Content uploaded by Jillur Rahman
Author content
All content in this area was uploaded by Jillur Rahman on May 14, 2019
Content may be subject to copyright.
ISSN 2413-3175
2019/02
INTERNATIONAL TRADE WORKING PAPER
Bangladesh’s Apparel Exports to the EU:
Adapting to Competitiveness Challenges
Following Graduation from Least
Developed Country Status
Mohammad A. Razzaque and Jillur Rahman
Abstract
Bangladesh is likely to graduate out of the group of least developed countries (LDCs) by 2024.
While this represents a major transition in terms of its development, demonstrating the country’s
impressive socio-economic achievements, it also gives rise to concern about potentially sizeable
costs due to the resulting loss of access to various support measures associated with LDC status.
e most important consequence will be forgone EU trade preferences, taking advantage of which,
among others, Bangladesh’s export-oriented apparel industry ourished, creating direct employ-
ment opportunities for 4 million people – most of whom are women. is paper focuses on the EU
market to analyse the potential implications of LDC graduation for Bangladesh’s apparel exports.
By using a partial equilibrium model, it estimates that discontinuing tari preferences could
lead to a potential export loss of more than US$1.6 billion. While the methodological approach
employed in this paper has certain caveats, there is no denying that terminating duty-free access
in the EU, resulting in a tari hike of 9.6 per cent, will put serious pressure on Bangladesh’s export
competitiveness. is paper gathers several buyers and exporters’ perceptions to provide insights
into the issues and oers some broad recommendations to mitigate any adverse eects.
JEL Classication: F13, O19, L67
Keywords: Least Developed Countries, Bangladesh, apparel industry, export, EU
International Trade Working Paper 2019/02
ISSN 2413-3175
© Commonwealth Secretariat 2019
By Mohammad A. Razzaque and Jillur Rahman, Policy Research Institute (PRI), Bangladesh.
Mohammad A. Razzaque is Research Director at Policy Research Institute, Dhaka, Bangladesh.
Jillur Rahman is Lecturer in Economics at Jagannath University, Dhaka, Bangladesh.
Please cite this paper as: Razzaque MA and J Rahman (2019), Bangladesh’s Apparel Exports to
the EU: Adapting to Competitiveness Challenges Following Graduation from Least Developed
Country Status’ International Trade Working Paper 2019/02, Commonwealth Secretariat,
London.
e International Trade Working Paper series promptly documents and disseminates
reviews, analytical work and think-pieces to facilitate the exchange of ideas and to
stimulate debates and discussions on issues that are of interest to developing countries in
general and Commonwealth members in particular. e issues considered in the papers
may be evolving in nature, leading to further work and renement at a later stage. e
views expressed here are those of the author(s) and do not necessarily represent those of
the Commonwealth Secretariat.
For more information contact the Series Editor: Dr Brendan Vickers,
b.vickers@commonwealth.int
Kirthika Selvakumar, Assistant Research Ocer, has provided valuable project support.
ITWP_2019-02.indd 2 05-3-19 11:15:53 AM
Contents
Abbreviations and Acronyms 4
Summary 5
1. Introduction 6
2. Bangladesh’s apparel exports and the importance of the EU market 8
3. Graduation from Least Developed Country status and EU market prospects for
readymade garments 13
4. Assessing competitiveness: global value chain perspectives 22
5. Adaptation strategies 27
6. Conclusion 30
Notes 31
Annex 34
References 43
3
Abbreviations and Acronyms
CDP Committee for Development Policy
CMT cut, make and trim
CN Combined Nomenclature
EBA Everything But Arms
EPB Export Promotion Bureau (of Bangladesh)
ECOSOC United Nations Economic and Social Council
EU European Union
FDI foreign direct investment
FOB free on board
GDP gross domestic product
GSP Generalised Scheme of Preferences
GSP Plus GSP Special Incentive Arrangement for Sustainable Development and
Good Governance
GVC global value chain
HS HarmonizedSystem(ofproductclassication)
ITC International Trade Centre
LDC least developed country
MFN most favoured nation
OEM original equipment manufacturing
R&D research and development
RMG readymade garment
ROO rules of origin
SITC StandardInternationalTradeClassication
UN United Nations
WTO World Trade Organization
4
Summary
e impending graduation from least devel-
oped country (LDC) status represents a
major transition in terms of development
for Bangladesh, demonstrating its impres-
sive socio-economic achievements. However,
it also gives rise to concern about potentially
sizeable costs due to the loss of access to vari-
ous support measures associated with LDC
status. Of this, the most important conse-
quence will be the loss of trade preferences
in the EU. Taking advantage of the duty-free
market access and relaxed rules of origin
(ROO) provisions of the EU’s Everything But
Arms (EBA) scheme for LDCs, Bangladesh’s
total exports to the EU have risen at a brisk
pace. In 2018 such exports reached US$21 bil-
lion, of which $19.6 billion (i.e. 92 %) were due
to apparel. Overall, the EU accounted for 58
per cent of Bangladesh’s merchandise exports
and 62 per cent of apparel exports. Over the
past decade, EU apparel imports worldwide
grew at a rate of 2.4 per cent per annum com-
pared with a comparable growth of 12 per cent
for the same imports from Bangladesh. ere
is evidence of further untapped export poten-
tial for Bangladesh in the EU: using a meth-
odology suggested by the International Trade
Centre, it is estimated that the existing level of
exports is short of an additional $11.3 billion
potential, of which more than 90 per cent is
apparel.
Bangladesh’s clothing exports to the EU
are dominated by knitwear items (under the
Harmonized System of product classication,
category HS 61), accounting for a share of about
57 per cent. e same share actually reached
a peak of 68 per cent in 2010. Until 2011, EU
ROO required ‘double transformation’ of cloth-
ing items as a precondition for tari-free mar-
ket access. For woven apparel (under HS 62),
this would imply domestically produced fabrics
being used in garment making, making it di-
cult for Bangladesh to use EU preferences. e
derogation of EU ROO in 2011 allowed single
transformation for LDC clothing exports, rein-
vigorating the supply from the woven garment
sector.
e EU accounts for almost 45 per cent
of global apparel markets. In 2017, the com-
bined EU-28 imports stood at $178.3 billion
of which $116 billion (i.e. 65 %) was sourced
from extra-EU suppliers. Between 1990 and
2010, China’s market share in the EU rose
steadily from less than 7 per cent to about 31
per cent, but over the next 7 years it fell by
almost 9 percentage points. From 2000 to 2010
Bangladesh’s market share rose from about 3.5
per cent to 6.5 per cent, and then accelerated
further to reach over 12 per cent, i.e. a 5.5
percentage point rise in 7 years. Such robust
export performance was greatly aided by the
EU’s derogation of ROO requirements under
the EBA scheme.
e textile and clothing sector attracts rela-
tively high EU most favoured nation (MFN)
taris, and therefore Bangladesh has sub-
stantially beneted from the EBA scheme.
Graduating LDCs can apply for the second
best (aer the EBA scheme) preferential
regime, the Generalised Scheme of Preferences
Special Incentive Arrangement for Sustainable
Development and Good Governance (GSP
Plus), which grants duty-free access to 66
per cent of EU tari lines including clothing
items. Given the existing qualication criteria,
Bangladesh is unlikely to be able to access GSP
Plus. In that case, the least attractive Standard
GSP would be the only option. Currently 98 per
cent of Bangladesh’s apparel exports attract EU
MFN tari rates of around 12 per cent. Under
the Standard GSP scheme these taris will be
reduced to 9.6 per cent, while with the GSP
Plus scheme tari-free access is given for the
same products. However, GSP Plus ROO provi-
sions are more stringent that those of the EBA
scheme.
In the global clothing value chain land-
scape, Bangladeshi rms operate mainly in
the low value-added segment of cutting and
making apparel, and the principal source of
its competitive advantage is the low costs of
labour. e loss of duty-free access could thus
adversely impact the country’s competitiveness
and export prospects. In this context, applying
a partial equilibrium model, which was devel-
oped as part of the Commonwealth Secretariat’s
analytical framework for understanding the
potential implications of LDC graduation,
shows that the loss of tari preferences in the
EU could result in a potential export loss of
International Trade Working Paper 2019/02 5
more than $1.6 billion for Bangladesh. Any
potential decline in Bangladesh’s exports will
be compensated for by increased supplies from
other countries. A market shi analysis seems
to suggest China gaining by more than $0.5 bil-
lion. Among others, Cambodia, India, Turkey
and Vietnam also stand to make gains.
e methodological approach and results
reported have certain caveats. Analytical frame-
works are simplied representations of the real-
ities, failing to capture many complex issues.
When the Multibre Arrangement (MFA) quo-
tas were abolished from global trade in 2005,
many analysts predicted huge business losses
for Bangladesh in sharp contrast to an eventual
acceleration of its export growth. If EU import-
ers have beneted from Bangladesh’s duty-free
access, they might not readily have alternative
and equally lucrative sourcing opportunities
elsewhere.
Competitive pricing and ability to deliver
in large volumes are recognised by buyers
as critical strengths of Bangladesh’s garment
industry. e buyers’ representatives inter-
viewed suggested that the demand for prod-
ucts was price driven. ey did not agree
with the popular notion that the prices of
Bangladesh’s products are unusually low com-
pared with those of rival suppliers. Exporters’
responses were mixed, although more than
half of them expressed concerns about the
prospect of weakened competitiveness arising
from erosion of EU preferences. In contrast
to buyers’ views, almost all garment manu-
facturers interviewed thought that the prices
obtained by Bangladesh were unusually low
compared with those of competitors. ey
pointed out that replacing supply sources from
Bangladesh might not be easy, as the country
has developed a very large capacity and buy-
ers benet from the associated economies of
scale.
However, there is no denying that loss of
LDC preferences in the EU, resulting in a
likely tari hike of 9.6 per cent, will put serious
pressure on competitiveness. ere are certain
measures that Bangladesh can consider to
mitigate any potential adverse consequences.
ese include seeking an extended transition
period (from the EBA scheme) for graduat-
ing LDCs, possible options and strategies for
securing access to GSP Plus and a negotiated
bilateral trade deal with the EU. On the sup-
ply side, industrial upgradation within apparel
value chains, including technological upgra-
dation, attracting foreign direct investment
and ensuring compliance, would help. Finally,
the cost of doing business is considered exces-
sively high in Bangladesh because of factors
such as infrastructural bottlenecks, inecient
customs processes, incompetent port manage-
ment and trade facilitation measures, dysfunc-
tional inland transport and weak governance.
Any improvements in these areas will con-
tribute to improving the competitiveness of
exporting rms.
1. Introduction
In 2018, Bangladesh for the rst time met
the criteria for graduation from the group of
least developed countries (LDCs), assessed
at the Triennial Review conducted by the
Committee for Development Policy (CDP)
of the United Nations Economic and Social
Council (ECOSOC). At the second consecu-
tive review in 2021, it is also expected to full
the criteria again, paving the way for its ocial
graduation from LDC status in 2024. Meeting
all three pre-specied graduation thresholds
in terms of per capita income, human assets
and economic vulnerability certainly consti-
tutes a great achievement, attesting to its jour-
ney through a critical transition in terms of its
development.1
Indeed, Bangladesh has made great strides
forward in its economic development. Since the
early 1990s, it’s economy has grown at an aver-
age annual rate of more than 5 per cent, with
the comparable growth rate for the last 10 years
being more robust at 6.5 per cent. Since 1995,
its per capita gross national income has regis-
tered more than a ve-fold increase from just
6 Bangladesh’s Apparel Exports to the EU
about US$300 to $1,751. Over the same time-
frame, the proportion of the population living
in poverty has more than halved from more
than 50 per cent to 24.3 per cent. Dependence
on foreign assistance declined from 8 per cent
of gross domestic product (GDP) in the 1980s
to just about 2 per cent. Compared with many
other countries at a similar stage of develop-
ment, Bangladesh has made faster progress as
measured by various social and human devel-
opment indicators.2
Since 1971, the United Nations has recog-
nised LDCs as highly disadvantaged in terms of
their development. ese countries have been
characterised as being caught in a low-income
trap and facing the risk of failing to overcome
poverty and deprivation; as predominantly
dependent on primary commodities for domes-
tic production and exports, with extremely
inadequate opportunities for diversication;
and, as critically reliant on foreign aid because
of limited economic activities accompanied
by unfavourable scal (internal) and current
account (external) balances. In response to
their development challenges, the global com-
munity has devised special international sup-
port measures.
Bangladesh enjoys certain privileges and
special and dierential treatments designed
for LDCs. ese include development part-
ners’ various concessions, special attention and
commitments to support LDCs with develop-
ment nance, trade preferences and technical
assistance. e members of the World Trade
Organization (WTO) have also devised more
favourable conditions and exibilities for this
group of countries in implementing and enforc-
ing international trade rules and regulations.
Bangladesh has been the largest beneciary of
tari-free access in the EU under its Everything
But Arms (EBA) initiative designed for LDCs.
