Dynamics of Comparative Advantage and Competitiveness of Textile and Apparel Industry: An Empirical Analysis for China and Bangladesh

Abstract

Aims: The purpose of this paper is to analyze the level of comparative advantage and competitiveness of Textile and Apparel (T&A) industry of Bangladesh and China in the global market. It also tries to link the competitiveness analysis with the trade theories of comparative advantage to synthesize different approaches of competitiveness recommending with policy implications. Place and Duration of Study: We used the two digit classification of Harmonized System (HS) data of 14 main products of Textile and Apparel industry of Bangladesh and China over the period from 2000 to 2015. Methodology: The proposed approach is based on the Balassa revealed comparative advantage (RCA) and Spearman Rank Correlation coefficient (rs) to examine the comparative advantage and competitiveness respectively for 14 main products of Textile and Apparel industry of Bangladesh and China. For calculation of RCA values, the export data have been taken from UN COMTRADE, an electronic database of the United Nations. To calculate the trends of trade between the two nations and individual industries, we used the database of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), database of International Trade Center (ITC), and the World Trade Organization (WTO) database. Results: The findings show that during this 16 years period, among the 14 products; Bangladesh improved her comparative advantage over 7 products, lowered over 5 products and remained quite unchanged over 2 products whereas China improved her comparative advantage over 8 products lowered over 2 products and remained quite unchanged over 4 products. According to the Competitiveness analysis of the 14 products; 3 products exhibit higher competition, 6 products exhibit modest competition and 5 products exhibit complementary between Bangladesh and China in global market. As a result, policy implications were discussed in this paper. Conclusion: In this paper revealed comparative advantage has been analyzed at the two digit level of HS classification for both Bangladesh and China. The implications reveal that the three main stakeholders of T&A; the government, manufacturers, and buyers must work together to realize the potential of textile and apparel market for both Bangladesh and China. It is suggested for both countries to improve the industrial competitive advantage through human resource exploitation strategy and innovation in science and technology. Improving product and market diversification and reducing the lead time also suggested for improving the competitiveness of Bangladesh’s T&A industry.