Due to competition, both forward linkage and backward linkage industries of the RMG sector may be improved. But to achieve this, country also needs entrepreneurial strategies.
Despite theoretical increase in opportunities, the withdrawal of the quotas will present numerous challenges for small economies. In fact, earlier phases of MFA quota rollbacks reinforce the apprehensions of many garment-reliant countries. Bangladesh's trouser exports, for instance, suffered significantly, while China's more than doubled after its 2001 accession to the WTO. What will actually happen this time around, once the quotas are completely gone, hinges on a number of factors.
Reducing trade barriers and moving towards free market economy do not guarantee that the country will gain from trade. Unequal exchange may take place, which will hamper growth of domestic economy. This may cause increase of unemployment, low level of income, low level of saving, low level of investment giving rise to a vicious circle of poverty. Moreover, obstacles created by the developed nations like US and the EU for the sake of the interest of their own nations through arranging agricultural subsidies and other trade barriers may prevent least developed countries like Bangladesh from gaining access to the most important markets. Rather developed nations for the sake of their own interest have opened up their own markets to US and EU exports.
Moreover, inventory management of Bangladeshis not efficient. The country cannot arrange for proper linkage with modern technology. It failed to apply e-marketing strategy in the garments sector. As a resultant factor, the economy of the country are facing hostile environment accompanied by political instability.
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