The Paradox of Export Growth in Areas of Weak Governance: The Case of the Ready Made Garment Sector in Bangladesh

Can export growth occur in states with weak governance and competitive clientelism? Conventional wisdom is that effective industrial policy requires a politically stable country with a centralized government. Absent these conditions, countries can pursue alternative types of industrial policies. Contexts with stable, or predictable, mis-governance and a government committed to nonintervention can yield strong export performance. We test this hypothesis in Bangladesh by examining the creation of industrial policy in the Ready Made Garment (RMG) sector. This paper highlights how the particular “political settlement” in Bangladesh has created a viable environment in which the RMG sector continues to grow.