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World Bank Study
the Bangladeshi clothing sector. Although the sector had been thought to be negatively affected by the MFA phaseout, Bangladesh was able to increase export value and market share after 2004. Also, during the global economic crisis Bangladesh has been one of the few winners and increased market shares in both the U.S. and EU markets. Despite continued growth of the sector and important competitive strengths, Bangladesh’s clothing sector faces challenges that need to be addressed should the growth of the clothing sector be sustained in the future. The chapter presents an overview of recent developments of Bangladesh’s clothing exports and highlights the specific way Bangladesh has been integrating into global clothing value chains. Based on this assessment, the main internal challenges of Bangladesh’s clothing sector are discussed and policy recommendations are identified to enhance the sector’s performance. Conclusions: How to Compete in the Post-quota and Post-crisis World?
Chapter 6 presents main conclusions with regard to global and country-specific dynamics as well as common challenges of LIC clothing exporters and main policy recommendations to address these challenges. It concludes that the clothing sector still provides opportunities for export diversification and industrial development in LICs but that the global clothing value chain and related entry and upgrading possibilities look different in the post-quota and post-crisis world. Entry barriers for first-tier suppliers have increased and low labor costs and preferential market access are not enough to compete in the clothing sector today. This provides opportunities for some suppliers that provide broader capabilities, but challenges marginal and potential new suppliers. The la er group may still be able to enter global clothing value chains but only through intermediaries, where entry barriers are lower while upgrading opportunities are limited. Two underlying structural challenges have limited possibilities to capture gains at the supplier level: (i) changing global supply and demand structures, and (ii) asymmetric market and power relations within global clothing value chains. Associated with these challenges is heightened competition between LICs. However, new global developments, including the emergence of powerful intermediaries and first-tier suppliers, shifting end markets, and the increasing importance of developing countries’ buyers as well as China’s move to higher-value exports, at least potentially challenge traditional competitive and power structures in global clothing value chains. Besides these global trends, country-specific dynamics related to the respective type of integration into global clothing value chains are crucial and can lead to very different outcomes. Notwithstanding important differences, there are common internal challenges that LIC clothing exporters face in the post-quota and post-crisis world. The chapter identifies main policy recommendations for LIC governments, industry associations, and clothing firms to face these challenges. These policy recommendations are crucial to sustain and increase competitiveness of LIC clothing exporters and to secure a sustainable impact of clothing exports on export diversification, industrial development, and economic growth. The chapter concludes that, although entry and upgrading in global clothing value chains have become more difficult for LICs in the post-quota and post-crisis world, the clothing sector still offers a pathway to export diversification and industrial development—granted that proactive policies to increase the competitiveness and local embedding of LIC clothing exporters are adopted.