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Development Outcomes from Openness to International Trade on Bangladesh’s Ready Made Garments Sector: Comparative Advantage, Need for Dynamic Gains and Role of the Government

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  • Md. Anwarul Azim

    (Department of International Relations, University of Dhaka, Bangladesh)

Abstract

Openness to international trade has brought about different development outcomes in different countries. Once it was thought that openness to trade is the panacea for development and it will always lead to positive development outcomes. However, Bangladesh’s experience of opening up to international trade suggests that it is a necessary but not sufficient condition for economic development. The country has experienced consistent economic growth throughout last two decades and a major contributor to her economic development has been export oriented Ready Made Garments (RMG) sector. Bangladesh could make RMG sector a success story owing to factor endowment of abundant labour. This comparative advantage in the factor of production allowed static gains like specialization to occur. However, only openness to trade did not make RMG sector a success story. The growth of RMG industries was supported by government as it introduced necessary institutional reforms related to RMG sector. But the country failed to apply underlying comparative advantage in sectors other than RMG to be able to compete in global market. Under the mentioned backdrop, the purpose of this study is to analyze whether static gain has been transformed into dynamic one. To do so both qualitative and quantitative methods have been applied. Findings suggest that the country has been unable to achieve dynamic gains. In order to achieve dynamic gains openness to international trade must be supported by structural and institutional changes initiated by the government. The country should also focus on enhancing its comparative advantage by supporting existing sectors as well as promoting new sectors. In doing so trade policies should be directed towards signing free trade agreement (FTA) and export oriented labour intensive industrialization which in turn will lead to economic development and employment creation for the country.

Suggested Citation

  • Md. Anwarul Azim, 2021. "Development Outcomes from Openness to International Trade on Bangladesh’s Ready Made Garments Sector: Comparative Advantage, Need for Dynamic Gains and Role of the Government," International Journal of Science and Business, IJSAB International, vol. 5(5), pages 66-74.
    • Handle: RePEc:aif:journl:v:5:y:2021:i:5:p:66-74
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    References listed on IDEAS

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    1. Andrew Atkeson & Ariel Tomás Burstein, 2010. "Innovation, Firm Dynamics, and International Trade," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 433-484, June.
    2. Sunanda Sen, 2010. "International Trade Theory and Policy: A Review of the Literature," Economics Working Paper Archive wp_635, Levy Economics Institute.
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