This paper investigated the Contribution of RMG to the National Economy of Bangladesh. The understanding between the buyer and supplier is now better than before. At present, Bangladesh is the world-second largest apparel exporter. If the growth continues, within a few years Bangladesh will be the world-largest apparel exporter.

1. BGMEA University of Fashion & Technology
Department Name: Apparel Manufacturing &Technology
Course Title: Industrial psychology
Course Code: PSY3101 Section: AMT-1
Submitted To Submitted By
Md. Abdur Rakib Tanzim Taiya Id:192-005-101
Assistant Professor and Head Md.Rana Ahmed Hridoy Id:192046-101
Department of Social Sciences Tuliha Tarannum Chowdhury Id:192-103-101
BGMEA University of Fashion & Technology Batch :192 Submission- 17. 1. 2022 GRP-16
Topic: Contribution of RMG in the National Economy of Bangladesh

2. Abstract
Bangladesh, a country in southern Asia bordered by India and Myanmar, with a population of
roughly 164 million people. Bangladesh's economy has risen at a rate of 6% per year on average
over the last six years, contributing to about 12% of Bangladesh's GDP in 2009 and 2010. It
employs about four million people. Bangladesh's export-oriented garment manufacturing
business has grown to a $22 billion-per-year industry. Young, urbanizing employees,
Bangladesh's ready-made garment industry now accounts for approximately 78 percent of total
exports, second only to China as the world's largest apparel exporter.
With the majority of production destined for the United States and European markets,
Bangladesh’s ready-made garment industry now accounts for approximately 78 percent of total
exports. In Bangladesh's development policy, the development of the garment industry is
considered a priority. Young entrepreneurs work in a variety of small and medium-scale
clothing industries, which include a variety of items. The purpose of this study is to assess the
contribution and future possibilities of Bangladesh's readymade garments industry. The
findings of this research suggest that Bangladesh has a big possibility to generate a lot of
foreign money and contribute to economic development by developing the readymade
garments industry.
Introduction
Bangladesh is a developing country with around 180 million people (the world's 29th economy
in terms of purchasing power) who’s latest (28th fiscal) annual GDP is 7.4% (fastest growing
in the world). Earnings per capita is $1906 USD or 16190Tk. Foreign reserves amounted to
30.3 billion (January 2020) or 257431.86 crore Taka. According to economists, Bangladesh
will be one of the top ten economies of the world in the 21st century. Fazle Rabby Akash
(2015). The ready-made garment sector has occupied an important place in Bangladesh
economy. Bangladesh is a least developed, resource poor, overpopulated and labor surplus
country in the world. Since independence, it has not much developed in industry.
In the field of Industrialization garment sector is a promising step. At present there are about
5400 garment industries in the country. This sector is highly growing in Bangladesh economy.
The growth rate from 2001 to 2012 is about 55%. The country’s RMG industry grew by more
than 15% per annum on average during the last 15 years. The main reason for this highly
growing is the cheapest labor. Mohammad Nazim (2017). It will be helpful to know the
condition, impact, ways of development, future scopes of the RMG sector in our country for
economic development. Over the years we found that Major Economic Contributions of RMG
Sector in Bangladesh economy. Sharmin Akter (2016).
Contribution of RMG sector to GDP in Bangladesh is Approx 18%. As I don’t find any exact
figure of Contribution of RMG sector to GDP of Bangladesh. But if we calculate it from raw
data then we can easily find out a rational figure. If we consider 82% of all export is RMG
sector then the percentage becomes 23, (122.7*28.6%*82% = 28.77, 28.77/122.7*100 =
23.44%). But we should keep in mind that all textile industry is not export oriented.
So, it’s very rational to accept it as 18%. Another example is that total approx GDP $122.7
Billion and total Export of RMG sector 21.52 billion, then Contribution becomes 17.53%. So,