LDC graduation would imply Bangladesh’s not
being eligible for the LDC-specic benets. As
the EU is its largest export destination, the ero-
sion of preferences in this market is likely to
have implications for Bangladesh.
e impressive socio-economic develop-
ment of Bangladesh has greatly been facili-
tated by its export growth. In recent decades,
among other things, taking advantage of privi-
leged market access in the EU, apparel exports,
locally known as readymade garments (RMGs),
have exhibited a remarkable expansion, gener-
ating jobs for four million workers, of which
around 60 per cent are women. e indus-
try has become integrated within the clothing
global value chain in which local producers use
both domestic and imported raw materials for
renowned international brands and other buy-
ers target mostly consumers in developed coun-
tries. ere is huge potential to further enhance
RMG exports and for industrial upgradation in
the sector, generating higher value-added prod-
ucts and moving up the value chain. e loss
of EU preferences could thus come at a criti-
cal juncture of this transformation, potentially
weakening Bangladesh’s competitiveness.
Against this backdrop, the objective of this
paper is to consider the likely impact of the loss
of EU tari preferences on Bangladesh’s exports,
resulting from its graduation from its LDC sta-
tus. In particular, the terms of reference of this
study are to identify the main competitors, anal-
yse market shares and assess the potential for
trade shis and to gather exporters and buyers’
perceptions of the related issues through a short,
quick survey to ascertain the apparel export
sector’s competitiveness challenges in the light
of the prospect of Bangladesh’s graduation. In
terms of the approach and methodology, this
paper utilises the Commonwealth Secretariat’s
A Guide to Leaving Least Developed Country
Status: Sustaining Graduation with Momentum
for analysing the implications of graduation
from the global value chain (GVC) perspective.
is includes using quantitative data and analy-
sis as well as qualitative assessments based on
exporters and buyers’ perceptions.
is paper is organised as follows: following
this introduction in Section I, Section II provides
a brief review of Bangladesh’s apparel exports
highlighting the importance of the EU market.
Section III identies the major competitors in
the EU market and analyses the possible impact
of graduation on apparel exports. Section IV
sheds light on the competitiveness issues from
the perspective of the global value chain, while
considering perceptions of exporters and buy-
ers. Section V provides a brief discussion of
some broad elements of adaptation strategies for
dealing with any adverse consequences. Finally,
Section VI concludes the paper.
International Trade Working Paper 2019/02 7
2. Bangladesh’s apparel exports and the importance of
the EU market
Apparel exports from Bangladesh
Among LDCs, Bangladesh is regarded as an
export success story. From less than US$2 billion
in the early 1990s its exports rose to $36.7 bil-
lion in scal year 2017–18 (FY2018). is would
imply an average annual export growth rate of
close to 12 per cent in comparison with that of
6 per cent for world merchandise exports. In the
process of export expansion, RMGs emerged as
a agship export product for Bangladesh, gen-
erating export receipts from about $1 billion in
1990 to above $30 billion in 2018 (Figure 1).
While so many countries, particularly those
in sub-Saharan Africa, failed to move export
production away from primary commodities
and other mineral resources to manufactur-
ing, Bangladesh exhibited dramatic shis in its
export composition in which the share of erst-
while traditional exports (such as raw jute and
jute goods, tea, leather and frozen sh) fell from
more than three-quarters to just about 10 per
cent to accommodate the growing relative signif-
icance of RMGs from virtually nothing to more
than 80 per cent (Figure 2). In the early 1990s,
yearly growth rates were relatively high given the
narrow base of apparel exports. But the 2000s
also saw impressive growth rates despite the sec-
tor by then having grown to a considerable size
(Figure 3). e rate of expansion would appear
to have lost some momentum and become less
stable in recent years particularly since 2014–15.
is is largely due to an unprecedented slow-
down in global trade that aected the export
performance of the overwhelming majority of
global economies (Razzaque, 2018a).3
SignicanceoftheEUasBangladesh’s
export market
e EU has been the largest export market for
Bangladesh. In FY2018, more than $21 bil-
lion worth of products were destined for the
EU, of which $19.6 billion (i.e. 92 per cent)
were due to apparel alone. In the same year,
the EU accounted for close to 58 per cent of
Bangladesh’s total exports and 62 per cent of
apparel exports (Figure 4). In terms of individ-
ual markets, the USA is the single most impor-
tant export destination with a share of 16.3 per
cent of Bangladesh’s merchandise export earn-
ings, followed closely by Germany (16.1%).
Other important markets are the UK (10.9%),
Spain (6.7%), France (5.5%), Italy (4.3%),
Figure 1. Bangladesh’s exports
Source: Authors’ presentation using data from the
Export Promotion Bureau (EPB) of Bangladesh.
Figure 2. Change in shares of apparel and
non-apparel exports in total exports (%)
Source: Authors’ presentation using data from the
Export Promotion Bureau (EPB) of Bangladesh.
8 Bangladesh’s Apparel Exports to the EU
the Netherlands (3.3%), Canada (3.1%), Japan
(3.1%) and Poland (2.6%). Information on total
and apparel exports to each EU Member State
and their respective shares in Bangladesh’s over-
all export earnings is given in Annex Table A1.
Figure 5 shows that, although the over-
all import growth of most EU Member States
(measured on the vertical axis) were either close
to zero or negative in the 5-year period from
2013 to 2017, their imports from Bangladesh
(measured on the horizontal axis) in the major-
ity of cases grew at a considerable pace. Imports
of Spain and Poland, for example, from world
markets were virtually stagnant (the aver-
age 2013–17 growth rate being zero), but their
comparable gures for growth in imports from
Bangladesh were 13 and 20 per cent, respec-
tively. Bangladesh’s top ve EU partners together
account for about 45 per cent of total exports
and almost half of apparel exports. e notable
growth in Bangladesh’s exports to the EU and
the latter’s large shares in Bangladesh’s exports
make the EU its most critical trading partner.
As is obvious from the above, Bangladesh’s
exports are mainly driven by RMGs: over the past
decade its average yearly growth in exports to
the EU was 12 per cent. During the same period,
EU apparel imports from the world grew at a rate
of 2.4 per cent per annum. It is worth pointing
out that, immediately aer the global nancial
crisis of 2008, while EU imports of apparel from
extra-EU countries declined by more than 8 per
cent in 2009, imports from Bangladesh posted a
5 per cent growth (Figure 6). A similar pattern
was also observed during the relatively recent
trade slowdown period of 2015–16.
Bangladesh’s apparel exports to the EU are dom-
inated by knitwear items under the Harmonized
System (HS) of product classication category
61, accounting for a share of about 57 per cent in
Figure 3. Readymade garment exports and growth rates
Source: Authors’ presentation using data from the EPB.
Figure 4. The EU’s share in Bangladesh’s total exports (%)
Source: Authors’ presentation using data from the EPB.
International Trade Working Paper 2019/02 9
Figure 5. Share in Bangladesh’s exports by partner countries (%)
Note: Bubble sizes correspond to partners’ shares in Bangladesh’s exports in FY2018. Export shares have been
computed from EPB data. The red bubbles present Bangladesh’s exports to individual EU Member States.
Source: Authors’ presentation using data from the ITC and EPB.
Figure 6. EU’s apparel import growth: from the world and Bangladesh (%)
Source: Authors’ presentation using data from the ITC.
Figure 7. Structure of Bangladesh’s apparel exports to the EU: woven and knitwear (%)
Note: Mirror data are used.
Source: Authors’ presentation using data from the ITC.
10 Bangladesh’s Apparel Exports to the EU
2017 (Figure 7). e same share actually reached
a peak as high as 68 per cent in 2010. Until 2011,
EU rules of origin (ROO) required ‘double trans-
formation’ of clothing items as a precondition for
tari-free market access. For woven apparel, this
would imply domestically produced fabrics to be
used in garment making (i.e. from yarn to fabric
and from fabric to garment would full the dou-
ble transformation criterion). Bangladesh lacks
domestic capacity in fabrics, thus nding it dif-
cult to make use of EU preferences. However, in
the knitwear segment there were strong domes-
tic backward linkages to spinning factories and
thus knitwear products fared better than woven
garments. e derogation of EU rules of origin
in 2011 allowed single transformation for LDC
clothing exports, which generated a reinvigorated
supply from the woven garment sector, raising its
share in exports.
About 21 per cent of total knitwear shipped
from Bangladesh was destined for Germany
in FY2018, followed by 12.5 per cent to the
UK (Figure 8). Slightly less than 10 per cent is
exported to the USA. However, more than one-
quarter of woven garment exports under HS 62
are bound for the USA. Among the EU countries,
15.3 per cent of Bangladesh’s woven garments are
exported to Germany, 11.8 per cent to the UK,
6.8 per cent to Spain, and 5 per cent to France
(Figure 9).
An analysis of the data at a more disaggre-
gated level shows that Bangladesh’s single most
important (in terms of export revenues gen-
erated) export item at HS 8-digit level is HS
61091000 (T-shirts, singlets and other vests of
cotton). Almost three-quarters of all export
earnings ($3.8 billion) from this item are due to
the EU (Figure 10). For this particular product,
Bangladesh has an EU market share of about 25
per cent. For the largest woven garment – men’s
or boys’ bib & amp; brace trousers, breeches
and shorts of cotton (HS 62034200) – the sin-
gle most important individual market is the
USA, accounting for about 30 per cent of all
exports. However, the combined EU Member
States’ share is far greater at about 50 per cent of
Bangladesh’s export earnings from this product
(Figure 11). e other major RMG exports to
the EU markets are men’s or women’s shirts, jer-
seys, pullovers, shorts made of cotton and bre,
etc. Annex Table A4 provides a list of the top
20 Bangladeshi RMG items (at the Combined
Nomenclature (CN) 8-digit level) exported to
the EU and their respective market shares.
Figure 12 depicts the growth dynamics of
Bangladesh’s individual HS 6-digit apparel
Figure 8. Countries’ share in Bangladesh’s knitwear
(HS 61) exports (%)
Source: Authors’ presentation using data from the EPB.
Figure 9. Countries’ share in Bangladesh’s woven
garments (HS 62) exports (%)
Figure 10. Partners’ share in Bangladesh’s exports of
HS 61091000
Source: Authors’ presentation using data from the EPB.
International Trade Working Paper 2019/02 11
export products to the EU. Clearly, there are
several items for which Bangladesh enjoys large
market shares. It is, however, striking to nd
that there are many items that are relatively
small in terms of export revenues but achieved
high average growth rates over the 5-year period
from 2013 to 2017. Although their small base
could be one reason for achieving such high
growth, nevertheless it implies that these prod-
ucts have promising export market prospects.
Further export potential in the EU
Although the EU has been its largest export
destination, there is evidence of further export
potential for Bangladesh by taking advantage of
tari-free market access. Unused export poten-
tial by destination markets can be determined
using a methodology recently developed by the
International Trade Centre (Decreux and Spies,
2016). e ITC export potential indicator (EPI)
identies products in which an exporting coun-
try has already proven that it is internationally
competitive and which have good prospects of
export success. e potential export value in a
target market is estimated based on exporters’
supply capacity, the demand in the market of
interest and market access conditions.4 Potential
export values are compared with actual export
earnings to reveal untapped opportunities.
Applying the ITC methodology reveals that
in dierent destination countries Bangladesh
has an untapped apparel export potential
worth US$17.4 billion, which is more than half
its current export earnings from the sector. For
the EU, it is estimated that the existing level
of exports is short of an additional $11.3 bil-
lion potential, of which more than 90 per cent
is apparel. e potential and actual exports of
apparel products are summarised in Figure 13
where the numbers in parenthesis show the
proportion of the actual exports as a percent-
age of actual plus unexploited export opportu-
nities. e highest absolute dierence between
potential and actual exports is for Germany,
leaving room for additional export earnings of
$2.2 billion. at is, currently about 34 per cent
of the potential is unexploited in Bangladesh’s
largest EU partner country market. Among
other EU partners, only 46 per cent of potential
Figure 11. Partners’ share in Bangladesh’s exports of
HS
62034200
Figure 12. EU market shares and Bangladesh’s export growth by products at HS 6-digit level
Note: Bubble sizes correspond to Bangladesh’s exports to the EU in 2017. The biggest bubble represents an
export value of US$3.8 billion whereas the smallest one indicates $13 million.
Source: Authors’ presentation using data from the ITC.
12 Bangladesh’s Apparel Exports to the EU
is utilised in the Netherlands. Bangladesh’s
other major EU markets – France, Italy, Spain,
and the UK – also have sizeable unexploited
market potential.5
Turning to non-EU countries, the USA oers
the biggest unrealised apparel export potential
for Bangladesh, estimated at $1.9 billion, i.e.
only 69 per cent of all potential is being uti-
lised in its largest exporting destination. It is
estimated that Bangladesh is using just 21.4 per
cent of its potential in China and 60 per cent in
India.
3. Graduation from Least Developed Country status
and EU market prospects for readymade garments
e EU accounts for almost 45 per cent of global
apparel markets. In 2017, the combined EU-28
imports stood at US$178.3 billion, of which
$116 billion (i.e. 65 per cent) worth of clothing
items were sourced from extra-EU suppliers.
