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Impact of Garment Industries on the Economy of Bangladesh Essay Example
Introduction
Bangladesh is currently one of the 12 largest exporters of garments products in U.S.A and U.K. In spite of this, the real situation does not come in front of the world. That is they are not becoming influenced like before any more. We can see this by the price level of our garments products in the world market. The quantity we are exporting is huge but at a very low price. In the statistics the impact may be huge but the condition of Bangladesh is not improving at that satisfactory level.In the term paper we will try to define the cause why the real situation is like this.
It is necessary because the sector is very promising in the environment of bbangladesh. Purpose and Scope: Bangladesh has a great comparative advantage in garments products that is low labor cost. Because of this advantage Bangladesh
...can produce products more easily than other countries. But labor is cheap here because people who are related to this sector are from very poor background. Most of them are unskilled, uneducated. But if some steps are taken to improve the quality of labor, the proper benefit of this comparative advantage can come out.
The purpose of our term paper is to overcome this problem and other related problems like cost of raw materials, Insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of communication, problem in taxes etc. But in spite of these problems this can be the most profitable sector of Bangladesh if we try to take some steps as follows:
- Production of sufficient raw materials in the country.
- Imparting training to make skilled workers.
- Reduction o
VAT and taxes • assurance of safety, salary and other facilities of the workers.
Bangladesh is a third world country
As other third world countries, Bangladesh is not much developed in industrial sector. But surprisingly the RMG (readymade garments) sector of Bangladesh has brought some significant changes in economy by reducing unemployment rate and increasing the amount of export earnings. European Union and U. S. A are the two major importers of the garment products of Bangladesh. On the other side, this sector has created an opportunity to unemployed workers.
Almost 3. million people are employed in garments where 85% are illiterate women. For a few years the earnings from this sector has increased to a very satisfactory level. This statistics are showing that this sector can contribute a lot to promote the economic situation of Bangladesh. The RMG (Readymade Garment) business started in Bangladesh in the 70s but it was then merely a casual effort.
The first consignment of knitwear export was made in 1973 and the first consignment of woven garments was made in 1977. Though started later, but it was the woven sector that first dint a spot in the market.Methodology: In this term paper we have used most of the information provided by Bangladesh garments manufacturing and export association (BGMEA). In the term paper we tried to focus on the probability of the sector in future.
And while trying to do this we have found some problems. Since this a very promising and profitable sector; Bangladesh govt. has to be caring about these problems to build a strong position in the world
competition of economy. We also have given a try to find out some useful solutions of the related problems. Limitations:Our research was on the impact and possibilities of the garments sector on the economy of Bangladesh.
It was a step forward to the goal of making Bangladesh economically stronger, stable and dependable so that not only domestic investors but also foreign investors become interested to invest more in this sector. In this step, Bangladesh govt. has to play the vital role. We have just tried to give some recommendations. There can be some leakages in this research since the outcomes are not applied.
We, with respect, are accepting our faults and leakages.
Empirical section
Current position of garments industries of Bangladesh in the world market as a exporter:
Though Bangladesh is an agricultural country, the GDP (Gross domestic Product) is captured mostly by garments industries. A huge portion of the total export earnings is earned by this sector. That is why Garment products are on the top of the items that are exported in various countries from Bangladesh.
Until 1980 jute goods were on the top. After then, substitute of jute goods came to the market and took the lead.
Contribution on Total Export Earnings
Year to year, the contribution of RMG (readymade garments sector) over export earnings has been increased. At the beginning, it was not satisfactory.
Stimulating Factors
There were both internal and external factors which contributed to the growth rate of garment industries in Bangladesh.
The external factor was imposed quota restrictions called MFA (Multifibre Arrangement) approved by GATT. MFA limited the amount that can be imported from countries like Hong-Kong, South Korea, Taiwan etc.
The domestic factor that contributed to the growth of
RMG industry was the comparative advantage Bangladesh enjoyed in garment production because of low labor cost and availability of almost unlimited number of trainable cheap labor.Most of the workers are female and from very poor backgrounds. They are not educated, skilled enough to work with higher salaries in other sectors. Participation of female workers in different industrial sectors Developed garment Industries: As a result, the number of garment industries continued to increase in Bangladesh. Right now, Bangladesh is one of the twelve largest apparel exporters of the world.
And, previously in 1978 there were nine industrial units, whereas now there are three thousand garment industries available. pic] Figure 4: Industrial change in garments.Real situation But in spite of these factors, the real situation directs to very unsatisfactory situation. For example,Bangladesh is the second lowest price taker in the international market of T-shirt . Moreover, as a third world country, bangladesh has some problems and also the country is discreminated under some strong and established competitors. This represents that though we are earning higher GDP, actually we are far behind compare to other countries.
Table
Comparison of prises of T-shirt per dozen in the international market
Country | T-shirt prices($) |
Dominican Republic | 54. 79 |
Bnagladesh | 62. 74 |
Srilanka | 74. 77 |
Mexico | 76. 6 |
India | 81. 04 |
Hong-Kong | 107. 34 |
Malysia | 137. 08 |
Conclusion
We have a very big
opportunity in terms of garment industries. Only thing needed is more investment in this sector from the government.
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