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1.

Growth of RMG Industry and MFA Implications

In spite of its recent origin, the garment industry has made an unparalleled impact on the socio-economic conditions in Bangladesh. The history of the garment industry dates back to 1977 when the first consignment was exported to then West Germany by Jewel Garments. The number of units, however, remained a meagre 46 until the end of 1983. From a humble beginning the sector has thus made phenomenal growth over the last two decades, the number of units growing to around 3500. The RMG industry achievement is noteworthy, particularly for a country plagued with poor resource endowments and adverse conditions for industrialisation. Exports increased from approximately 32 million US dollars in 1983/84 to 1.4 billion dollars in 1992/93. In 1987/88, the RMG export share surpassed that of raw jute and allied products. The figure further rose to 5.7 billion dollars in 2003/04, representing a contribution of about 75 percent of the

country’s total export earnings in that year4.

The employment generated by the

sector is estimated to be around 1.5 million workers.

Several factors account for the outstanding ‘success’ of the RMG industry in Bangladesh.

The country’s industrialisation after independence in 1971 followed the same path, from state-led to privatisation, as that of the majority of the developing countries. The state sector, which controlled 92 percent of the modern industrial fixed assets in 1972 as a result of the nationalisation policy, had suffered from a chronic loss

due to various internal main causes of the machinery, lack of

and external constraints (Sobhan and Ahmad 1980).

The

poor performance were mismanagement, material and foreign exchange, political

obsolescent instability,

manipulations of labour unions by political parties for the country’s primary export product, jute.

and

worsening

terms

of

trade

Successive governments from the mid-1970s gradually shifted their policy stance

4

Bangladesh Bank data.

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