China, the global export leader, captures about
one-quarter of the market share (Figure 14);
it exported $39.3 billion in 2017. Bangladesh
is the second largest exporter, having a 12 per
cent market share. Turkey and Germany ranked
respectively third and fourth largest suppli-
ers in the EU, each capturing about 7 per cent
market shares. Among others, Italy supplied 5.5
per cent, India 4 per cent, Cambodia, France
and Spain 3 per cent each, Vietnam and the
Netherlands 2.6 per cent each, and Pakistan
shipped 2.1 per cent.
A comparison over time of extra-EU compet-
ing suppliers’ market shares shows a striking
diminishing relative signicance of China.
Between 1990 and 2010, China’s market share
rose steadily from less than 7 per cent to just
below 31 per cent. However, over the next
7 years it fell by almost 9 percentage points.
A close look at Table 1 and Figure 15 reveal
Bangladesh’s capturing of much of China’s
declining market presence. During 2000–10
Bangladesh’s market share rose from about 3.5
per cent to 6.5 per cent, but then it accelerated
further to increase to more than 12 per cent,
i.e. a 5.5-percentage point rise in 7 years. Apart
from Bangladesh, as can be inferred from Table
1, Cambodia, Myanmar, Pakistan and Vietnam
have also seen their shares rising since 2010.
Figure 13. Export potential of Bangladesh’s RMG products
Note: The size of the blue bubbles indicates Bangladesh’s total export potential to the target market, while the
size of the orange bubbles indicates actual exports. The dierence between the size of the blue and orange
bubbles represents the total unrealised potential. The gures in the parenthesis indicate the proportion of the
export potential currently utilised.
Source: Authors’ presentation using data from the ITC export potential map.
International Trade Working Paper 2019/02 13
But none of them shows dynamism comparable
to that of Bangladesh.
It needs to be pointed out that such a robust
export performance by Bangladesh has been
greatly aided by the EU’s derogation of ROO
requirements for clothing under the EBA, as
mentioned earlier. e earlier stringent ROO
criterion of double transformation for duty-
free access proved to be a binding constraint.
As Figure 16 shows, between 2001 and 2010,
Bangladesh’s market share in woven garments
(HS 62) virtually stagnated. Aer allowing sin-
gle transformation, the market share of woven
products expanded rapidly: from just above 4
per cent in 2010 to more than 10 per cent in
2017. Because of strong domestic backward
linkages, ROO did not appear to be a major
problem for knitwear and thus Bangladesh
Figure 14. Major apparel exporters to the EU
Note: The bubble size represents the market share in the EU.
Source: Authors’ presentation using data from the ITC.
Table 1. Share of extra-EU partners in total apparel imports in the EU (%)
Country 1990 1995 2000 2005 2010 2015 2017
China 6.84 7.12 11.09 21.32 30.90 24.92 22.02
Bangladesh 0.49 2.08 3.53 4.20 6.54 10.84 12.01
Turkey 7.49 6.82 7.25 9.20 8.24 7.49 7.26
India 2.48 3.43 2.88 3.99 4.74 4.31 4.02
Cambodia 0.00 0.08 0.41 0.59 0.82 2.45 3.13
Vietnam 0.11 0.58 1.08 0.86 1.54 2.50 2.65
Pakistan 0.70 0.91 0.84 0.95 1.12 1.84 2.13
Morocco 1.33 3.39 3.17 2.68 2.15 1.99 2.08
Tunisia 1.95 3.28 3.49 2.76 2.21 1.53 1.45
Sri Lanka 0.47 0.97 1.41 1.21 1.47 1.33 1.24
Indonesia 1.04 2.01 2.67 1.58 1.34 1.08 1.08
Myanmar 0.00 0.03 0.42 0.22 0.12 0.31 0.91
Hong Kong 7.59 6.65 4.96 2.53 0.43 0.54 0.40
Thailand 1.45 1.21 1.48 1.07 0.89 0.44 0.40
Egypt 0.11 0.29 0.37 0.45 0.43 0.35 0.32
United States 0.65 0.93 0.53 0.39 0.38 0.37 0.32
Sources: UN COMTRADE and the ITC.
14 Bangladesh’s Apparel Exports to the EU
has been able to maintain a steady growth in
market share in this category as well (from 9
per cent in 2010 to 13.7 per cent in 2017).
In the EU, extra-EU suppliers compete
among themselves as well as with individual EU
Member States exporting to other fellow mem-
bers. While considering only extra-EU imports
into the EU, more than one-third of total extra-
regional imports of RMGs are shipped from
China (Figure 17). Bangladesh is the source of
about 18 per cent, whereas Turkey and India
respectively export 11.2 per cent and 6.2 per cent
of total extra-EU imports of RMGs to the EU.
Annex Table A4 and Figure A1 provide infor-
mation on countries’ extra-EU market shares.
The market shares of major extra-EU part-
ners for their respective top exporting items
at HS 6-digit level are provided in Figure
18. Bangladesh’s most important 5 and 20
products account for 22.2 per cent and 18.5
per cent of EU imports in the same prod-
ucts respectively. The relatively high con-
centration implies that Bangladesh is highly
competitive in these items. But it would also
suggest that there is scope for diversifica-
tion into new items within the apparel sec-
tor. China’s top 5 items hold about one-third
of EU imports of those products, whereas its
top 20 products together represent about 22
per cent market share. India’s shares in its top
five and 20 products are 3.3 per cent and 4.2
per cent respectively, which are lower than
its overall apparel market share. This implies
that India’s reliance on its major items is much
less than those of Bangladesh and China. It
could also suggest a lack of competitiveness
in items that are associated with the highest
export revenues.
Figure 15. EU apparel market shares by selected suppliers (%)
Source: Authors’ presentation using data from UN COMTRADE and the ITC.
Figure 16. Bangladesh’s EU market shares in knitwear (HS 61) and woven garments (HS 62) (%)
Source: Authors’ presentation using data from the ITC.
International Trade Working Paper 2019/02 15
The impact of graduation from least
developed country status on
Bangladesh’s readymade garment
exports to the EU
EU import regimes in apparel
e EU provides trade preferences to support
developing countries under its Generalised
Scheme of Preferences (GSP). e EU’s GSP
is based on the WTO’s Enabling Clause that
allows developed nations to grant unilateral
and non-reciprocal tari preferences to sup-
port developing countries in their development
process. e current GSP regime in the EU
oers three dierent preference arrangements:
(i) a general arrangement (Standard GSP); (ii) a
Special Incentive Arrangement for Sustainable
Development and Good Governance (GSP
Plus); and (iii) an EBA arrangement for the
group of LDCs. A summary of these preference
regimes is provided in Table 2.
Bangladesh, as an LDC, gets duty-free
quota-free market access under EBA. When
Bangladesh graduates from LDC status, it will
lose LDC-specic preferential market access
and ROO. Tari preferences provide signicant
competitive advantage particularly when most
favoured nation (MFN) tari rates are high.
Although taris are generally low in developed
countries including those in the EU, certain
sensitive sectors continue to be protected by
high taris. erefore, depending on bene-
ciary countries’ export composition, preferen-
tial treatment may or may not be a source of
competitive advantage. e textile and clothing
sector attract relatively high MFN taris, and
Figure 17. Share in extra-EU RMG imports, 2017 (%)
Source: Authors’ presentation using data from the ITC.
Figure 18. EU market shares of competitiors by their respective top 5 and 20 items (%)
Note: Shares in the EU market have been calculated for each country for their respective major exporting items at
HS 6-digit level.
Source: Authors’ presentation using data from the ITC.
16 Bangladesh’s Apparel Exports to the EU
therefore Bangladesh has substantially ben-
eted from the EBA arrangement for LDCs. An
analysis of EU tari structures (Figure 19) shows
that about one-quarter of EU tari lines at CN
8-digit level have an MFN duty rate of zero per
cent (i.e. 25 per cent of all products imported
by the EU provide duty-free access to suppli-
ers from all countries). Another 4percent are
subject to specic duties only. In about 25 per
cent of tari lines, MFN duty rates of 5–9.9 per
cent are applied, while just 4 per cent of prod-
ucts attract more than 15 per cent tari rates.
e MFN taris on textile and clothing items
are mostly in the range of 10–12 per cent with
88.9 per cent apparel products attracting such
taris of 12 per cent.
Table 2. EU GSP provisions
Standard GSP GSP Plus EBA
Indicators Low- or lower middle-
income countries
Vulnerable (in terms of
export diversication,
export and import
volumes) Standard GSP
beneciaries that have
ratied the 27 GSP
Plus-relevant
international conventions
LDCs
Number of
beneciaries
18 9 49
Non-sensitive goods Duty reduction for around
66% of all EU tari lines
Duty suspension for around
66% of all EU tari lines
Duty suspension for all
goods with the
exception of arms and
ammunition
Sensitive goods:
– specic duty
– ad valorem duty
Duty reduction:
– 30%
– up to 3.5 percentage
points
Duty suspension Duty suspension
Rules of origin
(important
provisions only)
Double transformation
fortextile and clothing
items. For all other
products a minimum
local value added of 50%
Double transformation for
textile and clothing items.
For all other products a
minimum local value
added of 50%6
Single transformation for
textile and clothing
items. For all other
products a minimum
local value added of
30%
Sources: Various documents available on the European Commission website.
Figure19. MFNtaristructureintheEU
Note: The percentages correspond to proportions of tari lines. Some products with MFN taris are also subject
to specic duties. In this exercise, these products are placed under the relevant ad valorem tari slabs only. Sd,
specic duty.
Source: Authors’ presentation using the EU tari schedule.
International Trade Working Paper 2019/02 17
Graduating LDCs can apply for perhaps the
second best (aer the EBA scheme) preferential
regime, GSP Plus, which grants duty-free access
to 66 per cent of EU tari lines. However, the
eligibility criteria for it stipulates that a ben-
eciary country (i) has ratied and eectively
implemented 27 international conventions on
labour rights, human rights, environmental
protection and good governance; (ii) has a share
in GSP-covered imports of less than 6.5 per
cent of GSP-covered imports of all GSP coun-
tries; and (iii) has at least 75 per cent of its total
GSP imports coming from the seven largest
sections of GSP-covered imports. Bangladesh
fulls condition (iii) and is likely to full condi-
tion (i), but is way above the threshold import
share under condition (ii).7 erefore, given the
existing GSP rules, Bangladesh might not qual-
ify for GSP Plus. In that case, the least attractive
Standard GSP would be its only option.
Figure 20 shows the distribution of Bangladesh’s
exports over EU tari rates under the Standard
GSP scheme with a view to ascertaining market
access implications aer graduation from LDC
status. It becomes obvious that applying the
Standard GSP regime on Bangladesh’s current
export structure would result in a dramatically
changed situation from the present duty-free
access for all products to almost all exports being
subject to some taris.8 In fact, about 92 per cent
of all Bangladesh’s exports will fall under an
average tari of 8–9.9 per cent. An examination
of the tari schedule reveals that, for 98 per cent
of Bangladesh’s apparel exports, EU MFN tari
rates are around 12 per cent. Under the Standard
GSP scheme these taris will be slightly reduced
to 9.6 per cent, while with the GSP Plus scheme
tari-free access is given for the same products.
at is, under GSP Plus Bangladesh’s apparel
exports will enjoy the same tari preferences as
they would under the EBA scheme. However,
EBA ROO are more relaxed and less stringent
that those of GSP Plus.9
Tariimplicationsforexportearnings
e Commonwealth Secretariat has proposed
an analytical framework to study the potential
implications of taris arising from graduation
from LDC status for a graduating country’s
exports (Commonwealth Secretariat, 2018).
e prescribed partial equilibrium model com-
prises two steps: rst, it estimates the impact
on exports due to price changes emanating
Figure20. EUtariratesunderStandardGSPandBangladesh’sexports
Note: The gures in parenthesis show absolute values of Bangladesh’s exports associated with specic tari
slabs. Some products with MFN taris are also subject to specic duties. In this exercise, these products are
placed under the relevant ad valorem tari slabs only. Sd, specic duty.
Source: Authors’ presentation using data from the EU Comext database.
18 Bangladesh’s Apparel Exports to the EU
from forgone tari preferences in the destina-
tion market; and, second, it estimates the pos-
sible increase in demand for goods exported by
non-graduate countries as they become more
competitive relative to the graduating country
in question.10
e advantage of this model is its simplic-
ity – the data requirements are minimum, and
the simulation is quite simple. Being a partial
equilibrium model means that it uses only one
sector while disregarding its interactions with
others – a feature that general equilibrium
models (GEMs) deal with. However, in contrast
to general equilibrium models, this approach
employed here can make use of highly disag-
gregated trade and tari data.11 erefore,
the Commonwealth Secretariat’s framework
provides a good basis for undertaking an ini-
tial assessment in identifying the potential
trade-related eects. e potential impact of
graduation from LDC status in this model is
transmitted through the following path:
• Price eects – an increase in the price of
goods because of graduation, which increases
taris.
• is will result in potential substitution
between exports from graduate and non-
graduates countries.
• e results are dependent on market share
elasticities and therefore the extent of price
sensitivities.
e potential caveats of this approach are that
it assumes constant import price elasticities, i.e.
if the price of a given item declines, each pro-
ducer adapts in the same way regardless of dif-
ferent adaptation measures within the structure
of production. In any case, the potential shis
in exports may depend on producers’ supply
capacities and competitiveness, which are not
captured in this market share-based approach.
