Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis

Ayub Ali; Rashedul Kabir; Samim Uddin

doi:doi:10.11648/j.ijsdr.20170306.11

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Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis

Ayub Ali, Rashedul Kabir, Samim Uddin

Published in International Journal of Sustainable Development Research (Volume 3, Issue 6)

Received: 2 October 2017 Accepted: 30 October 2017 Published: 15 November 2017

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Abstract

This study investigates the Revealed Comparative Advantage (RCA) analysis for the ready-made garments (RMG) exports of Bangladesh and major competing countries i.e. India, Sri Lanka, Vietnam, Pakistan, China, Cambodia and Turkey. The purpose is to explore the impact assessment on the US-GSP suspension for Bangladesh as well as how US-GSP suspension influences Bangladesh’s manufacturing sectors and export of RMG goods. The RCA analyzes the extent of export competition between Bangladesh and its major competitors. For this reason, the study applies the Balassa Index. It argues that the degree of competition among major competitors intensifies with the implementation of the US-GSP requirements to get the GSP facilities to US market. After the suspension of the US–GSP, Bangladesh’s export share in the US market decreased from 6.01to 5.68 percent in 2014, amounting US$ 134.64 million. For the other destination, the EU–market share is remained steady for Bangladesh’s RMG exports. This indicates that the US–GSP status is important to enhance the positive image and increase trade volume of the world market. This paper contributes to the literature by investigating whether the US-GSP has any significant influence on the trade flow of Bangladesh. This study explores Bangladesh’s comparative advantage in the top ten RMG products amongst the major competing countries. Further, it also analyzes the RCA for the US and EU markets covering the pre and post US–GSP suspension periods and concludes that Bangladesh had a greater comparative advantage in the EU market compared to the US market than its competitors for the top ten RMG products during the period covering 2012 to 2015.

Published in	International Journal of Sustainable Development Research (Volume 3, Issue 6)
DOI	10.11648/j.ijsdr.20170306.11
Page(s)	54-62
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Revealed Comparative Advantage, Balassa Index, Generalized System of Preferences, Ready-Made Garment, Trade Openness, Bangladesh

References

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[3]	Balassa, B. (1979). The changing pattern of comparative advantage in manufactured goods. The Review of Economics and statistics, 259-266.
[4]	Balassa, B. (1977). Revealed’ comparative advantage revisited: An analysis of relative export shares of the industrial countries, 1953–1971. The Manchester School, 45(4), 327-344.
[5]	Salvatore, D. (2007). International Economics. Hoboken, New Jersey: John Wiley & Sons, Inc.
[6]	Shohibul, A. (2013). Revealed comparative advantage measure: ASEAN-China trade flows. Journal of Economics and Sustainable Development, 4(7), 136-145.
[7]	Ministry of Finance. (2014). Bangladesh Economic Review. Dhaka: Bangladesh Government Press.
[8]	Bangladesh Bank. (2015). Annual Report 2013 - 2014. Dhaka: Bangladesh Bank.
[9]	Yeats, A. J. (1992). What do alternative measures of comparative advantage reveal about the composition of developing countries' exports. Indian Economic Review, 139-154.
[10]	Ahmad, N. (2013). Changing Revealed Comparative Advantage of Textile and Clothing Sector of Pakistan: Pre and Post Quota Analysis. Pakistan Journal of Commerce and Social Sciences, 7(3).
[11]	Bastos, P., & Cabral, M. (2007). The dynamics of international trade patterns. Review of World Economics, 143(3), 391-415.
[12]	Hadzhiev, V. (2014). More on Measuring the Overall Revealed Comparative Advantage.
[13]	Mohan Kathuria, L. (2013). Analyzing competitiveness of clothing export sector of India and Bangladesh: Dynamic revealed comparative advantage approach. Competitiveness Review: An International Business Journal, 23(2), 131-157.
[14]	Bacchetta, M., Beverelli, C., Cadot, O., Fugazza, M., Grether, J. M., Helble, M. & Piermartini, R. (2012). A practical guide to trade policy analysis. World Trade Organization.
[15]	Laursen, K. (2000), Trade Specialisation, Technology and Economic Growth: Theory and Evidence from Advanced Countries, Cheltenham: Edward Elgar
[16]	Rahman, M. H., & Siddiqui, S. A. (2015). RMG: prospect of contribution in economy of Bangladesh. International Journal of Scientific and Research Publications, 5(9), 1-8.

