Contact Us

For Marketing, Sales and Subscriptions Inquiries
Rockefeller Center, 45 Rockefeller Plaza
20th Flr Unit #5, New York, NY 10111
United States

Conference List

The Economics and Finance Letters

December 2020, Volume 7, 2, pp 295-307

Contribution of Ready-Made Garments Industry on the Economic Development of Bangladesh: An Empirical Analysis

Shapan Chandra Majumder


Jannatul Ferdaus

Shapan Chandra Majumder 1
Jannatul Ferdaus 2

  1. Associate Professor Department of Economics, Comilla University Cumilla, Bangladesh. 1

  2. Graduate Student Department of Economics, Comilla University Cumilla, Bangladesh. 2

Pages: 295-307

DOI: 10.18488/journal.29.2020.72.295.307

Share :

Article History:

Received: 15 September, 2020
Revised: 12 October, 2020
Accepted: 26 October, 2020
Published: 20 November, 2020


The Ready-Made Garments (RMG) industry holds a strong position in boosting Bangladesh’s economy through earning external currencies, contributing in Gross Domestic Product (GDP) and generating employment most notably. Secondary data based this study intended to draw the overall scenario and the growth trend of this industry, mainly to empirically analyze the contribution of ready-made garments industry on the economic development of Bangladesh. The results obtained from the Fully Modified Ordinary Least Squares (FMOLS) model reveal that, ready-made garments export significantly increases gross domestic product growth of Bangladesh. Results of Granger causality test affirmed the appearance of bidirectional causal association between gross domestic product growth and ready-made garments export. Though tremendous growth is achieved in last few decades, but some severe problems are prevailing in this sector those are highly responsible for the declining trend of the contribution of ready-made garments export to Bangladesh’s gross domestic product for last five years. Therefore, it is highly recommended to take initiatives for attracting foreign direct investments, making investment friendly monetary and fiscal policies, minimizing dependency on foreign countries for technical and financial support and most importantly for ensuring the safety of workplace.
Contribution/ Originality
The paper’s primary contribution is finding that export of RMG has a significant positive impact on the economic development of Bangladesh employing FMOLS technique and this finding may be beneficial for the RMG industry to initiate imperative steps to produce international quality standard products for more export earnings.


Ready-Made garments industry, Ready-Made garments export,Economic development, GDP growth, Fully modified ordinary least squares, Causality test, Bangladesh.


Adnan, A., Rakib, A., & Rahman, M. (2015). Export trend of Bangladesh: The dominance of ready-made garment industry. Research Journal of Economics, Business and ICT, 10(1), 25-31.

Adom, P. K., Amakye, K., Barnor, C., & Quartey, G. (2015). The long-run impact of idiosyncratic and common shocks on industry output in G hana. OPEC Energy Review, 39(1), 17-52.

Bangladesh Bureau of Statistics. (2019). Retrieved from: .

Berg, A., Hedrick, S., Kempf, S., & Tochtermann, T. (2011). Bangladesh’s ready-made garments landscape: The challenge of growth: McKinsey & Company, Inc.

BGMEA. (2020). Trade information. Retrieved from:

Bhattacharya, D., Rahman, M., & Raihan, A. (2002). Contribution of the RMG Sector to the Bangladesh economy CPD Occasional Paper Series No 50.

Chowdhury, M. A. M., Ali, M. M., & Rahman, R. (2005). WTO, post MFA Era and the Bangladesh RMG sector: An assessment of the performance and challenges. Journal of the Institute of Bankers Bangladesh, 52(2), 87-120.

Chowdhury, M., Ahmed, R., & Yasmin, M. (2014). Prospects and problems of RMG Industry: A study on Bangladesh. Prospects, 5(7), 103-118.

Clark, C., & Kanter, S. (2011). Violence in the readymade garments (RMG) Industry in Bangladesh. International Journal of Business and Management, 7(3), 18338119.

Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366a), 427-431.

Granger, C. W. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica: Journal of the Econometric Society, 37(3), 424-438.

