Is Bangladesh Competent Enough to Confront Future Challenges? An Empirical Analysis of Competitiveness of Bangladesh’s Apparel Sector Compared to Major Competitors

Abstract

Purpose: This study investigates the comparative advantage of Readymade Garment (RMG) industry of Bangladesh compared to other major Asian competitors in the global market such as China, Vietnam, Cambodia, India, Sri Lanka and Turkey from 2013 to 2017. Methodology: This study applies Balassa‟s Index of Revealed Comparative Advantage (RCA) with data from World Trade Organization (WTO) database during the stated period of 2013 to 2017 to calculate the RCA index of competing economies in global clothing export. Additionally, correlation-coefficient of the clothing export of competing economies for the study period has been calculated to analyze the export pattern. Moreover, the consistency and volatility of comparative advantage measured by standard deviation and coefficient of variance of the RCA have been analyzed. Findings: All seven competing economies display some degree of comparative advantage, the strongest display of RCA score comes from Bangladesh, followed by Cambodia. The findings exhibited that Bangladesh‟s export pattern is highly undiversified to single industry compared to other Asian economies. It is also depicted that Bangladesh has been unsuccessful in grabbing the growth in global clothing export compared to Vietnam. There has been a strong negative correlation that exists between the clothing export of Bangladesh and China whereas strong correlation persists between Bangladesh and Vietnam. It has been also identified that although Bangladesh has the highest RCA among other considered economies, the volatility remains on the higher side. Limitations: This research study has only focused on five countries trade variables. Time period of analysis of the data could also be extended. Practical Implications: The outcomes of the analysis would be helpful in formulating export policies and identifying factors of competitiveness for selecting strategic business and industrial policy for future growth. Originality/Value: This paper is one of the limited attempts to perform a structured investigation of competitiveness of Bangladesh and its Major Asian Competitor on clothing (RMG) trade to international markets as very limited previous studies have been conducted in this area.