Author: M. A. Hye Milton

Publisher:

Published: 2013

Total Pages:

ISBN-13:

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In an increasingly globalized world with different stages of an industrial value chain being geographically dispersed, there is usually nothing wrong for a nation to feel satisfied with the manufacture and export of intermediate goods instead of ruing the missed opportunity of being the producer and exporter of higher value added final goods. The underlying assumption behind this logic can be interpreted by applying the seminal concept of Ricardo (1817) to the current industrial scenario under globalization: a country should specialize in those activities in the value chain in which it has a 'comparative advantage'. While this static view of comparative advantage based on natural endowments like raw materials and labour can be the starting point for an industry, the insight from the value chain literature -- “some activities add more value and are more lucrative than others” (Schmitz, 2005) -- prompts an assessment of the upgrading potential of the sector. From these perspectives, the growth of the Bangladeshi leather sector predominantly as an exporter of intermediate products like crust and finished leather seems to have the following implication: while the growth of the leather processing industry is a positive development for a country having abundant domestic supply of raw hide and skin (RHS), the leather sector of Bangladesh is actually losing huge value addition opportunity by exporting 50% of its leather in the form of semi-finished and finished leather while converting only the remaining 50% into footwear and leather products for low-end market (Bangladesh INSPIRED, 2013). A number of studies (Ahmed and Bakht, 2010; Bangladesh U.S. Business Council, 1990; Huq and Ahmed, 1990) have also recognized the scope of maximizing the potentials of the sector through better management of the sourcing channels of raw hide and skin and graduation from an exporter of intermediate goods to a manufacturer of final ones. Against this backdrop, this paper undertakes a secondary research and aims to unlock the upgrading potential of the Bangladeshi leather sector through a critical analysis of the key opportunities and bottlenecks along the value chain.

Download or read book Unlocking the Upgrading Potential of the Bangladeshi Leather Sector written by M. A. Hye Milton and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In an increasingly globalized world with different stages of an industrial value chain being geographically dispersed, there is usually nothing wrong for a nation to feel satisfied with the manufacture and export of intermediate goods instead of ruing the missed opportunity of being the producer and exporter of higher value added final goods. The underlying assumption behind this logic can be interpreted by applying the seminal concept of Ricardo (1817) to the current industrial scenario under globalization: a country should specialize in those activities in the value chain in which it has a 'comparative advantage'. While this static view of comparative advantage based on natural endowments like raw materials and labour can be the starting point for an industry, the insight from the value chain literature -- “some activities add more value and are more lucrative than others” (Schmitz, 2005) -- prompts an assessment of the upgrading potential of the sector. From these perspectives, the growth of the Bangladeshi leather sector predominantly as an exporter of intermediate products like crust and finished leather seems to have the following implication: while the growth of the leather processing industry is a positive development for a country having abundant domestic supply of raw hide and skin (RHS), the leather sector of Bangladesh is actually losing huge value addition opportunity by exporting 50% of its leather in the form of semi-finished and finished leather while converting only the remaining 50% into footwear and leather products for low-end market (Bangladesh INSPIRED, 2013). A number of studies (Ahmed and Bakht, 2010; Bangladesh U.S. Business Council, 1990; Huq and Ahmed, 1990) have also recognized the scope of maximizing the potentials of the sector through better management of the sourcing channels of raw hide and skin and graduation from an exporter of intermediate goods to a manufacturer of final ones. Against this backdrop, this paper undertakes a secondary research and aims to unlock the upgrading potential of the Bangladeshi leather sector through a critical analysis of the key opportunities and bottlenecks along the value chain.