Hasan, J. (2013). The competitiveness of ready-made garments industry of Bangladesh in Post MFA Era: How does the industry behave to face the competitive challenge? British Journal of Economics, Management & Trade, 3(3), 296-306.

Hasan, K., Mia, M. S., Rahman, M., Ullah, A., & Ullah, M. (2016). Role of textile and clothing industries in the growth and development of trade & business strategies of Bangladesh in the global economy. International Journal of Textile Science, 5(3), 39-48.

Hossain, S. M. B., Noor, A. M., Khan, A. M., & M., R. E. (2016). The contribution of garments industry in Bangladesh economy. International Journal of Advanced Scientific Research, 1(6), 11-14.

Hossain, S. M., & Hosoe, N. (2017). Foreign direct investment in the ready-made garments sector of Bangladesh: Macro and distributional implications, GRIPS Discussion Paper (pp. 7-22). Minato-ku, Tokyo, Japan: National Graduate Institute for Policy Studies.

Hossain, M. S. (2019). Growth and contribution of Bangladeshi RMG sector: Quantitative and qualitative research perspectives. The Cost And Management, 47(4), 47-53.

Islam, M., Faruk, M., Khatun, R., & Rahman, M. (2014). Conflict between workers and organization in RMG sector where security of sustainable human resource development: A study on Dhaka city, Bangladesh. International Journal of Business and Management Invention, 3(4), 52-66.

Islam, M. S., Rakib, M. A., & Adnan, A. (2016). Ready-made garments sector of Bangladesh: Its contribution and challenges towards development. Journal of Asian Development Studies, 5(2), 50-61.

Islam, M. S. (2020). Ready-made garments exports earning and its contribution to economic growth in Bangladesh. GeoJournal.Available at:

Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12(2-3), 231-254.

Johansen, S. (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica: Journal of the Econometric Society, 59(6), 1551-1580.

Phillips, P. C., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I (1) processes. The Review of Economic Studies, 57(1), 99-125.

Rahman, M. (2002). Bangladesh’s external sector in FY2001: Review of performance and emerging concerns. In Sobhan, R. (ed) Bangladesh Facing the Challenges of Globalization: A review of Bangladesh’s development 2001. Dhaka: Centre for Policy Dialogue.

Rahman, N., & Anwar, J. (2007). The sustainability of RMG as a globally competitive industry: Porter diamond perspective. Journal of Business Studies, 28(2), 99-132.

Rahman, M. T., Habibullah, M., & Abdullah-Al-Masum, M. (2017). Readymade garment industry in Bangladesh: Growth, contribution and challenges. Journal of Economics and Finance, 8(3), 1-7.

Rahman, M. M., & Ehasan, M. A. (2017). Public opinion towards the worker dissatisfaction in ready-made garment (RMG) industry of Bangladesh. Global Journal of Management And Business Research, 17(5), 43-53.

Robbani, M. G. (2000). World trade organization and the ready-made garment industry of Bangladesh: A critical analysis. Journal of Business Studies, 2(2), 16-27.

Rock, M. (2001). Globalization and Bangladesh: The case of export-oriented garment manufacture. South Asia: Journal of South Asian Studies, 24(1), 201-225.Available at:

Sattar, Z. (2015). Strategy for export diversification 2015-2020: Breaking into new markets with new products. Paper presented at the Background Paper for the Seventh Five Year Plan. Policy Research Institute of Bangladesh. Bangladesh.

TextileToday. (2019). RMG sector’s contribution to GDP downs by 3%. Retrieved from: .

The Business Standard. (2020). RMG exports feared to decline $10 billion in 2020. Retrieved from:


Google Scholor ideas Microsoft Academic Search bing Google Scholor


This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


Both authors contributed equally to the conception and design of the study.