The model
e trade eect of graduation from LDC status
can be estimated by comparing the unit price
received by the preference-receiving country
with that of the MFN exporters:
P
Pm mP
P
k
i
k
W
k
i
k
ik
i
k
i
=+
=−
()
11
or
where
P
k
i
is the unit price of product k received
by country i (i.e. preference recipient), and
P
k
W
is the world unit price of the same product. It
is assumed that markets are perfectly competi-
tive and there is no product dierentiation. e
above equation can be expressed as:
PPT T
k
i
k
W
k
MFN
k
i
=+−()1
mT T
k
i
k
MFN
k
i
=−)
where
Tk
MFN
is ad valorem equivalent MFN tar-
i for product k, and
Tk
i
is the export-weighted
preferential tari faced by country i. e per-
centage changes in exports as a result of changes
in the price of exports is given by:
∆∆ ∆∆X
X
P
P
P
P
P
P
=+ +
ε1
where X is exports and ε is price elasticity of
demand for exports. e formula can be utilised
to estimate the eect of abolishing tari pref-
erences resulting from graduation from LDC
status. As a country graduates from the group
of LDCs, its tari preference regime changes,
as it has to pay a higher tari. e changes in
export revenue as a result of graduation can be
estimated from the following equation:
∆∆
∆∆
X
X
m
m
m
m
m
m
k
ik
i
k
ik
ik
i
k
ik
ik
i
k
i
=+++
++
µµµ
1111ε
where,
µ
k
ik
i
k
i
m
m
=∆ indicates the changes in pref-
erence margin. e rst component in the
above equation computes the changes in unit
price resulting from changes in tari prefer-
ence. e second component calculates the
impact on export revenue for the given changes
in price.
At the second step, to compute the trade-
shi eects it is assumed that the declining
exports from the graduate country will be pro-
portionally distributed to the other competi-
tors (i.e. non-graduates) based on their market
shares. e implicit assumption here is that
there is no product dierentiation among the
suppliers and that non-graduates’ exports will
increase proportionally (i.e. cross-price elastic-
ity of demand is 1). erefore, the market share
approach is used to estimate how other coun-
tries’ exports will be impacted.
Estimation results
e model is estimated using a total of 339 CN
8-digit products that were exported to the EU
International Trade Working Paper 2019/02 19
during 2015–17. e EU tari rates at this level
of disaggregation are used in the analysis for
individual products. e impact is estimated
based on the average exports during the last
3 years and their shares in total EU imports.
Export implications have been estimated using
two post-graduation scenarios: Bangladesh’s
receiving Standard GSP benets and being sub-
ject to MFN taris.
Table 3 summarises the results. e estima-
tions are based on alternative values for the price
elasticity of demand: between 0.5 and 2. Under
the unitary price elasticity of demand, the esti-
mation suggests that replacing duty-free access
with the Standard GSP regime would result
in a loss of export earnings for Bangladesh of
US$1.6 billion – 9.5 per cent of average export
revenues from the EU during 2015–17. e
resultant loss would be higher than $2 billion
in the unlikely case of Bangladesh facing the
MFN tari rates. It is estimated that the for-
gone export receipts from knitwear would be
greater than those from its woven counterparts
(Figure 21). Under Standard GSP, while the
export loss due to woven garments would be
lower than $700 million, the comparable gure
for knitwear would be close to $1 billion. e
most important reason behind higher potential
losses of knitwear compared with woven gar-
ments is the higher average tari rate applied
on the former.12 In any case, as reected in the
EU Comext database, Bangladesh exports more
knitwear than woven products. With values of
the price elasticity of demand higher than 1,
the estimated forgone exports are bigger. If we
were to choose, our preferred estimate would
have been in line with the unitary price elastic-
ity of demand. Annex Table A4 provides export
implications by the top 20 individual export
items.13 It shows that Bangladesh’s single most
important export items, CN 61091000 (knit-
ted or crocheted T-shirts), alone could suer a
decline of close to $300 million. e currently
large export base and the hike in the tari both
interact to generate this big impact.
While the limitations of the partial equilibrium
model have already been highlighted, it is also
worth pointing out a few other issues. First and
foremost, modelling exercises (including GEMs)
cannot capture the implications arising from the
changes in ROO provisions. Graduation out of
LDC status will be associated with more strin-
gent requirements (e.g. double transformation in
clothing and 50 per cent domestic value added in
other products) for getting Standard GSP prefer-
ences. Second, it is not clearly understood how
the rents from tari preferences are distributed
between exporters and importers, which can
have implications for price changes. Finally, it is
assumed that undierentiated products can be
readily supplied from other countries. In reality,
Table 3. Potential loss of apparel export
earningsduetoanincreaseintari
Price elasticity
of demand
Potential decline in RMG exports
(million $)
If Bangladesh
gets Standard
GSP preference
If Bangladesh
faces MFN
tari
0.5 800.8 1,001.0
11,601.6 2,002.0
1.5 2,402.4 3,003.0
23,203.2 4,004.0
Source: Authors’ estimation.
Figure21. Potentiallossofknitwearandwovengarmentexportearningsduetoanincreaseintari
Source: Authors’ estimation.
20 Bangladesh’s Apparel Exports to the EU
as products are dierentiated, individual coun-
tries might be able to exert some market power
on the model-based estimates.
Notwithstanding the caveats, the estimates
presented here are comparable with other
assessments undertaken elsewhere using dif-
ferent methodological approaches. e United
Nations Conference on Trade and Development
(UNCTAD) estimated a 5.5–7.5 per cent fall
in Bangladesh’s total exports due to the loss of
preferential access aer graduation (UNCTAD,
2016). Rahman and Bari (2019) derived a 7.8
per cent decline in Bangladesh’s total exports
(equivalent to $2.7 billion). However, there is
no study that – like this one – has used prod-
uct-specic disaggregated data to consider the
implications arising from the EU market.
Potential trade shifts
e decline in the EU’s imports of apparel
from Bangladesh will be compensated by the
increases in imports from other countries.
is is done using the market share approach,
i.e. distributing graduate countries’ forgone
exports among all exporters in the EU based
on their current market shares. Potential shis
in exports are analysed under the assumption
that import demand elasticities and cross-price
elasticities are one.
Being the largest supplier, China gains most:
about 16 per cent of Bangladesh’s export loss.
When the latter obtains the Standard GSP,
China’s export gains will be about $0.25 bil-
lion, which is quite small in terms of its total
exports (Figure 22). Germany would be the
second largest gainer followed by Turkey, India,
Italy and Spain. Aer graduation, if Bangladesh
is subject to MFN taris, all competitors’ gains
slightly increase.
If the resultant export gains are limited to
extra-EU suppliers only, China’s exports rise
by more than $0.5 billion (Figure 23). Turkey
and India together capture another $0.5 bil-
lion, with the former increasing its exports by
$302 million and the latter by $183 million.
Cambodia and Pakistan each get an additional
$100 million exports, while the comparable rise
in Vietnam’s exports is estimated at $56 million
followed by Sri Lanka’s $36 million. If export
gains are disaggregated by knitwear and woven
Figure 22. Potential increase in competitors’ apparel exports when all competitors are considered (million $)
Figure 23. Potential increase in competitors’ apparel
exports if only extra-EU competitors are considered
(million $)
Note: The price elasticity of demand and cross-
elasticity of demand are assumed to be 1.
Source: Authors’ estimation using data from the EU
Comext database.
International Trade Working Paper 2019/02 21
apparel, China, Turkey, India and Cambodia
will benet considerably from increased
exports of knitwear: China’s additional earn-
ings from knitwear would be above $300 mil-
lion under the scenario in which Bangladesh
would pay Standard GSP rates, and the com-
parable gains by exporting woven products
would be just above $200 million (Figure 24).
In the case of woven products, Bangladesh’s
comparators – Pakistan, Morocco, Tunisia and
Vietnam – would gain. If Bangladesh is subject
to MFN taris, each competitor’s exports will
rise further.
4. Assessing competitiveness: global value chain
perspectives
Global value chain-led trade
Bangladesh’s RMG exports have been facilitated
by what is known as global value chain (GVC)-
led production and distribution mechanisms. In
an overwhelming majority of traded goods, if
not all, export market prospects in today’s world
are critically dependent on a country’s position-
ing in the GVC network in respective consum-
ers’ products. e value chain captures the entire
range of activities (including production and ser-
vices) that are needed to bring a product from its
conception to end use and beyond. is includes
activities such as design, production, marketing,
distribution and support to the nal consumer.14
Fundamental changes have taken place in global
trade in which the traditional concept of an
entire production process being undertaken by
one rm in one country has been replaced by
the GVC-led process characterised by various
service providers’ presence in dierent countries
catering to the needs of nal consumers. is
GVC mechanism thus involves cross-border
fragmentation of production processes, which
entails specialisation in a narrower range of tasks
by rms organised within global production net-
works (Razzaque and Keane, 2016). Given the
limited productive capacity of many developing
countries, integrating with GVCs may provide
new trade opportunities for local rms to gain
access to new markets through specialising in a
single task. However, the specic location of a
country/rm on the GVC map can greatly inu-
ence the amount of value-added a country is
capable of exporting that is embodied in (gross)
exports and its capacity to reap a bigger slice of
the total added value created within the entire
production process associated with the prod-
uct (Der Marel, 2015). e value addition out
of export earnings is important, as it comprises
workers’ wages, entrepreneurs’ prots and other
costs associated with supplying orders.
It has become a typical feature of the GVC-
led trade that rms located in a developing
country focus mainly only on manufacturing
activities, while research and design (R&D) for
product development is provided by global big
brands or importers in developed countries, raw
materials are sourced from a third-party coun-
try, and marketing and aer-sales services are
provided by others in the countries where con-
sumers are located.15 is phenomenon is oen
represented by what has come to be known as
the ‘smile curve’ (Figure 25). One issue is that
the manufacturing stage within the smile curve
Figure 24. Potential rise in extra-EU competitors’
knitwear and woven garment exports if Bangladesh
paysStandardGSPtarirates(million$)
22 Bangladesh’s Apparel Exports to the EU
process is known to be generating very little
value in proportion to the nal retail prices of
the products.16 In general, activities related to
R&D, design, brand development and market-
ing occupy relatively greater shares in overall
industry value added. It is, however, true that at
the early stage it is very dicult to become spe-
cialised in these activities. With increased inte-
gration into GVCs, the likelihood of moving up
in certain segments of the value chain increases
as exporters grow contacts, acquire relevant
technologies and develop human resources to
perform high-value-added service tasks such as
designing, branding and marketing. e par-
ticipation of foreign direct investment (FDI)
rms in export production can greatly facilitate
a country’s moving up the value chains, as these
rms enjoy close contacts with brands, buyers
and retailers in the importing countries. ey
oen have in-depth R&D capacities and are
sometimes either directly or closely associated
with global retail businesses.
Although not directly related to rm-
level capabilities, the issues of labour and
environmental standards, among others, have
become critical success factors in GVC par-
ticipation (Kaplinsky et al., 2003). International
brands and retailers subject to close scrutiny by
consumers’ groups and NGOs in terms of their
procurement practices aim to avoid sources
that cannot comply with various production,
labour and environmental standards.
Bangladesh in apparel value chains and
the issue of competitiveness
Bangladesh’s apparel production process is
mainly related to manufacturing, i.e. to process
intermediate inputs to turn them into nal con-
sumer products. is stage of the global supply
chain is the most labour intensive in nature and,
being a labour-abundant country, Bangladesh
has a huge natural comparative advantage.
Among the principal apparel business mod-
els (Figure 26), Bangladesh is mostly involved
in two low-value stages of cut, make and trim
(CMT) and original equipment manufacturing
(OEM)/free on board (FOB) (Hassan, 2014).
Figure 25. The ‘smile curve’ – stages in the global value chain
Source: Adapted from Mudambi (2008).
Figure 26. Trend towards greater value addition
Sources: Adapted from ITC (2016) and based on Gere and Frederick (2010) and Cornelia (2012).
International Trade Working Paper 2019/02 23
Under CMT arrangements, buyers procure the
materials from their known sources in any third
country and send them to the manufacturer
on a free-of-cost basis and pay only for cutting
and sewing woven or knitted fabric or apparel
knitted directly from yarn. On the other hand,
under the OEM/FOB system, the manufac-
turer is responsible for all production activities,
including CMT activities, as well as nishing.
erefore, the manufacturing rm must have
the capabilities for procuring the necessary raw
materials and for undertaking the trimming
needed for production (Fernandez-Stark et al.,
2011). In this case, the prices quoted by factories
include raw material costs plus CMT charges,
i.e. the price of fabrics and accessories includ-
ing cutting and making charges. Bangladesh’s
apparel export business generally does not fall
under other high-value added models such
as original design manufacturing (ODM) and
original brand manufacturing (OBM).
