State Of Rmg Industry In The Post- Mfa Era
Introduction
This report assesses Bangladesh's external competitiveness in the context of the RMG sector after the full phase-out of the quotas dating back from the 1974 MFA. On January 1, 2005, the set of bilateral quotas that had governed trade in RMG for over 30 Years was eliminated. As these quotas had led to an artificial trade structure, the international RMG market faces a restructuring process. Bangladesh's exports are heavily concentrated in the RMG sector, which has been a main driver of growth and poverty reduction. With more than three-quarters of exports RMG related, the country is vulnerable to the MFA shock, in particular since it is confronted with other problems that affect its competitiveness. These problems are not limited to the RMG sector, but will be exposed more fully there in the post-MFA world. The challenge is therefore to improve competitiveness, both in the RMG sector and economy wide, and diversify exports, thus contributing to increased growth and poverty reduction. We will describe the RMG sector in Bangladesh. This gives some background for a brief assessment of the impact of the elimination of MFA quotas so far, including specific policy reactions, that moves beyond the short-term impact on the RMG sector, to Bangladesh's medium-term competitive position in general, looking at its main determinants.
HISTORY
The history of the Readymade Garments Sector in Bangladesh is a fairly recent one. Nonetheless it is a rich and varied tale. The recent struggle to realize Workers' Rights adds an important episode to the story.
Below, we present a detailed narration of the evolution of the RMG sector from its humble origins to the present day.
The shift from a rural, agrarian economy to an urban, industrial economy is integral to the process of economic development (Kaldor, 1966, 1967). Although policymakers in the least developed countries (LDCs) have, at various times,...
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