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<p>Bangladesh’s Ready-Made Garment sector, a global export leader, faces critical operational challenges that threaten its competitive edge. This study identifies and analyses the domestic, policy-induced bottlenecks that systematically constrain the sector’s upgrading within global value chains. Employing a mixed-methods approach, we uncover how restrictive procurement policies create a critical timing mismatch in Letters of Credit, forcing costly workarounds and eroding efficiency. Further, we document how cumbersome import-export regulations, misaligned HS codes, and punitive wastage benchmarks collectively inflate costs, prolong lead times, and inhibit product diversification. Our findings reveal that these are not isolated inefficiencies but interconnected frictions embedded in the institutional framework, locking manufacturers into low-value activities. The study provides strategic roadmap for policymakers, advocating for urgent regulatory modernization, full digital integration, and aligned trade policies. These evidence-based reforms are crucial to transforming systemic bottlenecks into levers of competitiveness, ensuring the resilience and sustainable growth of this vital economic cornerstone.</p>

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The high cost of friction: policy bottlenecks and upgrading constraints in Bangladesh’s RMG sector

  • 期刊论文

  • 发表日期：

    2026年4月13日

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  • Faridul I. Ovi,
  • Rownak J. Shova

摘要

Bangladesh’s Ready-Made Garment sector, a global export leader, faces critical operational challenges that threaten its competitive edge. This study identifies and analyses the domestic, policy-induced bottlenecks that systematically constrain the sector’s upgrading within global value chains. Employing a mixed-methods approach, we uncover how restrictive procurement policies create a critical timing mismatch in Letters of Credit, forcing costly workarounds and eroding efficiency. Further, we document how cumbersome import-export regulations, misaligned HS codes, and punitive wastage benchmarks collectively inflate costs, prolong lead times, and inhibit product diversification. Our findings reveal that these are not isolated inefficiencies but interconnected frictions embedded in the institutional framework, locking manufacturers into low-value activities. The study provides strategic roadmap for policymakers, advocating for urgent regulatory modernization, full digital integration, and aligned trade policies. These evidence-based reforms are crucial to transforming systemic bottlenecks into levers of competitiveness, ensuring the resilience and sustainable growth of this vital economic cornerstone.