Hanging from the world trade network by a thread: developing economies are easily rocked by regional events that profoundly alter the marketplace.
Jute is a vegetable fiber used throughout the world in products from upholstery to rice bags. It’s also the lifeblood of Bangladesh’s export economy. Up until a few months ago Iran was a leading importer of Bangladeshi jute but as sanctions on Iran increased, jute exports dropped. However, it was the recent freeze on the Iranian banking sector which has hit the industry the hardest. Producers haven’t received payments for deliveries, and canceled orders are filling up warehouses. Add to this the disruption of agricultural production throughout the Middle East, an unfortunate side effect of the Arab Spring, and you get a serious drop-off in the industry’s customer base.
There is some good news. Unpredictable world events have also provided the industry new avenues for growth. In the most recent quarter, jute exports upticked slightly thanks largely to a bumper rice crop in Pacific Asia, an emerging market for Bangladeshi producers. Western consumer markets have also shown renewed interest in jute as an eco-friendly alternative to plastic packaging.
With global trade comes new vulnerabilities and new opportunities. Countries like Bangladesh must learn to cope with them, and development professionals must learn to understand them.