How many times have you looked at the tag of a piece of clothing in a store and saw “Made in Bangladesh”? Walk into any clothing store and odds are that you’ll find something that was made in a small South Asian country. Beyond just your shopping trip, Bangladesh has built a name for itself in the global economy for its garments manufacturing industry – one that has allowed it to boast an economic growth that outpaces huge rivals like India.
From producing things like T-shirts to jeans to many other simple clothing apparel, the country has been applauded by the international community for the way it has harnessed the power of the industry to employ millions of people, especially women, and drastically reduce extreme poverty domestically. With all this in mind, it seems almost like Bangladesh is walking into a success story, right? Well, it’s not that simple, and in fact, the government’s infatuation with the profits dripping from the garment industry has blinded leaders to the problem of relying on just one sector to drive economic growth.
Overdependence
Perhaps one of the most clear-cut issues with Bangladesh’s garment and textile industry is just how badly the country of more than 160 million people depends on it. The industry accounts for about 10% of the total gross domestic product and an astonishing 85% of exports. This reveals how easy it would be for Bangladesh to fall into an economic recession if anything were to affect clothing supply lines around the world, as happened during the COVID-19 pandemic.
On top of that, the sector employs more than four million people, mostly women, and indirectly supports the livelihoods of an additional forty million Bangladeshis. That means that if revenues drop among factories or clothing supply lines, it will impact almost 45 million people across the country.
Beyond the industry taking up a significant portion of the country’s revenue, Bangladesh also depends on the United States and the European Union as buyers of their garment and textile products. The two regions make up a combined 80% of the industry’s export value, meaning that Bangladesh needs American and European countries to continue to buy their products to sustain its growth. This is especially concerning because, as trade agreements change and competition rises, the U.S. and E.U are becoming increasingly unreliable trade partners for Bangladesh, placing the garment and textile industry in an unstable position.
Competition
One of the biggest factors that drew international investors and buyers to Bangladesh was the dirt-cheap prices of the clothes that it sells, prices which were once comparable to those of China. However, Vietnam recently overtook Bangladesh as the second biggest exporter of garments and textiles. This is just one symptom of an increasingly competitive global market for clothes, with countries like Thailand and Nigeria starting to offer cheaper and more attractive products.
This is especially true labour as costs in Bangladesh begin to rise – as cheap labour is one of the most desirable qualities in any manufacturing sector. Other developing countries, like the aforementioned Thailand and Nigeria, have access to cheaper labour, and cheaper production costs, and have therefore been able to eat up a larger and larger share of the market.
Despite facing the heat of competitive forces that threaten the one industry Bangladesh relies on, the country has made little effort to increase the appeal of its products. Among garment factories, there have been insufficient efforts to modernise production, increase workers’ welfare, or invest in more efficient supply chains. Among leaders and politicians, mismanagement of funds and an inability to rapidly reinvest profits into advancing infrastructure has truly crippled Bangladesh’s garment industry compared to other countries. Where Vietnam rose 53 to 39 in the World Bank’s Logistics Performance Index, Bangladesh fell from 79 to 100, despite on-paper economic growth.
What Can Be Done for Bangladesh?
Through these statistics, it’s clear that things need to change. The garment and textile industry in Bangladesh will not be able to continue to sustain the entire country’s growth as it exists now. The nation needs to make a concentrated effort to improve the sector and also diversify the national economy.
For one, the government needs to begin collaborating domestically with factory owners and garment companies to become more competitive. This means digitising operations like wages, data collection, communication and more throughout the sector. There also needs to be a push to modernise infrastructure like machinery and transportation to provide more efficient production that can generate competitive prices in the global market.
More than anything, however, the government needs to take a more active role in ensuring workers’ welfare, and encouraging innovation and upward mobility among the lower class, specifically the poor women who make up most of the industry. This can be achieved through subsidising company training programs and expanding education for working women – to prepare them for a more service-oriented garment industry.
In a more macroeconomic sense, the country’s elite and politicians need to make a genuine effort to diversify the economy. Any country that relies on one sector too much places itself in a dangerous position, as we’ve seen in Venezuela and Nigeria with their oil industries, and China with its manufacturing. Investing in existing large sectors like agriculture and telecommunications and preparing them to be export-oriented can help to alleviate economic pressure from the garment industry.
The Future
While the garment and textile industry has been a ‘Hail Mary’ in thrusting Bangladesh into high economic growth and poverty reduction, its decreasingly appealing edge in an increasingly competitive market and the country’s overdependence on the sector’s revenue has placed the national economy into a dangerous predicament. The industry will not be able to continue to support the betterment of the 160 million Bangladeshis who live in the country.
In the meantime, however, the amount of ‘Made in Bangladesh’ labels will not be going away. You will likely continue to see them all around the shopping mall for years to come. But hopefully, one day, Bangladesh will be able to boast more from its economy than cheap clothes.
