What makes the second-largest apparel-exporting nation? An in-depth analysis of competitiveness and comparative advantage in Bangladesh’s apparel industry

Abstract

Purpose This study aims to analyze the export competitiveness of Bangladesh's apparel industry by identifying the specific product categories that help sustain its export comparative advantage. Design/methodology/approach Compound annual growth rate (CAGR) and market share (MS) are calculated between 2011 and 2020 at the two- and four-digit level apparel product categories within the harmonized system (HS) to analyze the industry’s growth and export dominance. Trade competitiveness (TC) at the four-digit level, revealed comparative advantage (RCA) and normalized revealed comparative advantage (NRCA) at the two-, four- and six-digit-level apparel product categories are computed for the same 10-year period to investigate the industry’s export competitiveness. Major export destinations of the top 5 exporting product categories are identified to understand the factors facilitating the industry’s growth. A non-parametric Spearman rank correlation analysis evaluated the association between the RCA and NRCA indices. Findings Among the 34 product categories at the four-digit level, 29 consistently demonstrated an export comparative advantage, as did 34 out of 217 six-digit level sub-categories. In contrast, 12 sub-categories at the six-digit level consistently exhibited a comparative disadvantage in Bangladesh's export competitiveness. Furthermore, the TC measure identified 28 categories at the four-digit level with a robust comparative advantage. 30 categories displayed a positive CAGR, and Bangladesh asserted significant market dominance over 26 product categories at the four-digit level. Research limitations/implications This study's implications are significant for various stakeholders in Bangladesh and other apparel-exporting industries, encompassing government entities, industry officials, policymakers, investors, researchers and students. Nevertheless, limitations arise from the study's reliance on RCA and NRCA as competitiveness indicators, particularly its adoption of a macro-level approach for measurement without exploring a micro-level perspective. This constitutes a notable constraint in the study's analytical framework. Originality/value This study contributed novelty and enrichment to the existing academic literature by identifying distinct apparel product categories that contribute to the industry's growth.