Related Article

( 1 ) An Enquiry into the Contributions of Microfinance Institutions Towards the Development of Small Scale Business in Nigeria
( 2 ) Agent-Based Simulation of Contribution Games
( 3 ) Technological Innovation in Central and Eastern Europe: What’s the Contribution of Innovation Policy?
( 4 ) Entrepreneurial Networking and Women Entrepreneurs’ Contribution to Employment Creation in Rivers State, Nigeria
( 5 ) Nexus between Non-Oil Sectoral Contribution and Economic Growth in Nigeria 1981-2018
( 6 ) Financial Inclusion and Poverty Alleviation: The Contribution of Commercial Banks in West Africa
( 7 ) Contribution of Domestic Direct Investment and Direct Foreign Investment to Economic Growth in Indonesia Era Joko Widodo
( 8 ) Contribution of Ready-Made Garments Industry on the Economic Development of Bangladesh: An Empirical Analysis
( 10 ) Factors Influencing Human Capital in Ready Made Garments Industry in Bangladesh
( 12 ) Improved Performance Through Empowerment of Small Industry
( 13 ) The Recruitment of Migrant Workers in the Food Service Industry in Malaysia. A Study of Old Town White Coffee and Pappa Rich Kopitiam
( 14 ) Factors Impacting on SMEs Internationalization: Dairy Industry in Zimbabwe
( 15 ) Measuring and Assessing the State of Technological Innovations and the Level of Interaction between Rice Processors and Stakeholders in Rice Processing Industry in Nigeria
( 16 ) Intention to Use E-Recruitment System: Empirical Evidence from Jobseekers in the Advertising Industry in Malaysia
( 17 ) Decision-Making on Working Capital Management, Based on Industry Differences
( 19 ) Factors Influencing on Human Resources Development in SMEs Service Enterprises in Industry 4.0: The Case of Thai Nguyen Province, Vietnam
( 20 ) Perception of Professional Accountants about the Application of Artificial Intelligence (AI) in Auditing Industry of Bangladesh
( 21 ) Factors Affecting the Capital Structure of the Textile Industry in Bangladesh: An Inferential Study
( 22 ) Drivers Behind the Financial Insolvency: An Empirical Study on the Textile Industry in Bangladesh
( 23 ) Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry
( 24 ) Financial Risks in Turkish Banking Industry: A Panel Data Analaysis on Istanbul Stock Exchange
( 26 ) Determinant of Indonesian Plantation Industry Investment ERA 4.0
( 27 ) Brexit Calling! Aftermath in the Pharmaceutical Industry
( 28 ) Consideration the Relationship Between Information Communications Technology and Economic Growth in Top 10 Economic
( 29 ) Shifting Global Economic Paradigm
( 30 ) How Telecommunication Development Aids Economic Growth: Evidence from Itu Ict Development Index (IDI) Top Five Countries for African Region
( 31 ) The Prospects of Accounting and Economic Systems in the Era of Global Knowledge Economy
( 32 ) Labor and Economic Growth in Zimbabwe
( 33 ) The Impact of Human Capital on Economic Growth: Evidence from Tunisia Using Star and Stecm Models
( 34 ) Exchange Rate Movements, Import And Economic Growth in Nigeria (1986-2010)
( 35 ) Impact of Food Beverage Price Index and Exchange Rate Volatility on Economic Growth
( 36 ) Long-Run Relationships and Causality Tests Between Military Expenditure and Economic Growth in India
( 37 ) Public Infrastructure Spending and Economic Growth in Nigeria: An Error Correction Mechanism (ECM) Approach
( 38 ) Study of the Relationship between Economic Growth and Inflation: Application to the Countries of the South Side of the Mediterranean: A Panel Data Approach
( 39 ) The Entrepreneurship, Knowledge Spillover and Economic Growth
( 40 ) Corruption’s and Democracy’s Effects on Economic Growth
( 41 ) Relationships between Financial Development and Economic Growth: A New Approach by Inputs
( 42 ) Impact of Microfinance Lending On Economic Growth of Third world Nations: Study of Nigeria
