Macroeconomic Analysis of Bangladesh's Ready-Made Garments Industry
The Ready-Made Garments (RMG) industry contributes to the Bangladesh economy in a distinctive manner. The last 20 years witnessed unparalleled growth in this sector, which is also the largest exporting industry in Bangladesh. It has attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a significant role in terms of employment generation. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. In addition to its economic contribution, the expansion of RMG industry has caused noticeable changes by bringing more than 1.12 million women into the workforce. Hence it is quite apparent that this sector has played a massive role in the economic development of the country.
RMG’s contribution in terms of GDP is highly remarkable; it has reached 13 percent of GDP which was only about 3 percent in 1991. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc.
One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over its competitors. The sector has created employment opportunities for about two million people of which 70 percent are women who mostly come from rural areas. Thus the industry helps in the country’s social development, women empowerment and poverty alleviation.
Currently RMG earns the lion's share of foreign exchange earnings.
INDUSTRY ANALYSIS
The Readymade Garment (RMG) industry of Bangladesh marked the leadership of private enterprise and the country’s successful transition to a major export-oriented economy. The key products of this industry are Knit and Woven Shirts and Blouses, Trousers, Skirts, Shorts, Jackets, Sweaters, Sportswear and many more casual and fashion apparels. RMG industry has enjoyed an impressive rise from less than 50 factories in 1983 to over 3600 in 2006.
Garments sector’s continual success can be attributed to the following:
Quotas under Multi-Fiber Arrangement (MFA) in the North American market
Preferential market access to European markets
The country has a small textile industry, but the volume and quality of its output are unable to fully meet the demand of the garments industry. Most of Bangladesh’s garments exports are made from imported textiles. RMG exports have grown rapidly after extensive trade and other economic reforms were undertaken in the early 1990s.
The strengths of the book come from its’ accessibility. The book is easy to follow and provides readers with a great deal of information about the production of mass-manufactured clothing. As well as brings awareness to its’ many issues which we inadvertently take part in when we purchase such products. The book is well written and thoroughly researched but does have its’ share of weaknesses.
Nova, Scott. “Apparel industry outsourcing costs garment workers’ lives in Bangladesh.” The Guardian. Guardian News and Media Limited, December 13, 2012. Web. November 12, 2013.
The Global Apparel Manufacturing industry contains men’s, women’s, and children’s apparel. This industry includes manufacturers that purchase fabrics and make fabrics themselves with certain facilities. The key economic drivers of this industry are GDP of BRIC nations, Global per capita income, GDP, World price of cotton, and Global population. The industries that supply Global Apparel Manufacturing are Global Agriculture, Hunting, Forestry, and Fishing. The Demand Industries that feed off of Global Apparel Manufacturing are Global Wholesale and Retail Trade, Global Department Stores, and General Merchandise Stores. The main activities of the Global Apparel Manufacturing industry are winter clothes
Industrialization, as it did in other countries, caused the formation of factories and machines that sped up how much cotton products are produced. In document 6, Radhakamal Mukerjee, an Indian economist, says “there has been a rapid decline of the hand-woven cloth industry…on account of the competition of machine manufactures…though many wear
Viewing it through the lens of economic progress, the garment industry notably contributes to Bangladesh’s GDP. It has become the largest foreign exchange earning branch mostly exporting clothing to the United States of America and Europe. Starting from the late seventies, Bangladesh’s garment
The life cycle of clothing has really surprised me, in more ways than I thought it would. The vast involvement of so many people, to produce one product that passes through dozens if not hundreds of hands. From the cotton, to the fabric, to factory workers in Bangladesh. Growing up I only ever heard really awful things about factories in other countries and although the situation is far from ideal, stories like Minu’s or Mukhta’s make it seem like things are progressing it the right direction. Bangladesh might have the worlds lowest wages, but I think they also have 4 million of the hardest working people. People who will continue to push their economy forward in the future. As consumers we are a huge part of that driving force.
Wealthy nations benefit from fast fashion, especially the business market. By outsourcing their labor to sweatshops overseas, they are able to lower their labor costs and still sell the products for extremely cheap- meaning a large profit for companies. This in turn stimulates the economies of these countries, such as the USA, the UK, and Russia. Meanwhile, nations with poorer economic conditions such as Bangladesh, China, and Vietnam are left with the pollution from the factories, textile waste, and underpaid laborers.
The U.S. textile industry is one of the major source of employment in the manufacturing sector, with 232,000 workers. The United States is a globally competitive manufacturer of textiles, including textile raw materials, yarns, fabrics, apparel and home furnishings, and other textile finished products. The industry’s specializes is in cotton, manmade fibers, and a wide variety of yarns and fabrics. The Textile industry is technologically advanced joined with a highly skilled workforce, with an investment of $1.6 billion in total capital expenditures in 2013. In recent years, U.S. textile companies have focused on retooling their businesses, finding more effective work processes, investing in niche products and markets, and controlling
I read ‘I almost died making your clothes!’ in Scope magazine about sweatshops in Bangladesh and the bad conditions and wages the workers get. It was tragic because most of the workers were working in American clothing companies. It was horrible because then that meant someone had made my clothes in those conditions. I was sad to hear that it still happens around the world and so I writing to you about it. I want to make sure that some of my favorite brands aren’t doing that.
Primary stakeholders are employees are the most affected because of the low wages they receive from employers. Furthermore textile employees work 7 days a week and a 12 hour shift, and the minimum wage in Bangladesh is $38 a month which is less than the rate of China. It could be devastating if the employee gets sick, he or she would not have enough money to pay for his or her treatment. For a suppliers to gain some profit they would make the product at a cheaper cost in order to get customers to buy their product. One way they operate is by exploiting textile workers and paying them a little for their
The correlation of expansion in Footwear International fell within the same time constraints as Bangladesh’s political history. As power transferred in 1971, the Manager Director of the company was recognized as being an integral part of the independence movement of Bangladesh. Two years following President Ershad gaining office, Footwear Bangladesh seen as the number one growth potential within Footwear International’s strategic plan. Sales were in excess of 10,000,000 pairs of footwear and gave the company 15% of the national market (L...
As soon as the shift to a free trade regime appeared along with the competition with countries such as China and Indonesia the quick collapse of Bangladesh’s textile industry has been predicted. However, the opposite occurred. We can highlight three major reasons to explain what happened:
"It's a huge leap forward for us. If the trend continues, ship building in Bangladesh will be the second largest exporter after garments in 2015," chairman of Ananda Shipbuilders Abdullahel Bari said.
The fourth largest sector in the Indian economy is all set for 16% growth during 2008-09, from a base of Rs. 85470 crores, as predicted by FICCI. Going forward, as anticipated by CRISIL, FMCG sector will touch around Rs. 140000 crores by 2015 (33.4B$).
From 2005 the textile segment has been made up of 2 companies, transforming raw materials into fabrics, from spinning to finishing and ennobling. Handicraft product quality and technological research development characterize this business segment which works with internationally recognized names of the apparel and fashion industry.