---
title: "Bangladesh Economy: RMG, Remittances, Microfinance"
description: "Dissect the three engines of Bangladesh's economy, ready-made garments, migrant remittances, and microfinance, with the statutes and institutions the BCS"
url: "https://modeldiplomat.com/learn/lessons/bcs-bangladesh-affairs-the-economy-in-depth-rmg-remittances-microfinance"
---

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The economy in depth: RMG, remittances & microfinance

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Lesson 18 min 20 XP

# 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.

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