( 43 ) The Role of Information and Communication Technology in Rural Socio-Economic Development in Africa
( 44 ) Dividend Policy Relevancy in Theoretical and Practical Economics
( 45 ) Consideration the Effects of Water Sector Investment on Economic Growth in Iran
( 46 ) Is Brics a Viable Solution for Russia in the Context of the Present Eu’s Economic Sanctions?
( 47 ) Stock Market Performance and Economic Growth: Evidence from Nigeria Employing Vector Error Correction Model Framework
( 48 ) Rural Saving Mobilizations and Economic Development in Akamkpa Local Government Area of Cross River State - Nigeria
( 49 ) Nigerian Politics, Economic Development, and the Role of Human Rights Organisations on Elections
( 50 ) Rural - Urban Balance as a Measure of Socio-Economic Development with Special Reference to Iran
( 51 ) Causal Relationship between Imports and Economic Growth in Zimbabwe: An Empirical Analysis 1975 – 2013
( 52 ) The Effect of Access and Quality of Education on Economic Development in Botswana
( 53 ) Panel Data Analysis of the Impact of Economic Freedom as Well as Economic Conditions, The Quality of Life, and Public Education Spending on U.S. Undocumented Immigrant Settlement Patterns
( 54 ) Dynamics of Inflation, Economic Growth, Money Supply and Exchange Rate in India: Evidence from Multivariate Analysis
( 55 ) Structural Breaks, Electricity Generation and Economic Growth in Nigeria
( 56 ) Comparative Analysis of the Effectiveness of Coub-Douglas, Real Business Cycle, and Keynsian Growth Models in Determining Economic Growth in Nigeria
( 57 ) The Link Between Agricultural Budgetary Allocation and Economic Growth in Nigeria
( 58 ) Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa
( 59 ) China Pakistan Economic Corridor (CPEC): Analysis of Internal and External Challenges
( 60 ) A Case Study of Local Government Implementation of the Ward Based Local Economic Development (LED) Program
( 61 ) Military Regimes and Nigeria’s Economic Development, 1966-1999
( 62 ) An Investigation of the Relationship between Manufacturing Output and Economic Growth : Evidence from Nigerias Data Set
( 63 ) Scenario Economic Impact Analysis of Offshore Fishing Tournaments in Ocean City
( 64 ) Macroeconomic Indicators and Capital Formation Growth in Nigeria: A New Evidence
( 65 ) An Empirical Investigation into the Key Drivers of Economic Performance in the CEMAC Zone: A Panel Corrected Standard Errors Approach
( 66 ) Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria
( 67 ) Impact of Telecommunications Market Liberalization on Labor Productivity in Economic Community of West African States
( 68 ) Assessment of Dual Carriageway for Sustainable Socio-Economic Development in Ado Ekiti, Nigeria
( 69 ) Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation
( 70 ) Does Agricultural Sector Contribute to the Economic Growth in Case of Republic of Benin?
( 71 ) Uncertainties in Global Economic Policy and Nigerias Export Earnings
( 72 ) Public Health Expenditure, Economic Growth and Health Outcomes in Nigeria
( 73 ) External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries
( 74 ) Impact of Exchange Rate Fluctuation on Selected Economic Sectors of the Nigerian Economy
( 75 ) The Colonialists & Indigenous Exchange Currency: Tracing the Genesis of Socioeconomic Woes in Postcolonial Nigeria
( 76 ) The Transitional Relationship between Economic Growth and Exchange Rate in Ghana: An Empirical Approach
( 77 ) Estimating the Economic Determinants of Technical Efficiency of Bioenergy in EU-28: An Application of Tobit Analysis
( 78 ) The Impact of Military Spending on Economic Wellbeing in Nigeria
( 79 ) The Relationship between Financial Development, Economic Growth, and Inflation: Evidence from Southeast Asia
( 80 ) German Exports, Economic Growth and Foreign Demand: An Analysis of the Period 2000–2017
