Rmg Paper

Topics: International trade, European Union, United States Pages: 22 (7089 words) Published: April 3, 2013

The RMG industry of Bangladesh has expanded dramatically over the last three decades. Traditionally, the jute industry dominated the industrial sector of the country until the 1970s. Since the early 1980s, the RMG industry has emerged as an important player in the economy of the country and has gradually replaced the jute industry. The “export-quota system”1 in trading garment products played a significant role in the success of the 1 Unilateral restriction, short-term arrangement (STA), long-term arrangement (LTA), Multifibre Arrangement (MFA) and finally the WTO Agreement on Textiles and Clothing (ATC) are the chronological steps through which the “export-quota system” was administered until it was finally abolished on 31 December 2004, making worldwide textile and garment trade quota-free. The system allowed importers to control the import of textile and garment products by imposing quantitative restrictions on exporting countries. For details on the system, see Agency for International Trade Information and Cooperation (1999); Hyvarinen (2000); Smith (1998); and Thongpakde and Pupphavesa (2000). industry. However, that quota system came to an end in 2004. Therefore, the competitiveness issue needs to be addressed, with special attention given to the long-term sustainability of the industry.The term “competitiveness” itself is a broad concept.Its meaning, implications,adaptation and achievement vary from firm to firm, industry to industry, or country to country. Michael E. Porter is a pioneer of the “competitiveness theory” (Porter, 1990) at the national or macro level (Cho and Moon, 2000). Firm/industry-level (micro level) competitiveness depends on various parameters. However, the literature provides no universal agreement on the definition of competitiveness. For example, some researchers consider the labour cost, unit cost, exchange rate, interest rate, prices of material inputs and other price- or cost-related quantitative factors for measuring the competitiveness of a manufacturing firm/industry (Edwards and Golub, 2004; Fukunishi, 2004; Cockburn and others, 1998; and Edwards and Schoer, 2002). Some other researchers consider product quality, innovativeness, design, distribution networks, after-sales service, transaction costs, institutional factors relating to the bureaucracy of export procedures and other non-price factors for measuring the competitiveness of a manufacturing firm/industry (Abdel-Latif, 1993; Chen and others, 1999; and Sachwald, 1994). The influences of both price and non-price factors on the competitiveness of a firm/industry are reflected by market share and profit (Toming, 2006). This study attempts to incorporate price, non-price and result (for example, market share) factors in order to address the international competitiveness of the Bangladesh RMG industry. The majority of the competitiveness-related research studies focus on the “competitive performance” or on the “factors influencing competitive performance”. The studies consider product price, market share and other indicators to measure competitive performance, while considering wages, costs, productivity and other issues as factors influencing competitive performance. However, Fujimoto (2001) puts special emphasis on the “capability”2 factor that influences the competitive performance of a firm. According to him, improvement in the “capability” of a firm enhances its “competitive performance”. This improvement takes time, but it ensures the long-term sustainability of a firm. In contrast, improving only “competitive performance” and not “capability” may not be sufficient to ensure the long-term development of the firm. This study addresses the competitiveness issue from two broader dimensions: surface-level and deep-level competitiveness.3 Surface-level competitiveness reflects the 2 “Capability” depends on organizational routine, managerial resources and knowledge held by an economic

agent (Fujimoto, 2001)....

References: Abdel-Latif, Abla M. (1993). “The nonprice determinants of export success or failure: the
Egyptian ready-made garment industry, 1975-1989”, World Development, vol
No. 10, pp. 1677-1684.
Agency for International Trade Information and Cooperation (AITIC) (1999). The World
Trade Organization Agreement on Textiles and Clothing (ATC) (Geneva),
American Textile Manufacturers Institute (2003). The China Threat to World Textile and
Apparel Trade (Washington, D.C.).
______ (2004a). Update Number Two: The China Threat to World Textile and Apparel
Trade (Washington, D.C.).
______ (2004b). Update Number 3: The China Threat to World Textile and Apparel Trade
(Washington, D.C.).
Chen, Kevin, Lian Xu and Yufeng Duan (1999). “Ex-post competitiveness of China’s
export in agri-food products: 1980-96”, Agribusiness, vol
Cho, Dong-Sung and Hwy-Chang Moon (2000). From Adam Smith to Michael Porter: Evaluation of Competitiveness Theory (Singapore, World Scientific Publishing Co.
Centre for Policy Dialogue (2000). Implementation of WTO-ATC: Current Status and
Implications for Bangladesh, Dialogue Report No
Delahanty, Julie (1999). A Common Thread: Issues for Women Workers in the Garment
Sector, report prepared for the Global Markets Programme of Women in Informal
European Commission (2003). Evolution of Trade in Textile and Clothing Worldwide –
Trade Figures and Structural Data, Commission Staff Working Paper No
(2003) 1348 (Brussels).
Edwards, L. and Volker Schoer (2002). “Measures of competitiveness: a dynamic approach
to South Africa’s trade performance in the 1990s”, The South African Journal of
Economics, vol. 70, No. 6, pp. 1008-1045.
Fujimoto, Takahiro (2000). “20 Seiki no Nihongata seisan shisutemu [The Japanese System
of Production in the 20th Century]”
_____ (2001). Management Text: Seisan Manejimento Nyumon (I) Seisan Sisutemu Hen
[Management Text: Introductory Production Management (I) Production System
Fukunishi, Takahiro (2004). International Competitiveness of Manufacturing Firms in
Sub-Saharan Africa, Institute of Developing Economies Discussion Paper No
Global Agriculture Information Network (GAIN) (2004). Bangladesh: Cotton and
Products, Annual, 2004, GAIN Report No
Gereffi, Gary (1999). “International trade and industrial upgrading in the apparel
commodity chain”, Journal of International Economics, vol
Gonzales, Aimee (2002). Sustainable Trade in Textiles and Clothing, dialogue report from
the Expert Panel on Trade and Sustainable Development (Gland, Switzerland, World
Haider, Mohammed Z. (2006). “Export performance of Bangladesh textile and garment
industry in major international markets”, The Keizai Gaku Annual Report of the
Hyvarinen, Antero (2000). The Changing Pattern of International Trade in Textiles and
Clothing: Implications of the Introduction of the Agreement of (sic) Textiles and
Jassin-O’Rourke Group (2002). Global Competitiveness Report: Selling to Full Package
Providers (New York).
Mainuddin, Khandaker (2000). Case of the Garment Industry of Dhaka, Bangladesh,
Urban and Local Government Background Series, No
Bank). Ministry of Commerce of Cambodia (2004). Cambodia’s Garment Industry: Meeting the
Challenges of the Post-Quota Environment, Technical Assistance Report for the
Porter, Michael E. (1990). The Competitive Advantage of Nations (New York, The FreePress).
Sachwald, Frédérique (1994). “Competitiveness and competition: which theory of the
firm?”, in F
Smith, Samantha (1998). “The Multi-Fibre Arrangement – a thread of protectionism”, The
Student Economic Review (Dublin, Trinity College, University of Dublin).
Thongpakde, Nattapong and Wisarn Pupphavesa (2000). “Returning textiles and clothing
to GATT rules”, in Tony Allison and Ryratana Suwanraks, eds., TDRI Quarterly
Toming, Kristina (2006). “The Impact of EU Accession on the Export Competitiveness of
Estonian Food Processing Industry”, paper presented at the European Association for
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • School Papers
  • Enzymes and Paper
  • General Paper
  • Banana Paper
  • Paper Flower
  • Ancient Paper
  • Paper Charcoal
  • Recycling Paper

Become a StudyMode Member

Sign Up - It's Free