Impact of Quota Withdrawn on the Textile and Clothing Industry of Bangladesh

Abstract

The textile and clothing industry plays a significant role in the economy of Bangladesh. It acts as a key player in the progress of the country. At present, the export performance of the readymade garment sector is more than 80% of total exports and hence makes up about 12% of the Gross Domestic Product (GDP) in Bangladesh. Thus, the country’s development largely depends on this sector which is considered the backbone of Bangladesh. As the quota system under the Multi-Fiber Agreement (MFA) phase greatly impacted the development process of the readymade garment sector in Bangladesh, many researchers disputed that after the abolition of the quota system, the growth of this sector might be hampered. Therefore, this study aims to find out the impact of quota withdrawal on the readymade garment (RMG) sector and, thereby, the roles of this sector to the economy of Bangladesh. For this purpose, the research has covered a period of twenty years as sample size, where ten years has been considered as the pre-MFA period and ten years as the post-MFA period. Being a quantitative study, comparative statements and descriptive statistics techniques have been used to determine the impact of quota withdrawal on the export performance of Bangladesh's textile and clothing sector. The evidence shows a smooth upward trend of textile and clothing exports towards the ten major countries in the world following the post-MFA period, and Bangladesh is registered as a significant export growth country following the withdrawal of MFA. Consequently, the arguments about the RMG sector concerning the textile and clothing industry that Bangladesh might not be able to compete in the global market during post-MFA periods proved wrong; thereby, this sector’s contribution to the economy is increasing progressively.