The Structure of the Bangladesh's Economy

Bangladesh is described as the “Next 11” or “Frontier 5” and it is expected that it will grow to be a key player in the world economy. Macro-economic dates, such as GDP growth rate which keeps as high as 6% since 2000’s, are indicators for the potential of Bangladesh’s economy. The Ready-Made Garment (RMG) sector is the country’s most dominant industry as well as its leading industry to earn foreign currency. It plays an important role not only in domestic economy, but also international market. The thriving RMG sector accounts for approximately 80% of total exports. As a major apparel products exporter, Bangladesh is ranked in 4^thplace behind China, Hong kong, and Italy in the supply of apparel goods to the world market.

     Even though RMG sector in Bangladesh is making remarkable progress, the industry stands on a fragile base. The following aspects should be taken into account when evaluating the real circumstance surrounding RMG sector: (1) RMG sector is highly dependent on imported raw materials specifically from China and India; (2) The RMG sector, which is divided into two categories, woven and knit, can only self sustain in knit sector. While knit sector supply meets most demands, woven sector that make higher value add-on products is far behind at about 20%; (3) Bangladesh’s competitive advantage is found largely in lower wages among than other competing countries such as China, India, Cambodia, Vietnam and so forth. This fact is strongly linked to working condition of RMG workers, which represent current tragedies in RMG factories; (4) Sourcing countries has been changing and it depends on international market trends. The possibility of Bangladesh remaining in its current stage is uncertain due to changing conditions in the external environment.