( 81 ) Does External Borrowing Affect Economic Growth? A Revisit of the Age-Long Debate for Nigeria
( 83 ) Management of The CFA Franc: What are the Fundamentals of the Real Exchange Rate in West African Economic and Monetary Union (WAEMU)?
( 84 ) Investigating the Environmental Effects of Economic Growth in African Economies
( 85 ) Analysis of Causal Nexus between Defense Spending and Economic Growth in Nigeria: A Toda-Yamamoto Approach
( 86 ) The Impact of Social Media on Economic Growth: Empirical Evidence of Facebook, YouTube, Twitter and Pinterest
( 87 ) The Impact of Economic Growth, Oil Price, and Financial Globalization Uncertainty on Financial Development: Evidence from Selected Leading African Countries
( 88 ) The Effects of Macroeconomic Variables on Bank Default: A Case Study in Brazil
( 89 ) Deficit Financing Asymmetry and Nigerias Economic Growth: A Nonlinear Autoregressive Distributed Lag Approach
( 90 ) Impact of Savings on Economic Growth in Africa
( 91 ) Does Corruption Grease or Sand the Wheels of Economic Growth in Ghana? An ARDL Bounds Test
( 92 ) Fiscal Decentralization and Economic Growth: Assessing Public Policy in Ukraine
( 93 ) Socioeconomic Environment and Obesity on the US West and East Coasts
( 94 ) Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis
( 95 ) An Empirical Investigation of the Impact of FDI, Export and Gross Domestic Savings on the Economic Growth in Bangladesh
( 96 ) Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan
( 97 ) Human Capital Development and Economic Growth in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach
( 100 ) The Impact of Covid-19 Pandemic on the Global Economy: Emphasis on Poverty Alleviation and Economic Growth
( 101 ) Impacts of Domestic Savings and Domestic Investment on Economic Growth: An Empirical Study for Pakistan
( 102 ) Financial Development and Economic Growth in Nigeria: New Evidence from a Threshold Autoregressive and Asymmetric Analysis
( 103 ) Socioeconomic Determinants of Drug Abuse in the United States
( 104 ) Central Bank Independence and Economic Growth of Ghana: What Inflation and GDP Per Capita Growth Rates Matter?
( 105 ) Investigating the Nexus among Poverty Alleviation, Unemployment, and Economic Development in Nigeria
( 106 ) Economic and Noneconomic Forces on Remittance Receiving: A Panel Analysis of Top Remittance Sending Countries towards Bangladesh
( 107 ) The Role of Social Capital and Social Innovation in Economic Growth
( 108 ) Twin Deficit Hypothesis and Macroeconomic Fundamentals: New Evidence from Nigeria
( 109 ) Nexus of Monetary Policy on Economic Growth: A Study of Ghana
( 110 ) The Development of Participated Environmental Education Model for Sustainable Mangrove Forest Management on Eastern Part of Thailand
( 111 ) The Impact of Investment Climate Reforms on the Development of Small and Medium Sized Enterprises in Nigeria: A Policy Brief
( 113 ) Development of Logarithmic Equations for Statistical Sample Determination
( 117 ) National Urban Development Policy and the Unanswered Development Question of Slum in Nigeria
( 118 ) Good Governance, Rural Development and Poverty Alleviation in Nigeria: Issues and Challenges
( 121 ) The Potential of Rural–Urban Linkages for Sustainable Development and Trade
( 122 ) Development, Preference Change, and Inequality in an Integrated Walrasian-General-Equilibrium and Neoclassical-Growth Theory
( 124 ) A Review on EU Transportation Projects within the Case of Turkey for European Union Regional Development Policy
( 125 ) Development of the National Economies and the Foreign Trade Relations between Ukraine and Bulgaria (In the Period 2005-2014)
( 127 ) The Influence of Communication, Work Motivation and Career Development on Elementary School Teacher’s Job Performance in Medan, Indonesia