Given the value chain segments in which
Bangladesh operates, CMT and OEM, it is gen-
erally recognised that prot margins cannot be
very high.17 e question is then how much
more competitive Bangladesh can be if it has to
lose its tari preferences in the EU market post
graduation. A comparison of prices obtained by
dierent suppliers to the EU could shed some
light on this, but drawing any meaningful con-
clusions would be far from straightforward for
at least two reasons. First, prices are generally
absent in international trade analysis. While
economists can use fairly disaggregated trade
data (e.g. at HS 8- or 10-digit levels), the com-
puted unit value prices still suer from aggre-
gation and measurement unit problems.18 e
second diculty relates to product dierentia-
tion. Products supplied by dierent countries
may dier substantially in quality, and cross-
country comparisons, even using highly dis-
aggregated data, cannot fully account for this.
Prices of various broad items (such as T-shirts)
from various brands and retailers are not avail-
able in a systematic manner. Even if available,
the retail prices would be very dierent from
those obtained by rms in developing countries.
While Bangladesh is developing capacity in
making relatively high-priced garment prod-
ucts sold by many global brands, until now it
has mainly been known as a source of low-cost
garment items in bulk.19 ere is also a general
perception that not only in garments but also in
all major export items, Bangladesh lags behind
its main competitors in terms of product qual-
ity. An analysis using one of the most compre-
hensive export quality database prepared by the
International Monetary Fund (IMF) and UK
Figure 27. Quality of export goods by SITC-1 digit sectors
Note: Authors’ presentation using the IMF export quality database.
24 Bangladesh’s Apparel Exports to the EU
Aid seems to conrm this view.20 As Figure 27
shows, at the SITC 1-digit level, Bangladesh’s
export quality is lower than those of China
and India in all but one Standard International
Trade Classication (SITC) 1-digit level of
product classications.21 In most categories,
Vietnam’s unit prices are also higher than
those of Bangladesh. In the case of the manu-
factured goods category, which includes much
of the country’s apparel exports, Bangladesh
is around the 80th percentile – behind China,
Vietnam and India.
From the aforementioned database, it is also
possible to compare export quality for clothing
items. e information thus obtained for dier-
ent countries can be used to generate a ‘quality
ladder’, measuring the relative quality of a coun-
try’s exports against all other countries that
export clothing (Reis and Farole, 2012). A close
look at Figure 28(a) and (b) reveals Bangladesh’s
moving up the quality ladder between 2001 and
2014.22 However, other comparators, such as
China, India, and Vietnam, have also moved up
and appear to have made faster progress. When
export quality is analysed separately for woven
and knitwear items, it again becomes evident
that Bangladesh is outperformed by its princi-
pal competitors (Figure 29 (a) and (b)).
e above quality-adjusted unit values
used do not make any distinction between
Bangladesh’s exports to various destination
markets, although it is most likely that the above
patterns would also be reected in the EU mar-
ket. Following Reis and Farole (2012), export
quality in the EU can be approximated by unit
value prices. Comparisons of trends in unit
values over the period from 2000 to 2017 for
overall apparel exports, knitwear products and
Figure 28. (a) and (b): Quality ladder for clothing
Source: Authors’ presentation using data from the IMF export quality database.
Figure 29. (a) and (b): Quality-adjusted unit value prices of woven and knitwear garments
Source: Authors’ presentation using data from the IMF export quality database.
International Trade Working Paper 2019/02 25
woven garments using export data exclusively
for the EU show Bangladesh’s having generally
lower prices compared with other major com-
petitors (Annex Figure A3). For Bangladesh’s
two single most important export items (CN
62034235 and CN 62034231), its unit value
prices in most recent periods are almost at par
with those of China (Annex Figure A3).23
Bangladesh’s competitive strengths:
buyers’ and exporters’ perceptions
A large number of international buyers compris-
ing globally established brands as well as inter-
mediaries source apparel from Bangladesh.24
In various global surveys, Bangladesh appears
to be an important destination for sourcing
low-cost garments.25 Despite Bangladesh’s abil-
ity to supply in bulk and having a record as a
consistent export performer, working condi-
tions and workers’ safety has been a concern for
many buyers.26 It is generally recognised that
working conditions have improved in recent
times (Moazzem and Sehrin, 2016), providing
a renewed relationship between factories and
buyers.
In the interviews, the buyers’ representa-
tives regarded Bangladesh as competitive
and an important source of suppliers. All
the respondents indicated that supplying in
large volumes is one of the key strengths of
Bangladesh. On a scale of 1 (being highly dis-
satised) to 5 (highly satised), the average
score assigned was 4 for the volume supplied.
e same score 4 was also recorded for prices
oered by Bangladeshi suppliers. Clearly,
competitive pricing and large volume deliv-
ery were critical strengths of the industry. In
all other indicators, such as product variety
and range, reliability and delivery, the aver-
age score was a 3. However, one of the biggest
buyers of Bangladeshi products participating
in the survey provided a maximum score of 5
in each area of supplying in large quantities,
reliability and delivery promptness.
When explicitly asked if the demand for
Bangladesh’s products was price driven or qual-
ity driven, most buyers’ representatives sug-
gested the former. However, there were diering
views indicating improving quality as well as the
importance of retaining the niche market where
quality is oen dictated by consumers’ purchas-
ing power. e buyers’ representatives did not
agree with the popular notion that the prices of
Bangladesh’s products are unusually low com-
pared with those of rival suppliers. ey were
of the view that global export markets were
competitive and prices for Bangladeshi goods
reected that reality. Almost all buyers thought
that low labour costs will continue to remain an
important source of comparative advantage for
Bangladesh.
In the discussion on the potential impact
of loss of tari preferences in the EU, the buy-
ers’ representatives generally agreed that there
would be some impact on relative competi-
tiveness, but they could not oer any insights
about its impact on export performance. Some
respondents were of the view that predicting
market outcomes about 10 years in advance
would not be practical, as export markets were
quite dynamic and business models includ-
ing countries’ moving along the value chain
or managing the supply chains could experi-
ence profound changes determining competi-
tiveness in the medium to long term. In the
short to medium term (over 2–5 years), most
buyers do not see any signicant changes in
sourcing practices involving Bangladesh. One
Box 1: Gathering perceptions of buyers
and exporters
In an attempt to better appreciate the
competitiveness challenges facing Bangladesh,
the perceptions of buyers and exporters were
gathered, as part of this particular study, through
a purpose-built short survey. Given the scope
of this current work, administering a detailed
questionnaire-based survey was not possible.
Rather, the approach was to conduct some short
and focused key informant interviews based on
a pre-specied and semi-structured checklist.
The checklist was developed following the
Commonwealth Secretariat’s methodological
guidelines for assessing rms’ capabilities
suitably adjusted to consider the specic case
of Bangladesh. The interviews were conducted
face to face, over the phone and through email
correspondence. Representatives of ve buyers/
buying houses based in Dhaka and ten garment
factory owners were interviewed. The questions
that were kept in the interview checklists included
participants’ perceptions on the price and quality
of Bangladeshi apparel; future market prospects;
buyers’ relationships with existing suppliers and
their medium-term sourcing strategies; and
general competitiveness issues facing Bangladesh
including potential loss of duty-free access.
26 Bangladesh’s Apparel Exports to the EU
representative, who procures for the US mar-
ket, expected a 25 per cent growth in his busi-
ness with Bangladesh over the next 5 years or
so. Another respondent representing a major
brand (and a big buyer) suggested that the
buyer concerned is satised with the products
it is purchasing from Bangladesh and could
not be sure what could be alternative sources
of supplies.
Exporters’ responses were mixed, although
more than half of them expressed concerns
about the prospect of weakened competitive-
ness arising from erosion of EU preferences.
Although the sample size was small, it appeared
that large rms were relatively less worried
about their business prospects. However,
according to two-hs of the respondents,
protability was already at such a low level that
accommodating a margin of lost tari prefer-
ence as big as 10–12 per cent would pose an
extremely dicult challenge.27
Two relatively small rm owners were of the
view that many European buyers were procur-
ing from Bangladesh as they did not have to
pay taris in the EU. ey thought that in the
absence of such benets those buyers would
look for alternative sourcing options. According
to them, rather than Bangladeshi suppliers, it is
the importers who benet from tari prefer-
ences. erefore, graduation from LDC status
could erode Bangladesh’s attractiveness as a
supplier among the buyers.
Along with tari preferences, the relaxed
and more generous EU ROO could also go
away following graduation from LDC status.
Under the existing EU ROO regime, non-
LDCs are required to full ‘double trans-
formation’ to access GSP preferences. Most
respondents reported that such a condition
for knitwear garments should not be a major
problem in accessing any future GSP prefer-
ences that might be available, as Bangladesh
currently has the domestic capacity to produce
yarn. However, for the woven garment sector
using domestically produced fabrics for gar-
ment making to access any preferences could
be a challenge.
Almost all garment manufacturers inter-
viewed thought that the prices obtained by
Bangladesh were unusually low as against
of those of competitors. Some respondents
thought that many rms would undercut prices
to secure orders, and this tendency has gen-
erally reduced prices across the industry. As
mentioned above, this view is, however, not
supported by buyers’ perceptions.
Several respondents thought that despite any
preference erosion-induced weakened com-
petitiveness, it might not be easy to replace
supply sources from Bangladesh. According to
them, the country has now developed a very
large capacity and the associated economies
of scale that benet buyers. When Bangladesh
and Cambodia graduate from LDC status, only
African countries will enjoy large tari advan-
tages. Although several African suppliers, such
as Ethiopia, Lesotho and Madagascar, have
developed as apparel exporters, they have very
small supply-side capacity.
Some respondents pointed out that wages
are steadily rising in China, and its industrial
upgradation strategy will transform the country
into a major exporter of technology-intensive
goods and services, generating more export-
ing opportunities for Bangladesh and others in
labour-intensive manufacturing sectors includ-
ing apparel. Wages in Bangladesh are increas-
ing too, but lower labour costs compared with
many other developing countries will be an
advantage.
5. Adaptation strategies
Even without referring to any specic magni-
tude of potential loss of export earnings or mar-
ket share, it can be concluded that graduation
from LDC status is likely to dent Bangladesh’s
competitiveness in the EU. Bangladesh thus has
a signicant task ahead to prepare for its gradu-
ation. e adaptation strategies should include
various policy options at the national level and
changes/improvements in rm-level business
and operational practices. It is not possible to
discuss all the associated issues in detail here
given the scope of this paper. However, a few
possible broad areas of intervention are agged
below.
International Trade Working Paper 2019/02 27
Exploring the most attractive future
trade policy regime in the EU
For Bangladesh, the most challenging impact
of graduation from LDC status will be trans-
mitted through the loss of duty-free market
access in the EU. However, the graduation pro-
cess and the available EU trade policy regimes
mean that there is scope for being strategic and
for Bangladesh’s undertaking proactive initia-
tives in mitigating any adverse consequences,
including weakened competitiveness of apparel
exporters.
e political processes within UN sys-
tems and its development partners generally
emphasise smooth graduation and transition
processes, although there is not much clar-
ity regarding how other international support
measures, such as bilateral and multilateral aid
and technical assistance, can be of help and will
actually be made available. However, in the case
of preferential market access, it is expected that,
once Bangladesh graduates, most likely to be in
2024, it will remain eligible for duty-free mar-
ket access in the EU for another 3 years.28 Post
graduation it may be possible to look for an
alternative EU trade policy regime that is more
generous and attractive to exporters than just
the Standard GSP or MFN options.29
Although under the existing rules Bangladesh
might not qualify for GSP Plus, the European
Commission’s current GSP regime will apply
until 2023 and is likely to be replaced by a new
regime. erefore, proactive engagement with
the European Commission and other stake-
holders could be undertaken to inuence any
future changes in the EU GSP regime that would
benet Bangladesh. In the light of the fact that
several other LDCs are in the process of gradu-
ation, coordinated eorts could enhance the
chance of graduating LDCs having an extended
transition period from EBA and/or more liberal
GSP Plus provisions including continuation of
the EBA ROO for graduating LDCs.
If GSP Plus or an equally favourable scheme
cannot be secured, striking a free trade agree-
ment could be an option if the EU were inter-
ested. Although the market size in Bangladesh
may appear to be too small for the EU to con-
sider it for a negotiated deal, it is growing rap-
idly. Given the medium-term growth outlook,
Bangladesh’s economy is set to grow to more
than US$500 billion by 2025. According to
recent PricewaterhouseCoopers projections,
Bangladesh will be the 28th largest economy
by 2030, in terms of GDP measured in pur-
chasing power parity (PPP) dollars.30 Another
important feature that makes Bangladesh an
attractive partner for a free trade agreement is
its robust economic growth accompanied by a
highly protected trade policy regime. Indeed, it
has been shown that, except for just one, there
is no country that has applied average tari
rates higher than Bangladesh and yet achieved
a higher average growth rate (Razzaque, 2017).
A growing market shielded by high taris pro-
vides preferential partners with a large compet-
itive advantage (over others who do not have
such preferential access) and thus should be of
interest to many countries.
Undertaking a bilateral trade arrange-
ment with such a major partner as the EU
will be a mammoth task for a country such as
Bangladesh, which has very limited trade nego-
tiation capacity and does not have any bilateral
free trade agreement with any other country.