3. we can easily consider it as 18 percentage as we don’t have any exact figure for it. Noor
Hossain (2018). The RMG exports earning significantly improves the economic growth rate
both in the short run and long run. The more the RMG exports earning, the more will be the
economic growth rate. The pairwise Granger causality test confirms a positive causality
running from RMG exports earning to economic growth rate. FDI inflow has a significant
negative effect on economic growth rate in short run, while no significant effect in the long
run.
RMG exports earning causes FDI inflow as the former attracts the latter. Therefore, the policy
makers should target for improvement in human capital of RMG workers through various
training programs that will boost the RMG output and exports earning, enhance their living
standard and economic growth rate. The government may encourage FDI inflow particularly
in backward linkage for woven fabrics that will minimize outward capital flight and boost the
economic growth performance. Saiful Islam (2019).
The readymade garment (RMG) sector plays a pivotal role in the economy of Bangladesh,
accounting for more than 83 percent of the country's exports and contributing approximately
16 percent to the GDP, with around 4,000 factories employing around four million workers.
Since its foundation, the booming RMG sector has, traditionally, been regarded by foreign
buyers as a value resource, based on high-volume, low-cost products. The growth of the sector
is undeniable. But how do we sustain these levels and how do we prepare for changes that will
arise from Bangladesh's transition from Least Developed Country (LDC) to developing
country—with official developing country status expected by 2024. (Daily star)
LITERATURE REVIEW
The general scenario of the RMG industry in Bangladesh, as well as its significance to the
Country’s economic growth, is depicted in the literature study.
Hossain and Jagit (1988) stated that Bangladesh is one of the fastest-growing garments
exporting countries due to low-wage labor. Robbani (2000), stated that the RMG sector
accounted for the majority of foreign currency exchange revenues, resulting in a substantial
position in the economy. The sector evolves into an exclusive growth rate of 15% per year in
the following years. Azad (2001) stated that ready-made garments have had phenomenal
success (RMG). Bangladesh's exports have outperformed expectations during the last two
decades. Bangladesh's garment industry has a far greater influence than its considerable
commercial and financial success. One of the most significant socioeconomic transformations
in Bangladesh. Rehman and Khundker (2001), stated that the RMG sector started as a modest
non-traditional exporter in the late 1970s, with a value of US$69,000, and by FY2002,
shipments had grown to US$4.5 billion of the ready-made garment international markets.
Rahman and Anwar (2007) stated that particularly weak and insufficient infrastructures, such
as low energy supply and poor port facilities. Haider (2007), stated that Bangladesh's garment
industry, which provides for 75 percent of the country's export profits, was established barely
three decades ago.Bangladesh RMG owners, Berik and Rodgers (2008), stated that are
hesitant to invest in training and development facilities, even though instruction values are

4. largely covered by increased output. Mohiuddin (2008), stated that attempted to determine the
possibilities of Bangladesh's RMG industry in the post-MFA period. Nuruzzaman and Haque
(2009) identified that the country's economic balance had transformed considerably in recent
years. Clark and Kanter (2011), stated that the performance of The Bangladesh RMG sector
faces five significant obstacles, Berg, Hedrick, Kempf, and Tochtermann (2011), stated that
poor infrastructures, compliance issues, low supplier and labor efficiency, insufficient
backward linkage, and political and economic volatility. Chowdhury et al. (2014). Hasan
(2013) stated that the single most significant difficulty facing Bangladesh's RMG sector as the
free competition that resulted from the removal of the quota system under the MFA agreement,
as well as the RMG sector's long-term viability in the face of global market competition.
Methodology
This assignment has made use of both primary and secondary sources of information. Our
assignment group prepared a detailed structure of the relevant areas in which the export-
oriented RMG sector of Bangladesh was contributing. After that, group members held a
detailed discussion with the BGMEA leadership on the outline of the proposed study and its
methodology. At the second stage in-depth discussion was carried out with several RMG
entrepreneurs and BGMEA officials to elicit relevant information. Assignment group members
surveyed selected RMG units and made a detailed analysis of the statements of accounts of 15
RMG units, both woven and knit. The information was cross-checked with other available
sources. The study team made exclusive use of the Bangladesh Trade-Related database.
Information received from various secondary sources including the EPB, NBR, Bureau of
Statistics, Bangladesh Bank, and Commercial Banks, various chambers were also consulted.
Based on the primary data generated for the study and also the secondary information that
carried out an in-depth study of the contribution of the RMG industry to the overall economy
of the country and also to the various sub-sectors of the economy.
Data generated from the sample survey served as the basis for these estimates. Identification
of the sectoral contribution was carried out in two parts: contribution through linkage industries
and socio-economic impact of the sector. For evaluation of the sectoral contribution, a set of
sectors were identified which included backward linkage industries, banking, and insurance,
transport and communication, ports, shipping, air cargo, utility services, hotels and tourism,
real estate, etc. The estimates were cross-checked with information from other sources
mentioned above for consistency and, where possible, for accuracy.
Results & Discussion:
The Bangladesh RMG industry, with its woven and knit, is a predominantly export-oriented
sector, with 95 percent of the woven and 90 percent of the knit exports being directed to foreign
markets. The cumulative foreign currency earnings by the sector, since 1978, when the first
export was registered, is estimated at 36.6 billion dollars. After that, Bangladesh’s RMG export

