Global value chain: An empirical investigation of Bangladesh’s garments and textile industry

Abstract

Bangladesh is the second-largest garments and textile exporting country in the world and has more than 80 percent of its total export earnings from this sector. Despite it playing a significant role in policymaking in developing countries like Bangladesh, there is a gap in study regarding the effect of participation and position of garments and textile industry in the global value chain (GVC). This paper empirically analyses the participation and position of Bangladesh’s garments and textile industry in the context of the GVC by using the multiregional Input-Output table EORA Global MIRO. We found that this country has a comparative edge in terms of low-cost production and specialization and makes a significant contribution to the global garments industry, but it has not been able to fully integrate into the global production network. We also found that Bangladesh's garments and textile industry have higher backward participation than forwarding participation and occupy a downstream position in GVC. However, the downstream phases contribute to a large percentage of this country's trade. The findings of the study suggest that enhancing the GVC participation of Bangladesh’s garments and textile industry may have a substantial positive impact on the local industry. To boost the capability, there must be local requirements, such as adequate backward linkage for the manufacturing process, research and development for innovation, fewer regulatory restrictions, a mature money market in international operation, and a favorable environment for foreign investors.