In the run up to graduation from LDC status,
serious attention should be given to consider all
options for securing favourable market access
in the EU and mobilising capacities for imme-
diate proactive engagements with all relevant
stakeholders.
Industrial upgradation for moving up
the global value chain
One element that an adaptation strategy should
include is industrial or economic upgrading to
move up the value chain. is may not be fea-
sible on a large scale, but many leading rms
will have the necessary capabilities for product
and process upgradation. Product upgrading
involves producing complex items, while process
upgrading requires advancing production meth-
ods in combination with using a skilled work-
force. Bangladesh has some capacity in the textile
industry, and improving that capacity may help
the garment sector upgrade into higher segments
of the value chain. Currently, a small number of
rms are oering product design to their buyers.
is capacity can be promoted further.
A review of country experiences by
Fernandez-Stark et al. (2011) reveals that, in the
case of upgrading into design and branding, a
strong commitment to growing the industry by
both the public and private sectors is needed
to develop the necessary talent and establish a
national brand. ey also found that successful
28 Bangladesh’s Apparel Exports to the EU
workforce development in the later stages of
the value chain leveraged knowhow in the
developed world by engaging foreign universi-
ties in countries successful in the apparel sec-
tor to help design curriculum for local training
programmes and by hiring foreign consultants
to help develop in-house talent. According to
Fernandez-Stark et al. (2011), instead of relying
solely on learning through experience, foster-
ing collaboration with successful training insti-
tutions in the developed world can speed up
rm-level learning for upgrading. A shortage of
specialised professionals and skilled workers in
Bangladesh is known to be a serious problem
for export-oriented rms including the apparel
sector. Industrial upgradation therefore must
consider the need for developing the necessary
human resource base.
Industrial upgradation will also imply pro-
moting competitiveness through technological
capacity building. Deepening of capital-inten-
sive production processes and automation have
already marked garment-making activities in
Bangladesh. Nevertheless, there is evidence
to suggest that, in comparison with countries
such as Cambodia, China, India and Vietnam,
the level of capital intensity in Bangladesh’s gar-
ment industry is much lower.31 As export pro-
duction technologies seem to converge, there
is considerable scope for improved labour pro-
ductivity driven by more technology-intensive
production processes.32
Ensuring compliance as expected from
credible suppliers for global consumers
Compliance will remain a major factor in
growing export business in the apparel sector.
Unfavourable working conditions and labour
issues attract widespread global attention, and
global brands will always avoid the factories
that cannot adhere to acceptable standards. As
mentioned above, various initiatives in recent
years have been implemented to improve work-
place safety standards and the working envi-
ronment (Moazzem and Sehrin, 2016). e
progress made in these areas should be consoli-
dated, and eorts must continue to make fur-
ther improvements. It is also important to take
greater ownership of these issues to maintain
good practices in a sustainable manner. During
the perception survey, some factory owners
mentioned not receiving higher prices or bigger
orders despite making progress on compliance
issues. However, better workplace standards
and practices should be seen as part of a long-
term investment and business growth strategy.
Attracting foreign direct investment in
the readymade garment sector
FDI can be a big boost for export growth and
eective integration into GVCs. In establish-
ing direct contact and business relationships
with global brands and retailers producing
high-value items, FDI can be instrumental.
FDI rms are known to secure higher unit
value prices for export products. Skill upgrad-
ing, improving productivity, positive spillover
eects arising from knowledge and technology
transfers and better management practices are
some of the direct impacts of participating in
FDI. e spillover eects can also benet local
rms, facilitating their industrial upgrading
and enhanced participation in GVCs. Among
other things, a weak investment climate and a
high cost of doing business discourage FDI in
Bangladesh. Since 2000, average yearly FDI as a
proportion of GDP in China, Cambodia, India,
and Vietnam has been 2.3 per cent, 7.8 per cent,
1.7 per cent and 5.4 per cent respectively, while
the comparable gure for Bangladesh has been
less than 1 per cent.33 Attracting foreign invest-
ment in Bangladesh’s RMG sector should thus
constitute a policy priority in its preparation for
graduation from LDC status.
Tackling excessive cost of doing
business to boost competitiveness
ere are certain areas in which Bangladesh
can transform its current challenges into
opportunities to boost external competitive-
ness. e issue of excessive cost of doing busi-
ness in Bangladesh is widely acknowledged.
A weak and inadequate infrastructure in con-
junction with inecient inland road transport
and trade logistics contribute to longer lead
times and a high cost of doing business, under-
mining competitiveness.34 Congestion in the
country’s main economic corridor, the Dhaka–
Chattogram highway, limited containerisation
and inecient handling and management of
containers, intricate customs processes, and an
inadequate port infrastructure all add to trad-
ing costs.35 is reduces trade volumes and
domestic value added (which includes wages
and prots). Within this reduced value added,
for an export-oriented apparel sector, there are
International Trade Working Paper 2019/02 29
two-way shipping costs involved: import of
raw materials and then export of nal prod-
ucts. e implication is that excessive trad-
ing costs make it increasingly dicult for
apparel-exporting rms to compete in world
markets.36 Improvements in these areas thus
may substantially help to recoup a part of the
lost trade preferences.
6. Conclusion
e impending graduation from LDC status
represents a major transition in terms of devel-
opment for Bangladesh. For a country of more
than 160 million people and a land area half
the size of the UK, confronting daunting chal-
lenges of frequent natural disasters, political
unrest and weak governance, to make this tran-
sition possible is nothing less than an amazing
achievement (Razzaque, 2018b). is is global
recognition of the socio-economic develop-
ment that Bangladesh has been able to achieve.
Graduation also gives rise to concerns about
potentially sizeable economic costs due to the
loss of access to various support measures asso-
ciated with LDC status. e available support
measures encompass a range of concessions,
commitments and provisions made by develop-
ment partners across the elds of development
nance, trade and technical assistance. Of this,
the most important consequence will be the
loss of trade preferences in the EU.
Taking advantage of duty-free market access
and relaxed ROO provisions, Bangladesh’s
apparel exports to the EU have risen to more
than US$20 billion. In the global clothing value
chain landscape, Bangladeshi rms operate
mainly in the low value-added segment of cut-
ting and making of apparel, and the principal
source of its competitive advantage is the low
costs of labour. e loss of duty-free access
could thus adversely impact the country’s com-
petitiveness and export prospects. In inter-
national trade, higher taris imposed against
a country’s suppliers are generally associated
with their lower exports, and tari preferences
tend to enhance the export response of the
preference-receiving countries. In this context,
applying a partial equilibrium model, which
was developed as part of the Commonwealth
Secretariat’s analytical framework to under-
standing the potential implications of gradu-
ation from LDC status, shows that the loss of
tari preferences in the EU could result in a
potential export loss of more than $2 billion for
Bangladesh.
It is worth pointing out that there are certain
caveats to the methodological approach and
results reported. Analytical frameworks are
simplied representations of the realities, failing
to capture many complex interactions involv-
ing the demand and supply sides. When the
MFA quotas were abolished from global trade
in 2005, many analysts predicted huge busi-
ness losses for Bangladesh – in sharp contrast
to an eventual acceleration of its export growth.
Considering post-graduation prospects, the
argument can be put forward that even with-
out any preferential treatment Bangladesh has
managed to succeed in the US apparel market.
Furthermore, trading is also about building net-
works and relationships. erefore, long-estab-
lished supply sources in Bangladesh may not be
replaced overnight. If EU importers have ben-
eted from Bangladesh’s duty-free access, they
might not have alternative and equally lucrative
sourcing opportunities elsewhere. Other LDCs
and developing countries enjoying EBA or GSP
Plus preferences currently do not have such
large supply-side capacities as Bangladesh.
at notwithstanding, there is no denying
that loss of preferences will put serious pres-
sure on Bangladesh’s competitiveness. ere
are certain measures Bangladesh can consider
to mitigate any potential adverse consequences.
ese include looking for an extended transi-
tion period (from EBA arrangements) for grad-
uating LDCs, possible options and strategies for
securing the GSP Plus scheme, widely regarded
as the most favourable EU preferential scheme
aer EBA, a negotiated bilateral trade deal
with the EU, etc. On the supply side, industrial
upgradation within apparel value chains includ-
ing technological upgradation in Bangladesh’s
garment industry, attracting FDI and ensur-
ing compliance with workplace standards
would help. Finally, the cost of doing business
30 Bangladesh’s Apparel Exports to the EU
is considered excessively high in Bangladesh
because of such factors as infrastructural bot-
tlenecks, inecient customs processes, incom-
petent port management and trade facilitation
measures, dysfunctional inland transport and
weak governance. Any improvements in these
areas will contribute to the improved competi-
tiveness of exporting rms.
In future, informed policymaking and
Bangladesh’s preparation for smooth gradua-
tion may be aided by several timely and gap-
lling analytical studies. ese include, among
others, analyses of the distribution of rents
from tari preferences between suppliers and
importers with a view to better appreciating
the likely impact on export competitiveness
following graduation and the role of preferen-
tial treatment in GVC positioning; exporters’
pricing strategies with and without preferences
(e.g. a comparative analysis of EU and US mar-
kets) to gauge competitiveness pressures; the
scope of industrial upgradation that is realisti-
cally feasible within GVCs for promoting export
competitiveness; industrial restructuring that is
taking place in China and its likely implications
for the global apparel market shares of dierent
suppliers; automation and deepening of capital-
intensive techniques and the implications for
development outcomes and industry competi-
tiveness; and the implications of dierent types
of possible post-graduation trading arrange-
ments with the EU.
Notes
1 Graduation from LDC status requires a country to
meet development thresholds under at least two of the
three pre-dened criteria (of per capita income, human
asset and economic vulnerability) in two consecutive
triennial reviews. Bangladesh qualied for graduation
by satisfying all three thresholds. It is to be noted that
there is also a provision for the ‘income-only’ gradua-
tion rule under which, if the 3-year average per-capita
gross national income of an LDC has risen to a level
at least double the graduation threshold, the country
could be eligible for graduation regardless of its situa-
tion under the other two criteria.
2 A summary of Bangladesh’s major socio-economic
achievements leading to graduation from LDC status
can be found in Razzaque (2018b).
3 World merchandise exports declined by a stagger-
ing US$2.5 trillion in 2015 (from the previous year),
and then again fell by more than $500 billion in 2016.
As many as 183 countries had experienced reduced
export earnings in 2015 (compared with the previ-
ous year), while for 112 countries export earnings
similarly declined in 2016. Given such a gloomy global
landscape, Bangladesh did much better by securing
modest growth in exports in both years.
4 e EPI has three components: exporters’ supply
capacity for a product, demand conditions and bilat-
eral ‘easiness to trade’. An exporter’s supply capacity
is estimated as a dynamic version of market share,
in which expected economic growth is considered to
augment the exporter’s capacity, and product-spe-
cic trade balance measured by the export–import
ratio and global margin of preference, which encom-
passes information on tari preference. Demand
conditions are captured through partners’ projected
imports, which are determined by projected GDP
and population growth, margin of preference in
the target market, and distance advantage, which
compares suppliers’ geographical distances with the
target market. e easiness to trade between two
countries is computed based on the actual trade
relative to hypothetical trade estimated by supply
and demand conditions. If easiness to trade between
countries is greater than 1, countries nd it easier
to trade between themselves relative to world mar-
kets. e export potential is then calculated by mul-
tiplication of estimated supply capacity, demand
conditions and bilateral easiness to trade. Potential
exports are estimated for disaggregated products at
HS 6-digit level. e aggregate export potential of
a country in a target market is the sum of product-
level export potentials.
5 Although Bangladesh enjoys duty-free access, there
could be various reasons for its not being able to
exploit the EU market fully. ese include underde-
veloped trade infrastructures, diculties in complying
with standards, quality and preferences of consum-
ers and any other barriers in developing relationships
with buyers/importers.
6 ere is some lack of clarity on these provisions for GSP
Plus.
7 Just one of the 27 international conventions has not yet
been ratied by Bangladesh. As regards condition (ii),
Bangladesh’s current share in all GSP-covered imports is
more than 16 per cent, which is much higher than the
6.5 per cent threshold. Finally, more than 90 per cent
of Bangladesh’s exports to the EU is in woven and knit
garments, comprising just one section of GSP-covered
imports.
8 According to one estimate, 96 per cent of Bangladesh’s
exports to the EU enjoyed tari-free access under the
EBA scheme in 2016 (European Commission, 2018a
and 2018b). e most likely cause of the remaining 4
per cent of exports not availing themselves of the pref-
erence was not fullling the ROO provisions.
International Trade Working Paper 2019/02 31
9 e local value added to qualify for preferential treat-
ment would increase from 30 per cent to 50 per cent
for all products. In the apparel sector, currently LDCs
can qualify for EBA facilities under single transfor-
mation of products (e.g. from fabric to clothing), but
under GSP Plus treatment products must go through
double transformation (i.e. from cotton to fabric to
clothing).
10 e second step thus involves the graduate coun-
try’s lost market share being distributed among the
non-graduates.
11 Developing an appropriate GEM can be very time-
consuming as well. One popular approach is to use
the Global Trade Analysis Project (GTAP) computable
general equilibrium model. But, in the GTAP model,
just one aggregate sector of textile and apparel is used,
unlike the trade data at the highly disaggregated level
used here.