( 130 ) The Importance of Public Administration Towards Achieving Good Governance for Positive National Development by Using SmartPLS 3
( 132 ) Trade Policy and Democracy for Development in Central African Countries
( 133 ) Health Care Outcomes, Malnutrition and Food Security in Southern Africa Development Community: A Quantile Regression Approach
( 134 ) The Roles of Labour Union in Nigeria Industrial Harmony and Development
( 135 ) Impact of Network Finance Development on Inflation: Evidence from Chinese Market
( 136 ) Africa's Human Capital Development: Is Public Finance Management an Effective Strategy?
( 138 ) Family Leadership and Small to Medium Sized Enterprises Research and Development Investments
( 139 ) Perceived Poverty and Alleviation Efforts of Kogi State Community and Social Development Agencies in Kogi State: An Empirical Investigation
( 140 ) Re-Engineering Nigerian Economy through Human Capital Development: A Case of Manufacturing Firms In Southern Part of Nigeria
( 141 ) State and Evolution of Public and Private Research and Development in Bulgarian Agriculture
( 144 ) Infrastructure Development, Capacity Utilization and Manufacturing Value Added in Nigeria
( 145 ) Factors Influencing Farmers’ Adoption of Soil Conservation Development
( 146 ) The Role of Women in Rural Development in Enugu State, Nigeria
( 148 ) Role of Talent Development on Talent Engagement and Self-Efficacy: A Structural Model
( 150 ) The Financial Decentralization Policy for Local Development in Cameroon: An Econometric Analysis
( 151 ) Sustainability Performance and Sustainable Development Goals
( 154 ) Efficiency of Microfinance (MF) Institutions in Bangladesh: A Study on Top 10 MF Institutions
( 157 ) Driving Role of Institutional Investors in the Indian Stock Market in Short and Long-Run – An Empirical Study
( 158 ) Just-In-Time: Review of Empirical Studies
( 159 ) The Effect of Selected Financial Ratios on Profitability: An Empirical Analysis of Listed Firms of Cement Sector in Saudi Arabia
( 160 ) An Empirical Test on Effect of Intra-Product Trade on Regional Income Distribution: The Case of Liaoning, China
( 162 ) The Internal Branding Process: Customer Reprofiling and Brand Positioning (Empirical Study on Traditional Snack Food in Bandung-Indonesia)
( 163 ) Managerial Judgement Versus Financial Techniques in Strategic Investment Decisions: An Empirical Study on the Syrian Coastal Region Firms
( 164 ) Empirical Evidence on Municipal Tax Policy and Firm Growth
( 165 ) The Effect of Public Debt on Domestic Product and Unemployment (An Empirical Study on the Palestinian Economy)
( 166 ) Does the Holiday Effect Differ from Religious to Non-Religious Holidays? Empirical Evidence from Egypt
( 167 ) What Drives Banking Stability? Empirical Evidence from ECOWAS Countries
( 168 ) The Profitability of Momentum Strategies: Empirical Evidence from Damascus Securities Exchange (DSE)
( 170 ) Forecasting Equity Index Volatility: Empirical Evidence from Japan, UK and USA Data
( 173 ) Exchange Rate and Foreign Reserves Interface: Empirical Evidence from Nigeria
( 174 ) An Empirical Assessment of the Impact of Access to Credit on Farm Output: A Case Study of Sefwi-Wiawso Municipality Ghana
( 175 ) An Empirical Evaluation of Cashless Systems Implementation in Ghana
( 177 ) Incidence of Short Term Private Capital Outflow: Empirical Analysis in Nigeria
( 179 ) An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia
( 180 ) Inflation, Oil Revenue, and Monetary Policy Mix in an Oil-Dependent Economy: Empirical Insights from the Case of Nigeria
( 181 ) Effect of Savings Deposit Rate on Stock Market Capitalization in Nigeria: An Empirical Investigation
( 184 ) An Empirical Analysis of the Impact of Decentralization on Poverty in Cameroon
( 189 ) Nexus among Foreign Exchange Reserve, Remittance and Trade Openness: An Empirical Investigation in the Case of Bangladeshi Economy