Bangladesh needs to boost productivity and technology for global competitiveness, says the World Bank

Bangladesh has made significant strides in the ready-made garment (RMG) industry, generating millions of jobs and stimulating the country’s economy. The industry must now compete on greater productivity rather than low labour-intensive production due to the obstacles posed by automation and the COVID-19 epidemic. The primary takeaway from a was released on June 24, 2021.

The manufacturing sector can increase productivity and recover from the crisis more quickly, according to the report, if innovation and technology adoption are encouraged in businesses. Three pillars are identified in the research to support this: workers’ and managers’ capabilities; connectedness to global markets; and complementary markets and institutions.

Most Bangladeshi businesses, according to the research, continue to operate with very basic or antiquated technology. For example, three-fourths of businesses perform manual quality inspections, and over 40% of businesses still utilize handwritten paperwork for company administration. According to the report, technical and management skills are essential for a turnaround. Approximately 50% of manufacturing companies are managed by non-degree holders. The firms with managers who have completed college have a 10% greater degree of technology than these organizations.

The research suggests providing enterprises with cost-effective access to consulting services and fostering human capital development through education and training. It also emphasizes how crucial global connectivity is to the spread of technology. Businesses that interact with multinational corporations employ more sophisticated technology than those that only serve the local market. The paper recommends expanding export diversification beyond the RMG sector, which will include loosening regulations on foreign direct investment and international trade, improving the availability of duty-free raw material imports for businesses outside the RMG sector, and updating special economic zones.

The research also highlights how important it is to have strong financial institutions and regulatory frameworks for technology use. Most small and medium-sized enterprises (SMEs) that responded to the survey indicated that financing was the largest barrier to adopting new technology. The study offers suggestions for improving access to capital for small and medium-sized enterprises (SMEs), strengthening the defence of intellectual property rights, and improving logistics and infrastructure.

“The success of Bangladesh’s ready-made garment (RMG) exports has fuelled economic growth and produced roughly four million jobs.” However, automation has delayed the development of jobs in the RMG sector recently, and this trend is expected to pick up speed in the post-pandemic environment, according to Mercy Tembon, Country Director for Bangladesh and Bhutan at the World Bank. Bangladeshi manufacturers must quickly change their strategy from competing on low labour-intensive productivity to competing on higher productivity as a result of this. Businesses will need to implement superior technology across all company activities and production processes for this to occur.

Based on a survey of over a thousand manufacturing companies in Bangladesh, the research covers a range of industries, including electronics, food, pharmaceuticals, leather, and RMG. The Bangladesh Bureau of Statistics, the World Bank Enterprise Surveys, and other sources are also cited in the paper. In order to assist Bangladesh in realizing its goal of becoming an upper-middle-income nation by 2031 and a middle-income nation by 2024, the paper offers policy recommendations.

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