* Strong Bangladeshi manufacturing performance over last 20 years, with double digit growth rates in recent years, particularly in RMG sector: * Strong growth of backward linkages, particularly in textiles and spinning (domestic value addition in RMG exports estimated at around 45% in 2002) * But growing ‘competition from below’ from other low wage economies aggressively entering these markets * And ‘competition from above’ from countries that are higher up the value chain * This study looks at the RMG and linked sectors to assess critical technology upgrading problems in Bangladeshi manufacturing Technological characteristics of the garments industry
* Buyer-driven global value chain
* Significant part of value added appropriated at the final stages of chain (retailers and own brand marketers in advanced countries) * Producer countries differentiated into those that are primarily * Simple assemblers (eg Bangladesh in 1980s)
* Integrated producer countries/single package suppliers (eg China, Mexico, Bangladesh in 2010?) * Countries with own brand capacity (UK, US etc)
What does technological upgrading mean in this context?
* Very high barriers to entry at final stages (requires huge investment in retail outlets, advertising) * Differences in market share and total value-added between dominant apparel exporting countries (China, Turkey, Mexico) versus others largely explained by degree of integration of supply chain and scale economies of firms * Low wage countries are not necessarily assemblers (China’s hourly wage is only 50% higher than South Asia), and higher wage countries do not automatically become integrated suppliers (Mexico only began to move towards single package supply in the 1990s) * Enhancing country capacity in higher end backward and forward linkages is the key Methodology
* In general markets in...