Bangladesh's Strong Growth 📈
- Take a look at Bangladesh's GDP. Prior to the pandemic, it was growing exponentially, from around 5% in the previous years to 7% in 2019 and it's all thanks to their garment industry
- Check out the tags on your t-shirt, chances are they were made in Bangladesh. They are today one of the world's largest garment exporters
- The garment exports from Bangladesh more than doubled, from $14.6 billion in 2011 to $33.1 billion in 2019 - a CAGR of 7%
- Bangladesh has also increased its share of global exports from 4.7% to 6.7%
How is Bangladesh managing this feat? 🔨
- Their strategy was very simple and familiar. Bangladesh has a ton of manual labour (which we're not unfamiliar with) so they leveraged their biggest resources and picked a labour-intensive light manufacturing industry, in this case, the garment industry
- They laid out plans for promoting that industry and successfully became the global low-cost leader in that industry
- Bangladesh's garment industry is now upgrading its product offerings like producing garments made from synthetic fibres and manufacturing complex products such as outerwear and lingerie
- This has once again proven that the traditional strategy of starting with export-led, manufacturing-based light industry still works
- There are still some big challenges ahead for Bangladesh
- Bangladesh really suffered a massive hit due to the pandemic with global lockdowns triggering order reductions, cancellations, payment delays etc.
- In 2020, exports fell by 17%, representing revenue losses of up to $5.6 billion
- And because the barrier of entry to the garment industry is relatively low, the country has been facing increased competition with Vietnam outperforming Bangladesh in terms of apparel import value in 2020
- Right now, Bangladesh needs to move on to step 2 of the playbook and invest in heavy manufacturing like making electronics. This will require the country to build better infrastructure but it'll definitely be worth it in the long run
Make no mistake, Bangladesh is still a very poor country, with a per capita GDP of only $1280 while Malaysia is around $12,500. It's going to be many more years before Bangladesh can achieve what other East Asian countries have achieved and it all depends on what Bangladesh's next step is.