Trends in the Growth Rate of RMG Exports of Bangladesh: An Analysis of the Trends with Special Emphasis on the RMG Exports of Bangladesh to the US Market

Abstract

The readymade garments (RMG) sector of Bangladesh has been maintaining its impressive growth rate for quite a long time. But although there have been many studies on this sector, significant analysis of the trends in the growth rate of the garments sector is yet to be done.  Moreover, a formal statistical measurement of how the recent financial crisis would affect the garments exports has not been done yet, which is surely very important for policy making, given the current economic situation of the world. Using non-parametric approaches and time series econometrics, this paper provides a first look at the trend growth rates of RMG exports, and provides a special focus on RMG exports of Bangladesh in the US market, since USA is the largest buyer of RMG products (if individual countries are taken into account). The main conclusion is that the trend growth rates of both the total RMG exports to all countries and the RMG exports to USA are showing signs of decline. However, application of ARIMA estimation and co-integration techniques show that in the US market, the RMG exports would show some increase in the coming year, even after accounting for the recent financial downturn. This means that the future of the RMG export earnings from USA might not be as disastrous as speculated by many. Since economic fluctuations in USA tend to affect the rest of the world significantly, this indicates that there is a probability that RMG export earnings from other countries would not decrease as well. But precise country studies like the one presented in this paper are needed to reach such a conclusion about the other countries of the world.