Profitability and Diversity Among Knitwear‐producing Firms in Bangladesh: The Prospects of a Labor‐intensive Industry in a Least Developed Country

Abstract

This paper assesses the profitability and productivity of the knitwear industry in Bangladesh taking into account the sector's role in poverty reduction. Using firmlevel data collected in 2001, rate of return and total factor productivity were used to gauge the extent and determinants of the profitability of the industry. In addition, stochastic frontier analysis was used to assess variability in productivity. The estimation results indicate high profitability of the knitwear firms on average. In Bangladesh, the dynamic development of the industry has entailed great diversity in efficiency in comparison with the garment industries of other developing countries. Although there is a significant scale effect in profitability and productivity, no supporting evidence was found for the positive impact on competitiveness of industrial upgrading in terms of usage of expensive machinery, vertical integration, and industrial agglomeration.d eve_089 340..366

Effect of agglomeration on technical efficiency of small and medium‐sized garment firms in Egypt

“…Given present technology and inputs, Egyptian garment firms can increase production by 16.8 percentage points. This estimate of TE exceeds that of textile and garment firms in other countries: 54.9% in Kenya and Bangladesh (Fukunishi, 2009), 60.0% for textile manufacturers in Kenya (Ngui‐Muchai & Muniu, 2012), 77.4% to 82.9% for clothing and footwear manufacturers in Malawi (Chirwa, 2002), 50.3% and 50.6% for fabric knitters and garment makers in Bangladesh (Bakht et al, 2009), 63.0% for Indonesia's garment industry (Hill & Kalirajan, 1993). The average level of TE of agglomerated firms is estimated at 87.0%, while it is 71.3% for non‐agglomerated firms.…”

“…For estimation, it is transformed to a logarithm. Value added was frequently used instead of gross output to estimate production functions for the garment industry if firms subcontract materials from a buyer (Bakht, Yamagata, & Yunus, 2009; Fukunishi, 2009). However, subcontracting is not widespread in Egypt's garment industry.…”

Unfolding Industrial Output: A Study of India’s Formal Manufacturing Sector

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Competitive Position of Bangladesh and China in the Global Clothing Export Market: An Analysis of Revealed Comparative Advantage

“…In some instances, those predictions were accurate for African countries (Morris, Barnes, 2009;Rolfe, Woodward, 2005). On the other hand, several Asian nations, specifically Bangladesh, Vietnam and Cambodia, have gained astonishing development by raising their proportion of the global exports of RMG products after the MFA phase (Bakht et al, 2009;Chowdhury et al, 2006;Joarder et al, 2010;Hasan, 2013;Yunus, Yamagata, 2012).…”