Bangladesh Case

Executive Summary

• The objectives are clearly stated in the introduction which will be answered through application of theory and models along with empirical evidence.

• The questions that report encompasses around are “What international trade theory or theories best explain the rise of Bangladesh as a textile powerhouse? “And “How secure is Bangladesh’s textile industry from foreign competition? What factors could ultimately lead to a decline?”

• The first section looks at comparative advantage theory, Heckscher-Ohlin’s model and explains that Bangladesh has progressed not through a singular advantage over many other powerful economics but a mixture of comparative advantage, cheap labour and lenient trade agreements.

• The benefits of economics are scale and The Porter diamond model are briefly touched upon and fortifies the idea of various economic factors colluding to work in favour of driving the economy forward.

• In the second part of the report, it is brought to attention that rising costs and higher gains through investment must be observed in order to prevent the economy from overheating and allowing inflationary pressure to be transferred to consumers.

• The report encapsulates the arguments of growth being unsustainable if corporate social responsibility is not observed by producers. It has been a growing consumer for not only producers in the recent years but also for the consumers.

Introduction

This report aims to articulate the birth of a textile giant, Bangladesh, and how it has continued to surpass all expectations and grew phenomenal over the years. The textile sector of the country has proved itself to be a true “Engine of growth” for the rest of the economy. It is currently the nation’s largest source of income and has expanded its export capacity significantly in recent years, standing at the “world’s second largest exporter since 2011” (World Trade Organization, 2012) .

This report aims to answer the following questions

• What international trade theory or theories best explain the rise of Bangladesh as a textile powerhouse?

• How secure is Bangladesh’s textile industry from foreign competition? What factors could ultimately lead to a decline?

The report pursues the application of theory and empirical evidence via recent sources in order to justify the conclusions drawn for these questions.

What international trade theory or theories, best explain the rise of Bangladesh as a textile powerhouse?

Comparative advantage

David Ricardo is associated with the conceptualisation