5. earnings stood at 4.58 billion US dollars in FY2002. In 2021 this sector contributed 81.16% of
the total Bangladesh export of 5.9 billion dollars in the same year.
RMG export in FY2021 was equivalent to 27.95% of Bangladesh’s GDP over the
corresponding year. Accordingly, local value addition by the sector in 2021 was about
38758.31 million US dollars. The value addition created by the sector itself is estimated at
81.16% of total RMG export earnings which amounted to about 38758.31 million dollars or
equivalent to 27.95% of GDP.
Number of Factories by Year
Source of Information: BGMEA
The emergence of the RMG sector is seen as one of the best things that happened in
Bangladesh's economy as it created generous employment opportunities for the labor force,
especially for women. It provided room for women's participation and empowerment. More
than 4 million workers are directly employed in the RMG sector. Data in table 2, highlights
workers trends in the RMG sector.
Number of RMG workers
4576
4222
4296 4328
4482
4560
4621
4692
4764
3900
4000
4100
4200
4300
4400
4500
4600
4700
4800
4900
NUMBER OF FACTORIES YEARS
Series 1 Series 2 Series 3
Year Number of Garments
Factories
2012-2013 4576
2013-2014 4222
2014-2015 4296
2015-2016 4328
2016-2017 4482
2017-2018 4560
2018-2019 4621
2019-2020 4692
2020-2021 4764
Year
RMG workers
quantity (in million)
1983-1984 0.06

6. Source of Information: BGMEA
RMG sector’s contribution to the country’s export has experienced phenomenal growth over
the years. It has evolved as the main export earning sector of Bangladesh. Over the last two
decades, the RMG industry has emerged as the thrust sector and ensured the fuel of growth and
development of the economy. While export earnings from the apparel industry were barely $ 1
million in 1978, it became $24.49 million in 2013-2014, $28.94 million in2015-2016, and
$34.13 billion in 2018-2019 fiscal years holding the 84.21 percent of countries of total export
earnings. Table 3 captures these facts
Year
RMG export (in
million us$)
Total export (in
million us$)
Contribution in total
export (%)
2013-2014 24491.88 30186.62 81.13
2015-2016 28094.168 34257.18 82.01
2018-2019 34133.27 40535.04 84.21
2020-2021 31456.73 38758.31 81.16
1983-1984
0%
1989-1990
2%
2016-2017
19%
2017-2018
19%
2018-2019
19%
2019-2020
20%
2020-2021
21%
Other
60%
RMG WORKERS QUANTITY (IN
MILLION)
1983-1984 1989-1990 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021
1989-1990 0.34
2016-2017 4.00
2017-2018 4.00
2018-2019 4.10
2019-2020 4.22
2020-2021 4.40