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Ayub Ali, Rashedul Kabir, Samim Uddin. (2017). Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis. International Journal of Sustainable Development Research, 3(6), 54-62. https://doi.org/10.11648/j.ijsdr.20170306.11

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ACS Style

Ayub Ali; Rashedul Kabir; Samim Uddin. Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis. Int. J. Sustain. Dev. Res. 2017, 3(6), 54-62. doi: 10.11648/j.ijsdr.20170306.11

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Ayub Ali, Rashedul Kabir, Samim Uddin. Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis. Int J Sustain Dev Res. 2017;3(6):54-62. doi: 10.11648/j.ijsdr.20170306.11

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@article{10.11648/j.ijsdr.20170306.11,
  author = {Ayub Ali and Rashedul Kabir and Samim Uddin},
  title = {Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis},
  journal = {International Journal of Sustainable Development Research},
  volume = {3},
  number = {6},
  pages = {54-62},
  doi = {10.11648/j.ijsdr.20170306.11},
  url = {https://doi.org/10.11648/j.ijsdr.20170306.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijsdr.20170306.11},
  abstract = {This study investigates the Revealed Comparative Advantage (RCA) analysis for the ready-made garments (RMG) exports of Bangladesh and major competing countries i.e. India, Sri Lanka, Vietnam, Pakistan, China, Cambodia and Turkey. The purpose is to explore the impact assessment on the US-GSP suspension for Bangladesh as well as how US-GSP suspension influences Bangladesh’s manufacturing sectors and export of RMG goods. The RCA analyzes the extent of export competition between Bangladesh and its major competitors. For this reason, the study applies the Balassa Index. It argues that the degree of competition among major competitors intensifies with the implementation of the US-GSP requirements to get the GSP facilities to US market. After the suspension of the US–GSP, Bangladesh’s export share in the US market decreased from 6.01to 5.68 percent in 2014, amounting US$ 134.64 million. For the other destination, the EU–market share is remained steady for Bangladesh’s RMG exports. This indicates that the US–GSP status is important to enhance the positive image and increase trade volume of the world market. This paper contributes to the literature by investigating whether the US-GSP has any significant influence on the trade flow of Bangladesh. This study explores Bangladesh’s comparative advantage in the top ten RMG products amongst the major competing countries. Further, it also analyzes the RCA for the US and EU markets covering the pre and post US–GSP suspension periods and concludes that Bangladesh had a greater comparative advantage in the EU market compared to the US market than its competitors for the top ten RMG products during the period covering 2012 to 2015.},
 year = {2017}
}

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TY - JOUR
T1 - Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis
AU - Ayub Ali
AU - Rashedul Kabir
AU - Samim Uddin
Y1 - 2017/11/15
PY - 2017
N1 - https://doi.org/10.11648/j.ijsdr.20170306.11
DO - 10.11648/j.ijsdr.20170306.11
T2 - International Journal of Sustainable Development Research
JF - International Journal of Sustainable Development Research
JO - International Journal of Sustainable Development Research
SP - 54
EP - 62
PB - Science Publishing Group
SN - 2575-1832
UR - https://doi.org/10.11648/j.ijsdr.20170306.11
AB - This study investigates the Revealed Comparative Advantage (RCA) analysis for the ready-made garments (RMG) exports of Bangladesh and major competing countries i.e. India, Sri Lanka, Vietnam, Pakistan, China, Cambodia and Turkey. The purpose is to explore the impact assessment on the US-GSP suspension for Bangladesh as well as how US-GSP suspension influences Bangladesh’s manufacturing sectors and export of RMG goods. The RCA analyzes the extent of export competition between Bangladesh and its major competitors. For this reason, the study applies the Balassa Index. It argues that the degree of competition among major competitors intensifies with the implementation of the US-GSP requirements to get the GSP facilities to US market. After the suspension of the US–GSP, Bangladesh’s export share in the US market decreased from 6.01to 5.68 percent in 2014, amounting US$ 134.64 million. For the other destination, the EU–market share is remained steady for Bangladesh’s RMG exports. This indicates that the US–GSP status is important to enhance the positive image and increase trade volume of the world market. This paper contributes to the literature by investigating whether the US-GSP has any significant influence on the trade flow of Bangladesh. This study explores Bangladesh’s comparative advantage in the top ten RMG products amongst the major competing countries. Further, it also analyzes the RCA for the US and EU markets covering the pre and post US–GSP suspension periods and concludes that Bangladesh had a greater comparative advantage in the EU market compared to the US market than its competitors for the top ten RMG products during the period covering 2012 to 2015.
VL - 3
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Author Information

