Correlation Between Social Compliance and Export Competitiveness in the RMG Industry of Bangladesh

Abstract

Having survived one disaster after another, the Readymade Garments (RMG) industry of Bangladesh progressed swiftly, becoming the second-largest exporter of textiles and clothing. Prior to remediation programs launched by Accord-Alliance in the aftermath of the Rana Plaza incident, RMG companies have not been as keen about social compliance as they are now. Therefore, this research seeks to investigate the correlation between social and export competitiveness. Sales data of fifty-two RMG companies over the last five years were collected and analyzed to determine the sales trend. The results of the analysis show there is an upward trend in the sales data. This means social compliance has not affected sales revenue. On the contrary, the results confirm what the literature states-social compliance attracts more export orders. A thorough literature review led to the development of a hypothesis stating social compliance and export competitiveness have a positive correlation. There are, however, other factors to consider when discussing export competitiveness such as lead time management, supply chain management, government's fiscal policies, trade pacts, port efficiencies, energy supplies, cotton imports, backward and forward linkages, tariff and currency depreciation affect competitiveness of cotton exports. Shortening the lead time can boost export competitiveness of Bangladeshi textiles and clothing in the long run. Implementing supply chain management systems will help to optimize lead time and developing the local backward linkage industry will curb exporters' dependence on imported raw materials and thereby shorten lead time further. However, further research along with primary data will provide the accuracy and relevance required for a research of this scope.