Competitiveness of the knitwear industry in Bangladesh : a study of industrial development amid global competition

This paper assesses the technical efficiency and profitability of the knitwear industry in Bangladesh taking into account the sectorâ[euro](TM)s role in poverty reduction. While stochastic frontier analysis was invoked to assess technical efficiency, three alternative measures, namely the rate of re...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Bakht, Zaid, Salimullah, Md, Yamagata, Tatsufumi, Yunus, Mohammad
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2008
Subjects
Efficiency
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Summary:This paper assesses the technical efficiency and profitability of the knitwear industry in Bangladesh taking into account the sectorâ[euro](TM)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.