An Inquiry Into the Rapid Growth of the Garment Industry in Bangladesh

GRIPS Discussion Paper 11-10

An Inquiry into the Rapid Growth of the Garment Industry in Bangladesh

By

Khondoker Abdul Mottaleb Tetsushi Sonobe

September 2011

National Graduate Institute for Policy Studies 7-22-1 Roppongi, Minato-ku, Tokyo, Japan 106-8677

GRIPS Policy Research Center

Discussion Paper : 11-10

An Inquiry into the Rapid Growth of the Garment Industry in Bangladesh

Khondoker Abdul Mottaleb National Graduate Institute for Policy Studies, Tokyo Tetsushi Sonobe Foundation for Advanced Studies on International Development, and National Graduate Institute for Policy Studies, Tokyo

Abstract The export-oriented garment industry in Bangladesh has grown rapidly for the last three decades and now ranks among the largest garment exporters in the world. While its

early success is attributed to the initial technology transfer from South Korea, such a one-time infusion of knowledge alone is insufficient to explain the sustained growth for three decades. This paper uses primary data collected from knitwear manufacturers

and garment traders to explore the process of the continuous learning of advanced skills and know-how. It finds, among other things, that the high profitability of garment

manufacturing due to the initial infusion of specific human capital attracted a number of highly educated entrepreneurs to the industry, that the division of labor between manufacturers and traders has facilitated the expansion of the industry, and that enterprise growth has lasted long because of the continuous learning from abroad by the highly educated entrepreneurs.

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GRIPS Policy Research Center

Discussion Paper : 11-10

Acknowledgement We thank the editor, two anonymous referees, Lizbeth Navas-Aleman, Tatsufumi Yamagata, and Keijiro Otsuka for many helpful comments. We thank the Bangladesh

Knitwear Manufacturers and Exporters Association and the Bangladesh Garment Manufacturers and Exporters Association for their cooperation...