Reports
Discussion Papers
No.169 Competitiveness of the Knitwear Industry in Bangladesh: A Study of Industrial Development amid Global Competition
by Zaid Bakht, Md. Salimullah, Tatsufumi Yamagata , and Mohammad Yunus
October 2008
ABSTRACT
This
paper
assesses
the
technical
efficiency
and
profitability
of
the
knitwear
industry
in
Bangladesh
taking
into
account
the
sector’s
role
in
poverty
reduction.
While
stochastic
frontier
analysis
was
invoked
to
assess
technical
efficiency,
three
alternative
measures,
namely
the
rate
of
return,
total
factor
productivity
and
the
Solow
residual,
were
used
to
gauge
the
extent
and
determinants
of
the
profitability
of
the
industry
based
on
firm-level
data
collected
in
2001.
The
estimation
results
indicate
the
high
profitability
of
the
knitwear
firms.
In
Bangladesh,
the
dynamic
development
of
the
industry
has
entailed
great
diversity
in
efficiency
in
comparison
with
the
garment
industries
of
other
developing
countries.
While
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
and
vertical
integration
and
industrial
agglomeration.
Keywords:
Bangladesh,
knitwear,
poverty
reduction,
productivity,
profitability,
stochastic
frontier
analysis
JEL
classification:
D24,
J31,
L67,
O14,
O53
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.