7. Source of Information: BGMEA
RMG Export Earnings and Contribution to GDP
The phenomenal growth of the RMG sector resulted in its magnificent contribution to the
country’s GDP as well.
Source of Information: BGMEA
Contribution to the National Economy
24491.88
28094.168
34133.27
31456.73
30186.62
34257.18
40535.04
38758.31
81.13
82.01
84.21
81.16
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
2013-2014
2015-2016
2018-2019
2020-2021
Chart Title
Series 3 Series 2 Series 1
Fiscal Year Share in GDP (%)
1994-95 5.87
1999-00 9.24
2009-10 12.45
2013-14 14.07
2015-2016 12.69
2018-2019 34.13
2020-2021 27.95

8. Most of the interviewees stated that the contribution of the RMG sector to the country’s
economy is significant. “Rural economy is also being developed through the contribution of
this sector.” “Most firms acknowledge three internal factors: favorable government policy,
cheap labor force, entrepreneurial skills.”
RECOMMENDATIONS
Female workers are involved in a tremendous amount of work that has significant value to in
national economy and GDP as well as family and society. The above figures make it clear that
females make an enormous contribution to the national economy. The calculation of the exact
economic value of a female’s work is complicated. We tried, in this research, to calculate the
amount that female worker contributes to the national economy. This first attempt, however,
need not necessarily be considered sufficient. Further research and analysis would help to
arrive at a better figure and to understand more thoroughly the various issues involved in
considering female workers contribute to the national economy. Some recommendations from
the study are stated below:
• People and policymakers should be aware of the importance of females’ economic
contribution.
• Government should take some initiative for a better and positive work environment.
• Arrange some skill development training especially for female RMG workers for increasing
efficiency.
• RMG associations or owners or government should take up a better accommodation for the
worker.
Convince government officials to include workers in economic measurements of the national
economy contribution (such as export earnings and GDP), and to incorporate an understanding
of workers value when looking at programs to assist the worker and Spending money on the
worker is an investment in the economic wellbeing of the country.
Conclusion
This paper investigated the Contribution of RMG to the National Economy of Bangladesh. The
understanding between the buyer and supplier is now better than before. At present, Bangladesh
is the world-second largest apparel exporter. If the growth continues, within a few years
Bangladesh will be the world-largest apparel exporter. Workers’ unrest, political violence, lack
of utility services, non-compliance issues, the high interest of bank loans, increment of
workers’ wage, terrorism, low price of RMG products, unavailability raw materials in the home
country are some of the problems of this sector. Proper guidelines of the regulatory authorities
like BGMEA, BKMEA, and government support are badly needed to reach the sector at the
peak of success.
A good work environment and payment should be ensured to workers. Different financial and
non-financial incentives should be given to their dependents also. The relationship between
owner and worker should be developed. The new market should be searched immediately
before it’s too late. Hartal, political violence, workers’ unrest should be stopped. Fire safety
instruments should be installed in every factory. Proper building code should be maintained.

9. After doing all these things, we can hope to have a perfect Ready-Made Garments sector in
Bangladesh which will lead the world garment industry one day.
References:
Azad, M.R. (2001). Ready-made garment industry in Bangladesh: Competitiveness and sustainability.
Paper presented in Department of Marketing, University of Rajshahi.
Clark, C., & Kanter, S. (2011). Violence in the ready-made garments (RMG) industry in Bangladesh.
Haider, M. Z. (2007). Competitiveness of the Bangladesh ready-made garments industry in major
international markets.
Hossain, N., &Jagit, S. B. (1988). The garment workers of Bangladesh: Earnings and perceptions
towards unionism.
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.
Rehman, S., & Khundker, N. (Eds.). (2001).
Mohiuddin, M. (2008). Bangladesh as an emerging tiger in apparel market: Challenges and strategies.
Nuruzzaman, & Haque, A. (2009).
Chowdhury, M., Ahmed, R., &Yasmin, M. (2014).
Hasan, J., (2013). The Competitiveness of Ready-Made Garments Industry of Bangladesh.
Akash , F. R. (2015).
Nazim , M. (2017).
Akter, S. (2016).
Islam, S. (2019)
Hossain, N. (2018).