The economy in depth: RMG, remittances & microfinance
The three engines of Bangladesh's economy—ready-made garments, migrant remittances, and microfinance—dissected for BCS with dated facts, statutes and institutions.
The Ready-Made Garment (RMG) Sector
The ready-made garment industry is the spine of Bangladesh's export economy. Its origins trace to the 1978 collaboration between Desh Garments and South Korea's Daewoo, which trained the first cohort of Bangladeshi garment workers. The Multi-Fibre Arrangement (MFA, 1974–2004) and its quota system diverted orders to Bangladesh, and growth accelerated after the quota phase-out under the WTO Agreement on Textiles and Clothing (ATC) on 1 January 2005, against early predictions of collapse.
By fiscal year 2022–23, RMG accounted for roughly 84–85% of Bangladesh's total merchandise exports, with annual export value crossing US$45–47 billion. Bangladesh is the world's second-largest apparel exporter after China. The sector employs over 4 million workers, the majority of them women—a fact central to female labour-force participation and rural-to-urban migration narratives.
Trade Preferences and Compliance
Market access rests on preference schemes: the EU's Everything But Arms (EBA) initiative grants duty-free, quota-free access to LDCs, and Canada and Australia offer similar terms. The United States suspended Bangladesh's Generalized System of Preferences (GSP) on 27 June 2013 following the safety crises—though apparel was never covered under US GSP. Bangladesh's scheduled LDC graduation in November 2026 threatens these preferences, making the sector's diversification and the pursuit of FTAs and GSP+ status a live policy challenge.
The Safety Reckoning
Two disasters reshaped the industry's compliance regime. The Tazreen Fashions fire (24 November 2012) killed at least 117 workers. The Rana Plaza collapse (24 April 2013) in Savar killed 1,134 people—the deadliest garment-factory disaster in history. These triggered two binding inspection regimes: the Accord on Fire and Building Safety in Bangladesh (EU-led, legally binding) and the Alliance for Bangladesh Worker Safety (North American). The Bangladesh Labour Act, 2006 (amended 2013, 2018) and the establishment of the Remediation Coordination Cell institutionalised oversight. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) remains the dominant industry body.
Candidates must connect RMG to the macro picture: it powers the trade balance but concentrates export risk in a single sector, leaving Bangladesh exposed to global demand shocks, wage disputes, and the looming loss of LDC tariff preferences after 2026.