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Bangladesh Institutional Diagnostic – Chapter 5


Bangladesh Institutional Diagnostic

Chapter 5: Informal institutions, the RMG sector, and the present challenge of export diversification in Bangladesh

Chapter Overview

List of tables, figures, and boxes

  1. Introduction
  2. Review of the literature on export diversification
  3. Overview of the RMG and overall export sector in Bangladesh
  4. The ‘RMG model’ of export success
    • The MFA regime
    • The genesis of the RMG industry in Bangladesh
    • The RMG industry has been the major beneficiary of industry and trade policies and export incentives
    • Institutional space, political settlement, and deals space favouring RMG
    • Subcontracting in the RMG industry in Bangladesh
    • ‘Political settlement’ regarding the management of the labour regime in the RMG sector
    • Poor factory compliance and a weak regulatory and monitoring mechanism
    • Rent generation and management through RMG by-products
  5. Sustainability challenges of the RMG-centric export model
    • Increased competition in the global market
    • Diversification within RMG and quality issues
    • The segmented RMG value chain in Bangladesh
    • Increased pressure on workplace safety and compliance
    • The evolving political settlement on the labour regime
    • Crisis in the deals environment of the RMG sector
    • Automation in the RMG sector and implications for job creation
    • The challenges of LDC graduation
  6. Challenges of the diversification of exports in Bangladesh
    • Weak collective action of non-RMG sectors
    • Inadequate policies and strategies that hurt non-RMG sectors
    • An environment with a high cost of doing business that disproportionately affects the non-RMG sectors
  7. Conclusion

Discussion: Informal Institutions, the RMG sector, and the Present Challenge of Export Diversification in Banglades

Authors: Selim Raihan, SANEM,
With discussion by Jaime de Melo, University of Geneva

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