Square Textiles Limited

Chapter 1

Introduction

1.1 INTRODUCTION

The performance of the export sector, fuelled by a phenomenal growth of the readymade garments (RMG), has been one of the most notable success stories of Bangladesh. The role of the RMG sector as the only driver to this apparently spectacular performance is reflected in the fact that RMG exports were just over US$10 million in 1985 (or 10 per cent of total exports), but within the next two decades they increased to over US$6 billion, accounting for more than three-quarters of the country’s total export receipts.1 As the apparel making is characterised by a highly labour-intensive production process, the growth in exports has resulted in a remarkable expansion in employment. Just about 0.1 million people were employed in the RMG industry in the mid-1980s, but over the next 20 years it grew rapidly to reach about 1.9 million – 80 per cent of whom being women.2 According to one estimate, if jobs created in the complimentary enterprises as a result of the growth in this sector are considered, the number of people either directly or indirectly depending for their employment on the existence and expansion of the RMG sector will rise to three millions.

The growth and development of the RMG industry in Bangladesh was the result of an international “managed trade” regime in the sector which caused global dispersion of production by limiting imports from countries that would have a larger volume of exports were they not constrained by their quota allocations. While the intention was to provide protection to domestic manufacturing units in the importing countries from the relatively efficient producers in developing countries, the operation of MFA quotas in the process led to exporting opportunities in countries where textile and clothing were not traditional export items. Many international business firms, in particular those from the Asian newly industrialising economies (NIEs), facing binding quota restrictions in...