The Role of the Ready-Made Garments Sector in Economic Growth and Structural Change: Evidence from an Emerging Economy

The Ready-Made Garments (RMG) has immensely fueled Bangladesh's economic transition in the past four decades, transforming itself from a small export-oriented industry to one of the most competitive garment-producing countries of the world. Today, the RMG industry contributes over 84% of the total export earnings and provides employment to more than four million workers, most of whom are women. In spite of the outsize cachet of its role empirical analysis frequently reduces to export performance, while broader structural contributions–outcomes in terms of industrial diversification labour market transformation technology upgrading and female economic participation– remain somewhat neglected. The objective of the research is to analyse the impact of RMG sector on the economic growth and structural change in Bangladesh from 1990 to 2024. Export earnings, GDP, employment, industrialization indicators and labor productivity secondary data were obtained from the World Bank (WB), Bangladesh Bank (BB), EPB and national statistical databases. The paper quantitatively analyses the contributions of the RMG sector to GDP growth, employment creation and structural changes through descriptive analysis, correlation tests and regression model. The results reveal that RMG export earnings have a strong and significance impact on GDP growth indicating the importance of the sector in terms of Bangladesh's external trade and economic progress. The findings also point to the conclusion that employment in RMGs contributes heavily to labor market participation, particularly by women, and consequently household income, consumption and poverty alleviation. The sector has also promoted structural transformation by means of backward linkage industries, industrial clustering, human capital formation and some degree of technological upgrading. Nevertheless, the analysis also highlights ongoing issues, such as weak product diversification, labour fragility and sustainability problems. The contribution of this study to the literature is that it provides rich empirical insights into the various dimensions of RMG in shaping Bangladesh's economy. The policy implications highlight upgrading to higher- value added products, better labour standards, stronger backward linkages and superior technological capabilities.