The Effect of Integration with Global Apparel Value Chain: The Case of Bangladesh Apparel Industry

This paper estimates the effect of integration with global apparel value chain on performance of Bangladesh apparel firms. The study does it by estimating an augmented Cobb-Douglas production function. The findings show that both backward linkage with foreign suppliers of intermediate inputs and forward linkage with foreign buyers of finished apparels positively affect firms’ output and labour productivity. By contrast, backward linkage with local suppliers negatively affects firms’ output and labour productivity. The findings imply that it is a firm’s integration with the global apparel value chain, not the conventional backward linkage with domestic suppliers,that defines success of Bangladesh apparel industry.