12 is analysis does not consider the fact that gradu-
ation from LDC status could lead to more stringent
ROO impacting woven garments, as discussed earlier
in the paper.
13 is is one key advantage of partial equilibrium mod-
els in which the implications of individual products
can be evaluated.
14 is denition of GVC is taken from https://
globalvaluechains.org/concept-tools.
15 Bangladesh’s apparel exports are a prime example of
GVC-led trade.
16 e issue of low-value additions as a proportion of
overall GVC-led nal product retail prices has also
attracted a lot of attention in the context of primary
commodities’ supply chains. It is generally recognised
that a majority of developing countries including
LDCs and sub-Saharan African countries have failed
to add more value by processing their primary exports
and moving up the GVCs within which they spe-
cialise. Some commodity exporters are thought have
become trapped in captive value chains (Nissanke and
Mavrotas, 2010; Keane, 2012). It has been argued that
participating in the lower end of GVCs may lead to a
‘hollowing-out’ of the manufacturing sector. is dis-
advantageous process is also known as ‘immiserising
growth’ (Kaplinsky, 2005), a phenomenon recognised
within the case study GVC literature of the 1990s but
ignored by the current GVC discourse.
17 Data on rm-level costs by various activities and prot
margins are not available. Industry sources and key
informants suggest that it is the high volume of orders
that make it possible for most rms to operate even
with a small margin per unit.
18 For instance, the measurement units are oen in
kilogram and square metre equivalents. For garment
items, prices in these units generally will not make
much sense. Empirical work using these data mainly
focuses on determining the changes in variations in
these data rather than comparing the prices across
countries. Another problem with these data is that
they can be very noisy over time given, among other
things, the possible substantial changes in quality
mixes even within a specic category.
19 http://fashion2apparel.blogspot.com/2017/02/top-
10-retailers-fashion-brands.html
20 is IMF and UK Aid database on export quality can
be found here: https://www.imf.org/external/np/res/
ddimf/diversication.htm. e estimation method-
ology (Henn et al., 2013) employed derives quality
from unit values of disaggregated products. First, trade
prices are modelled as the function of unobservable
quality, exporters’ level of development, and distance
between exporters and importers. In the second step, a
quality augmented gravity equation is specied. en
from step one the quality relationship is substituted
into the specication in the step two equation, which
is then estimated separately for individual products.
Finally, the regression coecients are used to calculate
quality estimates.
21 At SITC-4, the broad category dened as ‘mineral
fuels, lubricants, and related materials’, Bangladesh is
shown to have unit values higher than those of China,
India and Vietnam. Bangladesh is not a major exporter
in the category and thus the higher unit prices reect a
very small quantity of a high-quality product.
22 e export quality database of IMF and UK Aid pro-
vides information only until 2014.
23 It needs to be pointed out that the data used for the
EU-specic unit value analysis do not explicitly con-
sider varying qualities. However, following Reis and
Farole (2012) the measurement of the relative quality
has been dened as the unit value of any product rela-
tive to the 90th percentile unit value of the same prod-
uct across countries. e 90th percentile of the unit
values is considered the world standard. Higher values
of the index correspond to higher quality levels. e
closer a country’s position to the origin of the quality
ladder, the lower the quality and vice versa. e total
length of the quality ladder shows the potential for
further quality improvement of a specic product.
24 Some of the biggest brands that produce in Bangladesh
include Benetton, C&A, Carrefour, H&M, J.C. Penney,
Levi’s, Gap, Walmart, Target, Tesco and Zara.
25 For example, see the Global Sourcing Survey 2018 by
Asia Inspection: https://s3.asiainspection.com/images/
news/2018Q1/AI_Q1_2018_Barometer_ survey_
results_Jan2018.pdf (accessed 6 November 2018).
26 Since the collapse of a factory building (Rana Plaza)
in 2013, killing more than a thousand workers, two
western buyers’ platforms – Accord and Alliance –
have been involved in working with the government,
industry associations, workers and local and interna-
tional NGOs, and development partners to improve
workplace safety in Bangladesh’s RMG sector.
27 ey explained that their current protability per sea-
son is very low. It is only because they receive orders
for three seasons that they can stay aoat.
28 is is as per the provision stipulated in Article 17,
paragraph 2 of Regulation (EU) No. 978/2012 of the
European Parliament and of the Council dated 25
October 2012.
29 As mentioned earlier, if Bangladesh does not qualify
for GSP Plus, it will be eligible for the Standard GSP
scheme, which is much less attractive. e Standard
GSP tari rate on apparel in most cases will be 9.6 per
cent (as against zero in all apparel-related tari lines
under EBA and GSP Plus) in comparison with an
MFN rate around 12 per cent. Moreover, the eligibility
32 Bangladesh’s Apparel Exports to the EU
of most developing countries for Standard GSP means
there cannot be any gains in competitiveness.
30 In 2030 Bangladesh’s GDP is projected to reach PPP
US$1.34 trillion, while by 2050 it is expected to grow
further to PPP $3.06 trillion to become the 23rd largest
economy in the world. Along with its overall economic
growth, Bangladesh is experiencing a rapid expan-
sion of the middle class and, with it, rising disposable
incomes and a high propensity to spend on a new and
wide range of products and services. According to one
estimate in 2017, the consumer goods sector grew 9
per cent to $3.4 billion.
31 Razzaque and Dristy (2018) estimate that as against
Bangladesh’s employing 142 workers in producing gar-
ment items worth US$1 million, China and Vietnam
each require just 48 workers for the same size of export
production. e comparable numbers of workers for
India and Cambodia are 59 and 75 respectively.
32 is could, however, imply that employment opportu-
nities in the sector would diminish. In fact, the impact
of automation and more capital-intensive production
processes have already been experienced. For instance,
as Razzaque and Dristy (2018) point out, between
2010 and 2016 Bangladesh’s clothing exports more
than doubled from $12.5 billion to $28 billion, but jobs
in the sector grew only marginally from 3.6 million to
4 million. In future, the garment industry will have to
grow at a much faster rate to generate a modest expan-
sion in employment.
33 e FDI stock as a percentage of GDP for Bangladesh,
6 per cent, is far lower than that of its comparators: for
instance, the FDI stock for Cambodia increased from
about 10 per cent in 1995 to more than 80 per cent in
2016, while Vietnam’s share increased from around 28
per cent to more than 55 per cent.
34 e lead time – the number of days from the conr-
mation of any orders to goods delivered to port and
turned over to the freight forwarding company – is
also an important determinant of competitiveness in
the apparel export sector.
35 World Bank (2016) provides a detailed analysis of
these issues.
36 It should be pointed out that in the World Bank’s ease
of doing business index, Bangladesh ranks among the
worst performing countries (176th out of 190 coun-
tries in the index for 2019).
International Trade Working Paper 2019/02 33
Annex
Table A1. Bangladesh’s total and RMG exports to the EU
Economy Total
exports
(million $)
RMG
exports
(million $)
Share of
RMG to total
exports (%)
Share in
Bangladesh’s
total exports (%)
Share in
Bangladesh’s
RMG exports (%)
Germany 5,890.72 5,579.51 94.72 16.06 18.22
UK 3,989.12 3,724.26 93.36 10.88 12.16
Spain 2,457.98 2,277.77 92.67 6.7 7.44
France 2,004.97 1,851.93 92.37 5.47 6.05
Italy 1,559.92 1,454.04 93.21 4.25 4.75
Netherlands 1,205.37 935.38 77.6 3.29 3.06
Poland 965.22 864.85 89.6 2.63 2.82
Belgium 877.9 705.57 80.37 2.39 2.30
Denmark 693.29 667.95 96.35 1.89 2.18
Sweden 579.33 533.09 92.02 1.58 1.74
Czech Republic 497.39 492.29 98.98 1.36 1.61
Ireland 175.81 169.88 96.62 0.48 0.55
Portugal 86.63 68.83 79.45 0.24 0.22
Slovakia 84.97 84.15 99.03 0.23 0.27
Slovenia 65.74 57.52 87.49 0.18 0.19
Greece 57.93 50.34 86.9 0.16 0.16
Austria 36.47 27.72 76.02 0.1 0.09
Finland 33.13 29.92 90.32 0.09 0.10
Romania 24.96 19.46 77.94 0.07 0.06
Croatia 16.58 15.28 92.17 0.05 0.05
Hungary 6.44 2.72 42.32 0.018 0.009
Malta 6.2 6.16 99.28 0.017 0.020
Lithuania 6.11 3.78 61.93 0.017 0.012
Cyprus 4.86 1.37 28.19 0.013 0.004
Bulgaria 4.35 3.25 74.67 0.012 0.011
Estonia 1.45 1.26 86.88 0.004 0.004
Latvia 1.38 0.75 54.38 0.004 0.002
Luxembourg 0.29 0.29 100 0.001 0.001
Bangladesh’s total
exports to EU
21,334.51 19,629.31 92.01 58.18 64.12
Bangladesh’s total
exports
36,668.17 30,614.76 83.49 100 100
Source: Authors’ presentation using data from the EPB.
34 Bangladesh’s Apparel Exports to the EU
Table A2. Major export items of Bangladesh to the EU
HS
code
Product description Bangladesh’s
exportstoEU
(million $)
Bangladesh’s
total exports
(million $)
Share in
Bangladesh’s
exports by
product (%)
Share in
Bangladesh’s
RMG exports
to EU (%)
610910 T-shirts, singlets and other vests of
cotton, knitted or crocheted
3,833.4 5,235.8 73.2 17.90
620342 Men’s or boys’ trousers, bib and
brace overalls, breeches and
shorts, of cotton
2,912 5,399.6 53.9 13.60
620462 Women’s or girls’ trousers, bib and
brace overalls, breeches and
shorts of cotton
1,777.9 3,095.7 57.4 8.30
611020 Jerseys, pullovers, cardigans,
waistcoats and similar articles,
of cotton, knitted or crocheted
1,618.9 2,393.5 67.6 7.56
611030 Jerseys, pullovers, cardigans,
waistcoats and similar articles,
of man-made bres, knitted
1,528.1 2,096.7 72.9 7.13
620520 Men’s or boys’ shirts of cotton
(excluding knitted or crocheted,
nightshirts, singlets
841.5 1,851.5 45.5 3.93
610462 Women’s or girls’ trousers, bib and
brace overalls, breeches and
shorts of cotton, knitted
793.6 1,015.7 78.1 3.71
610510 Men’s or boys’ shirts of cotton,
knitted or crocheted (excluding
nightshirts, T-shirts, singlets)
708.3 942.9 75.1 3.31
611120 Babies’ garments and clothing
accessories of cotton, knitted or
crocheted (excluding hats)
526.2 767.2 68.6 2.46
610990 T-shirts, singlets and other vests of
textile materials, knitted or
crocheted (excluding cotton)
493.2 760.6 64.8 2.30
621210 Brassieres of all types of textile
materials, whether or not
elasticated, including knitted or
crocheted
319.8 473.3 67.6 1.49
620343 Men’s or boys’ trousers, bib and
brace overalls, breeches and
shorts of synthetic bres
309.4 567.3 54.5 1.44
620640 Women’s or girls’ blouses, shirts
and shirt-blouses of man-made
bres (excluding knitted or
crocheted)
279.4 395.2 70.7 1.30
610711 Men’s or boys’ underpants and
briefs of cotton, knitted or
crocheted
238.9 373.5 64 1.12
610442 Women’s or girls’ dresses of
cotton, knitted or crocheted
(excluding petticoats)
236.8 314.9 75.2 1.11
620630 Women’s or girls’ blouses, shirts
and shirt-blouses of cotton
(excluding knitted or crocheted)
225.3 426.3 52.8 1.05
(Continued)
International Trade Working Paper 2019/02 35
Table A3. Selected countries shares in extra-EU apparel imports, 1990–2017 (%)
1990 1995 2000 2005 2010 2015 2017
China 13.26 13.80 19.99 35.61 45.95 37.84 33.84
Bangladesh 0.96 4.03 6.36 7.02 9.72 16.46 18.46
Turkey 14.52 13.22 13.06 15.36 12.25 11.38 11.15
India 4.80 6.65 5.18 6.67 7.05 6.55 6.18
Cambodia 0.00 0.16 0.74 0.98 1.21 3.72 4.81
Vietnam 0.22 1.13 1.95 1.43 2.29 3.80 4.07
Pakistan 1.35 1.76 1.51 1.58 1.67 2.80 3.28
Morocco 2.57 6.56 5.71 4.48 3.20 3.02 3.20
Tunisia 3.79 6.35 6.28 4.62 3.28 2.32 2.24
Sri Lanka 0.90 1.88 2.54 2.03 2.19 2.02 1.90
Indonesia 2.02 3.90 4.81 2.64 1.99 1.64 1.66
Myanmar 0.00 0.06 0.75 0.37 0.18 0.47 1.40
Hong Kong, China 14.72 12.89 8.93 4.23 0.63 0.83 0.62
Thailand 2.81 2.34 2.66 1.78 1.32 0.67 0.61
Egypt, Arab Rep. 0.22 0.57 0.66 0.75 0.63 0.53 0.49
United States 1.26 1.80 0.96 0.65 0.56 0.57 0.49
Source: UN COMTRADE and ITC.
