Value Chain Upgrading, Management and Productivity: Evidence from Bangladesh Woven and Knitwear Sectors

In recent years the Bangladesh knitwear sector has witnessed extremely rapid growth. The volume of exports, however, is currently very concentrated in a handful of products and destination markets. Given Bangladesh’s increasing export experience and increases in wages in the sector in China (the world’s largest garment exporter) there is an opportunity for the sector to break into new product markets. Whether producers are able to realise this opportunity depends on the ability to produce higher quality products. We examine two issues related to entry into new, higher value added markets. First, we examine how overseas buyers identify exporters with the potential to export higher value added products. Moving one level down the production chain, we then ask how the exporter’s relationships with supplier change when the exporter begins to export higher value-added products. Do the exporters find new suppliers, or work to upgrade existing suppliers? How difficult is the challenge of finding higher quality inputs? These relationships are critical to Bangladesh’s ability to expand exports in the garment sector. The initial stage of the project will summarise administrative data from several partners in Bangladesh, including the National Bureau of Revenue and the knitwear sector industry association (BKMEA). These data will be used to produce a summary report of recent entry of exporters into new product lines and countries. The initial work will form the basis of a more extensive project on vertical supply relationships, using data gathered from the firms themselves.