issue that governments and enterprises urgently need to address.
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