Publisher's Synopsis
This book examines, in a general equilibrium framework, the economic consequences of exchange rate and trade policies on the structure and growth of industries in Bangladesh. The methodology used by the author allows for a disaggregation of the change in welfare, due to a small change in an exogenous variable, into the direct welfare impact of the change and indirect gains (or losses) from alleviating (or exacerbating) distortions in all other markets.;It thus gives valuable insights into interactions among various economic policies. The study demonstrates the booming sector effects of foreign aid inflow, and advocates for trade promotion which requires, inter alia, efficient foreign exchange and trade policies. Dismantling the dual exchange regime, which is acting as a tax on trade, is found to lead to a deterioration in the terms of trade and welfare in the absence of optimal trade taxes. As the export incentives based on the dual exchange regime are eliminated, following the unification of exchange rates, a simultaneous reduction in protection to import-substituting industries is recommended to raise welfare, and to promote exports.
