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Economic Upgrading in Bangladesh’s Apparel Value Chain during the Post-MFA Period

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  • Khondaker Golam Moazzem
  • Farzana Sehrin

Abstract

Bangladesh’s success in the global apparel value chain following the expiration of the Multi-Fibre Arrangement in 2005 deserves study to understand how a least developed country can become a major source of apparels within a short period of time. This article shows that even under a quasi-hierarchical governance structure, suppliers in Bangladesh have made significant progress in economic upgrading, particularly process and product upgrading. Competitive pressure linked to the ‘open sourcing’ of apparels has caused leading firms to ease conditionalities on the production process. Preferential access to major markets, timely responses to buyers’ changing demands, favourable policies related to the import of raw materials, production and export of apparels and new labour-related policies have facilitated economic upgrading. Suppliers have accordingly benefited from substantial investment in productive capacity, technological know-how and workers’ skills. Further upgrading would require more investment in firm-level productivity and improvement in physical and social compliance.

Suggested Citation

  • Khondaker Golam Moazzem & Farzana Sehrin, 2016. "Economic Upgrading in Bangladesh’s Apparel Value Chain during the Post-MFA Period," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 73-93, March.
    • Handle: RePEc:sae:soueco:v:17:y:2016:i:1:p:73-93
    DOI: 10.1177/1391561415621824
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    References listed on IDEAS

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    1. Khondoker Abdul Mottaleb & Tetsushi Sonobe, 2011. "An Inquiry into the Rapid Growth of the Garment Industry in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 60(1), pages 67-89.
    2. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
    3. Alessandro Nicita & Victor Ognivtsev & Miho Shirotori, 2013. "Global Supply Chains: Trade And Economic Policies For Developing Countries," UNCTAD Blue Series Papers 55, United Nations Conference on Trade and Development.
    4. Mustafizur Rahman & Asif Anwar, 2006. "Bangladesh Apparels Export to the US Market: An Examination of Her Competitiveness vis-à-vis China," CPD Working Paper 62, Centre for Policy Dialogue (CPD).
    5. Gereffi, Gary & Frederick, Stacey, 2010. "The global apparel value chain, trade and the crisis : challenges and opportunities for developing countries," Policy Research Working Paper Series 5281, The World Bank.
    6. Debapriya Bhattacharya & Mustafizur Rahman & Ananya Raihan, 2002. "Contribution of the RMG Sector to the Bangladesh Economy," CPD Working Paper 50, Centre for Policy Dialogue (CPD).
    7. Debapriya Bhattacharya & Mustafizur Rahman, 2000. "Seeking Fair Market Access For Bangladesh Apparels In The Usa: A Strategic View," CPD Working Paper 11, Centre for Policy Dialogue (CPD).
    8. Mustafizur Rahman, 2014. "Trade Benefits for Least Developed Countries: the Bangladesh Case Market Access Initiatives, Limitations and Policy Recommendations," CDP Background Papers 018, United Nations, Department of Economics and Social Affairs.
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    Cited by:

    1. Khondaker Golam Moazzem & Md. Arfanuzzaman, 2018. "Livelihood Challenges of RMG Workers: Exploring Scopes within the Structure of Minimum Wages and Beyond," CPD Working Paper 122, Centre for Policy Dialogue (CPD).
    2. Mair, Simon & Druckman, Angela & Jackson, Tim, 2019. "Higher Wages for Sustainable Development? Employment and Carbon Effects of Paying a Living Wage in Global Apparel Supply Chains," Ecological Economics, Elsevier, vol. 159(C), pages 11-23.
    3. Herr, Hansjörg & Dünhaupt, Petra, 2019. "Global Value Chains in economic development," IPE Working Papers 124/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    More about this item

    Keywords

    Economic upgrading; product upgrading; process upgrading; competitiveness; Multi-Fibre Arrangement; productivity; global value chain;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • F1 - International Economics - - Trade

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