Ayub Ali

Department of Research & Development, Bangladesh Knitwear Manufacturers Exporters Association-BKMEA, Dhaka, Bangladesh
Rashedul Kabir

Department of Research & Development, Bangladesh Knitwear Manufacturers Exporters Association-BKMEA, Dhaka, Bangladesh
Samim Uddin

Department of Research & Development, Bangladesh Knitwear Manufacturers Exporters Association-BKMEA, Dhaka, Bangladesh

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Ayub Ali, Rashedul Kabir, Samim Uddin. (2017). Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis. International Journal of Sustainable Development Research, 3(6), 54-62. https://doi.org/10.11648/j.ijsdr.20170306.11

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ACS Style

Ayub Ali; Rashedul Kabir; Samim Uddin. Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis. Int. J. Sustain. Dev. Res. 2017, 3(6), 54-62. doi: 10.11648/j.ijsdr.20170306.11

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AMA Style

Ayub Ali, Rashedul Kabir, Samim Uddin. Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis. Int J Sustain Dev Res. 2017;3(6):54-62. doi: 10.11648/j.ijsdr.20170306.11

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@article{10.11648/j.ijsdr.20170306.11,
  author = {Ayub Ali and Rashedul Kabir and Samim Uddin},
  title = {Revealed Comparative Advantage and Competitiveness for RMG Industry of Bangladesh: A Pre and Post US– GSP Suspension Analysis},
  journal = {International Journal of Sustainable Development Research},
  volume = {3},
  number = {6},
  pages = {54-62},
  doi = {10.11648/j.ijsdr.20170306.11},
  url = {https://doi.org/10.11648/j.ijsdr.20170306.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijsdr.20170306.11},
  abstract = {This study investigates the Revealed Comparative Advantage (RCA) analysis for the ready-made garments (RMG) exports of Bangladesh and major competing countries i.e. India, Sri Lanka, Vietnam, Pakistan, China, Cambodia and Turkey. The purpose is to explore the impact assessment on the US-GSP suspension for Bangladesh as well as how US-GSP suspension influences Bangladesh’s manufacturing sectors and export of RMG goods. The RCA analyzes the extent of export competition between Bangladesh and its major competitors. For this reason, the study applies the Balassa Index. It argues that the degree of competition among major competitors intensifies with the implementation of the US-GSP requirements to get the GSP facilities to US market. After the suspension of the US–GSP, Bangladesh’s export share in the US market decreased from 6.01to 5.68 percent in 2014, amounting US$ 134.64 million. For the other destination, the EU–market share is remained steady for Bangladesh’s RMG exports. This indicates that the US–GSP status is important to enhance the positive image and increase trade volume of the world market. This paper contributes to the literature by investigating whether the US-GSP has any significant influence on the trade flow of Bangladesh. This study explores Bangladesh’s comparative advantage in the top ten RMG products amongst the major competing countries. Further, it also analyzes the RCA for the US and EU markets covering the pre and post US–GSP suspension periods and concludes that Bangladesh had a greater comparative advantage in the EU market compared to the US market than its competitors for the top ten RMG products during the period covering 2012 to 2015.},
 year = {2017}
}

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