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The Effect of Integration with Global Apparel Value Chain

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  • Mizanur Rahman
  • Takrima Sayeda

Abstract

This article estimates the effect of integration with global apparel value chain on performance of Bangladesh apparel firms. The study does it by estimating an augmented Cobb–Douglas production function. The findings show that both backward linkage with foreign suppliers of intermediate inputs and forward linkage with global retailers of apparels positively affect firms’ output and labour productivity. By contrast, backward linkages with local suppliers have adverse effects on firm performances. The findings imply that it is a firm’s integration with the global apparel value chain, not the conventional backward linkage with domestic suppliers, that defines success of Bangladesh apparel industry in a globalizing world.

Suggested Citation

  • Mizanur Rahman & Takrima Sayeda, 2016. "The Effect of Integration with Global Apparel Value Chain," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(2), pages 248-270, September.
    • Handle: RePEc:sae:soueco:v:17:y:2016:i:2:p:248-270
    DOI: 10.1177/1391561416650587
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    References listed on IDEAS

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    1. repec:bla:jecsur:v:13:y:1999:i:2:p:149-72 is not listed on IDEAS
    2. Ahmed, Faisal Z. & Greenleaf, Anne & Sacks, Audrey, 2014. "The Paradox of Export Growth in Areas of Weak Governance: The Case of the Ready Made Garment Sector in Bangladesh," World Development, Elsevier, vol. 56(C), pages 258-271.
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    4. K. P. Kalirajan & R. T. Shand, 1999. "Frontier Production Functions and Technical Efficiency Measures," Journal of Economic Surveys, Wiley Blackwell, vol. 13(2), pages 149-172, April.
    5. Tetsushi Sonobe & Keijiro Otsuka, 2014. "Cluster-Based Industrial Development," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-38511-6, December.
    6. Raymond W. Goldsmith, 1951. "A Perpetual Inventory of National Wealth," NBER Chapters, in: Studies in Income and Wealth, Volume 14, pages 5-73, National Bureau of Economic Research, Inc.
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    9. Baldwin, John R. & Yan, Beiling, 2014. "Global Value Chains and the Productivity of Canadian Manufacturing Firms," Economic Analysis (EA) Research Paper Series 2014090e, Statistics Canada, Analytical Studies Branch.
    10. ZELLNER, Arnold & KMENTA, Jan & DREZE, Jacques H., 1966. "Specification and estimation of Cobb-Douglas production function models," LIDAM Reprints CORE 12, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Deeti Saha, 2020. "Comparative Analysis of Economic Performance of SAARC Countries Based on the Estimated Cobb-Douglas Production Function," International Journal of Science and Business, IJSAB International, vol. 4(10), pages 39-63.

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    More about this item

    Keywords

    Apparel; global value chain; backward linkage; forward linkage; Bangladesh;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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