Table A2. Major export items of Bangladesh to the EU (Continued)
HS
code
Product description Bangladesh’s
exportstoEU
(million $)
Bangladesh’s
total exports
(million $)
Share in
Bangladesh’s
exports by
product (%)
Share in
Bangladesh’s
RMG exports
to EU (%)
620193 Men’s or boys’ anoraks,
windcheaters, wind jackets and
similar articles, of man-made
bres
212 400.6 52.9 0.99
610342 Men’s or boys’ trousers, bib and
brace overalls, breeches and
shorts of cotton, knitted
202.7 350.9 57.8 0.95
610610 Women’s or girls’ blouses, shirts
and shirt-blouses of cotton,
knitted or crocheted
197.1 279.9 70.4 0.92
620530 Men’s or boys’ shirts of man-made
bres (excluding knitted or
crocheted, nightshirts, singlets)
196.6 318.5 61.7 0.92
Source: Authors’ presentation using data from the ITC.
36 Bangladesh’s Apparel Exports to the EU
Table A4. Product-wise loss in Bangladesh’s exports to the EU
CN 8-digit
code
Product description Bangladesh’s
exports to the
EU (million $)
EU imports from
the world (million $)
Market share of
Bangladesh
MFNtari GSP
tari
Potential decline in
Bangladesh’s exports
(million $)
Under MFN Under GSP
61091000 T-shirts, singlets and other vests of cotton, knitted or
crocheted
3,146.8 12,831.2 24.5 12 9.6 –370.6 –296.5
62034235 Men’s or boys’ trousers and breeches of cotton (excl. Denim,
cut corduroy, knitted or crocheted, industrial and
occupational, bib and brace overalls and underpants)
956.5 4,309.0 22.2 12 9.6 –117.3 –93.8
61103099 Women’s or girls’ jerseys, pullovers, cardigans, waistcoats and
similar articles, of man-made bres, knitted or crocheted
(excl. Lightweight ne knit roll, polo or turtleneck jumpers
and pullovers and wadded waistcoats)
978.4 7,662.7 12.8 12 9.6 –114.7 –91.7
62034231 Men’s or boys’ trousers and breeches of cotton denim (excl.
Knitted or crocheted, industrial and occupational, bib and
brace overalls and underpants)
861.0 5,942.8 14.5 12 9.6 –102.3 –81.9
62052000 Men’s or boys’ shirts of cotton (excl. Knitted or crocheted,
nightshirts, singlets and other vests)
731.3 4,614.0 15.8 12 9.6 –90.8 –72.7
61102099 Women’s or girls’ jerseys, pullovers, cardigans, waistcoats and
similar articles, of cotton, knitted or crocheted (excl.
Lightweight ne knit roll, polo or turtleneck jumpers and
pullovers and wadded waistcoats)
711.0 4,769.3 14.9 12 9.6 –85.3 –68.2
61046200 Women’s or girls’ trousers, bib and brace overalls, breeches
and shorts of cotton, knitted or crocheted (excl. Panties
and swimwear)
658.2 3,259.4 20.2 12 9.6 –76.1 –60.9
(Continued)
International Trade Working Paper 2019/02 37
Table A4. Product-wise loss in Bangladesh’s exports to the EU (Continued)
CN 8-digit
code
Product description Bangladesh’s
exports to the
EU (million $)
EU imports from
the world (million $)
Market share of
Bangladesh
MFNtari GSP
tari
Potential decline in
Bangladesh’s exports
(million $)
Under MFN Under GSP
62046231 Women’s or girls’ cotton denim trousers and breeches (excl.
Industrial and occupational, bib and brace overalls and
panties)
627.5 4,540.8 13.8 12 9.6 –70.4 –56.3
61051000 Men’s or boys’ shirts of cotton, knitted or crocheted (excl.
Nightshirts, t-shirts, singlets and other vests)
610.2 2,565.7 23.8 12 9.6 –70.3 –56.3
61102091 Men’s or boys’ jerseys, pullovers, cardigans, waistcoats and
similar articles, of cotton, knitted or crocheted (excl.
Lightweight ne knit roll, polo or turtleneck jumpers and
pullovers and wadded waistcoats)
614.0 3,858.0 15.9 12 9.6 –69.4 –55.5
62046239 Women’s or girls’ trousers and breeches, of cotton (not of cut
corduroy, of denim or knitted or crocheted and excl.
Industrial and occupational clothing, bib and brace overalls,
briefs and tracksuit bottoms)
577.3 3,416.7 16.9 12 9.6 –67.8 –54.3
62034290 Men’s or boys’ shorts of cotton (excl. Knitted or crocheted,
swimwear and underpants)
436.5 1,520.2 28.7 12 9.6 –51.6 –41.3
61112090 Babies’ garments and clothing accessories, of cotton, knitted
or crocheted (excl. Gloves, mittens, mitts and hats)
438.9 2,965.2 14.8 12 9.6 –48.7 –39.0
38 Bangladesh’s Apparel Exports to the EU
61099020 T-shirts, singlets and other vests of wool or ne animal hair or
man-made bres, knitted or crocheted
368.8 5,777.2 6.4 12 9.6 –40.4 –32.3
61103091 Men’s or boys’ jerseys, pullovers, cardigans, waistcoats and
similar articles, of man-made bres, knitted or crocheted
(excl. Lightweight ne knit roll, polo or turtleneck jumpers
and pullovers and wadded waist
286.4 1,729.2 16.6 12 9.6 –32.2 –25.8
61071100 Men’s or boys’ underpants and briefs of cotton, knitted or
crocheted
210.4 1,731.8 12.1 12 9.6 –23.5 –18.8
62063000 Women’s or girls’ blouses, shirts and shirt-blouses of cotton
(excl. Knitted or crocheted and vests)
173.6 2,171.2 8.0 12 9.6 –22.9 –18.3
62053000 Men’s or boys’ shirts of man-made bres (excl. Knitted or
crocheted, nightshirts, singlets and other vests)
168.1 439.2 38.3 12 9.6 –22.1 –17.7
62064000 Women’s or girls’ blouses, shirts and shirt-blouses of
man-made bres (excl. Knitted or crocheted and vests)
223.2 4,515.8 4.9 12 9.6 –21.3 –17.0
61034200 Men’s or boys’ trousers, bib and brace overalls, breeches and
shorts of cotton, knitted or crocheted (excl. Swimwear and
underpants)
186.6 1,303.1 14.3 12 9.6 –20.6 –16.5
Top 20 products 12,964.4 79,922.6 16.2 –1,518.4 –1,214.8
Source: Authors’ presentation using data from the EU Comext database.
International Trade Working Paper 2019/02 39
Figure A1. EU apparel market shares (extra-EU) by selected suppliers (%)
Source: Authors’ presentation using data from the ITC.
40 Bangladesh’s Apparel Exports to the EU
FigureA2. ComparisonofunitvaluesforapparelproductsexportedtotheEUbydierentexporters
Source: Authors’ presentation using data from the EU Comext database.
International Trade Working Paper 2019/02 41
Figure A3. Quality ladders of apparel products in the EU market
Source: Authors’ analysis using data from the Comext database
42 Bangladesh’s Apparel Exports to the EU
References
Commonwealth Secretariat (2018) A Guide to Leaving
Least Developed Country Status – e Global Value
Chain Perspective: Adapting to Competitiveness
Challenges, Commonwealth Secretariat, London.
Cornelia, S (2012) Apparel Exports – Still a Path for
Industrial Development? Dynamics in Apparel
Global Value Chains and Implications for Low-
income Countries, Working Paper No. 34, Austrian
Foundation for Development Research, Vienna.
Decreux, Y and J Spies (2016) Export Potential Assessments:
A Methodology to Identify Export Opportunities
for Developing Countries, available at: https://
exportpotential.intracen.org/media/1089/epa-
methodology_141216.pdf (accessed 20 October
2018).
Der Marel, E (2015) Positional on the Global Value Chain
Map: Where Do You Want to Be?, ECIPE Occasional
Paper No 01/2015, available at: http://ecipe.org/app/
uploads/2015/02/Occasional-Paper-012015_Last1.
pdf (accessed 7 November 2018).
European Commission (2018a) Mid-Term Evaluation
of the EU’s Generalised Scheme of Preferences (GSP),
European Commission, Brussels.
European Commission (2018b) Report on the Application
of Regulation (EU) No 978/2012 Applying a Scheme of
Generalised Tari Preferences and Repealing Council
Regulation (EC) No 732/2008, European Commission,
Brussels.
Fernandez-Stark, K, S Frederick and G Gere (2011)
e Apparel Global Value Chain: Economic Upgrad-
ing and Workforce Development, Duke Centre for
Globalization, Governance & Competitiveness, Duke
University, Durham, NC.
Gere, G and S Frederick (2010) e Global Apparel
Value Chain, Trade, and the Crisis: Challenges and
Opportunities for Developing Countries, in Cattaneo,
O, G Gere and C Staritz (eds), Global Value Chains
in a Postcrisis World: A Development Perspective,
World Bank, Washington, DC, pp. 157–208.
Hassan, M (2014) ‘Supply chain management in ready-
made garment industry, Bangladesh’, Asia Business
Consortium, available at: http://journals.abc.us.org/
index.php/abr/article/view/1056 (accessed 6 November
2018).
Henn, C, C Papageorgiou and N Spatafora (2013) Export
Quality in Developing Countries, IMF Working Paper
WP/13/108, International Monetary Fund, Washington,
DC.
International Trade Centre (2016) Kenya: Textile and Clothing
Value Chain Roadmap 2016–2020, International Trade
Centre, Geneva.
Kaplinsky, R (2005) Globalisation and Poverty: Between a
Rock and a Hard Place, Polity, London.
Kaplinsky, R, O Memedovic, M Morris and J Readman
(2003) e Global Wood Furniture Value Chain: What
Prospects for Upgrading by Developing Countries: e
Case of South Africa, UNIDO, Vienna.
Keane, J (2012), ‘e governance of global value chains
and the eects of the global nancial crisis trans-
mitted to producers in Africa and Asia’, Journal of
Development Studies, Vol. 48, 783–797.
Moazzem, KG and F Sehrin (2016) ‘Economic upgrad-
ing in Bangladesh’s apparel value chain during the
post-MFA period: an exploratory analysis’, South Asia
Economic Journal, Vol. 17 No. 1, 73–93.
Mudambi, R (2008) ‘Location, control and innovation in
knowledge-intensive industries’, Journal of Economic
Geography, Vol. 8 No. 5, 699–725.
Nissanke, M and G Mavrotas (eds) (2010) Commodities,
Governance and Economic Development Under
Globalization, Palgrave Macmillan, Basingstoke.
Rahman, M and I Bari (2019) ‘Pathways to Bangladesh’s
sustainable LDC graduation: Prospects, challenges
and strategies’, in Bhattacharya, D. (ed.), Bangladesh’s
Graduation from Least Developed Countries: Pitfalls
and Promises, Routledge, Abingdon.
Razzaque, MA (2018a) ‘Revitalising Bangladesh’s export
trade: Policy issues for growth acceleration and diver-
sication’, BEI Journal, Vol. 1 No. 1., 1–52 (Bangladesh
Enterprise Institute, Dhaka).
Razzaque, MA (2018b). ‘e tipping point: Bangladesh’s
graduation from the group of least developed countries’,
Harvard International Review, Summer 2018, 34–38.
Razzaque, MA (2017) ‘Global trade slowdown and glo-
balisation backlash: Trade and development perspec-
tives from Bangladesh’, paper presented at the ISAS
Workshop on Revisiting Globalisation: Comparing
Country Experiences from South Asia and the World,
Organised by the National University of Singapore, 12
September 2017.
Razzaque, MA and NT Dristy (2018) ‘Automation, jobs,
and industrialisation’, Policy Insights, April 2018, 6–11
(Dhaka).
Razzaque, MA and J Keane (2016) ‘Delivering inclusive
global value chains’, International Trade Working
Paper 2016/10, Commonwealth Secretariat, London,
accessed on: https://www.oecd-ilibrary.org/docserver/
5jm2jfd5xfmv-en.pdf?expires=1548076077&id=id&a
ccname=guest&checksum=EB066F86EDA692BF106
4CC44BE15EA1D (6 November 2018).
Reis, J and T Farole (2012) Trade Competitiveness
Diagnostic Toolkit, World Bank, Washington, DC.
Staritz, C (2012) ‘Apparel exports – still a path for indus-
trial development? Dynamics in apparel global
value chains and implications for low-income coun-
tries’, Working Paper 34, Austrian Foundation for
Development Research, Vienna.
UNCTAD (2016) e Least Developed Countries Report
2016: e Path to Graduation and Beyond: Making the
Most of the Process, UNCTAD, Vienna.
World Bank (2016) Towards New Sources of Competitiveness
in Bangladesh: Key Findings of the Diagnostic Trade
Integration Study, World Bank, Washington, DC.
International Trade Working Paper 2019/02 43
