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Competitiveness of the knitwear industry in Bangladesh : a study of industrial development amid global competition

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Author Info
Bakht, Zaid
Salimullah, Md.
Yamagata, Tatsufumi
Yunus, Mohammad
Abstract

This paper assesses the technical efficiency and profitability of the knitwear industry in Bangladesh taking into account the sector’s role in poverty reduction. While stochastic frontier analysis was invoked to assess technical efficiency, three alternative measures, namely the rate of return, total factor productivity and the Solow residual, were used to gauge the extent and determinants of the profitability of the industry based on firm-level data collected in 2001. The estimation results indicate the high profitability of the knitwear firms. In Bangladesh, the dynamic development of the industry has entailed great diversity in efficiency in comparison with the garment industries of other developing countries. While there is a significant scale effect in profitability and productivity, no supporting evidence was found for the positive impact on competitiveness of industrial upgrading in terms of usage of expensive machinery and vertical integration and industrial agglomeration.

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Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 169.

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Date of creation: Oct 2008
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Publication status: Published in IDE Discussion Paper. No. 169. 2008.10
Handle: RePEc:jet:dpaper:dpaper169

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Related research
Keywords: Bangladesh; Knitwear; Poverty reduction; Productivity; Profitability; Stochastic frontier analysis; Apparel industry; Textile industry;

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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