Proceedings of The 10 th International Conference on the Regional Innovation and cooperation in Asia. November 27, 2015. Bangkok, Thailand 101 A comparative input output analysis of the textile-clothing sector in Bangladesh and some Asian countries Md. MASUM Doctoral Student, Graduate School of Economics, Ritsumeikan University, Japan and Assistant Professor, Bangladesh University of Textiles, Bangladesh. Kazuo INABA, Ph.D Professor, Graduate School of Economics, Ritsumeikan University, Japan. ------------------------------------------------------------------------------------------------------------ Abstract The objective of this paper is to examine the performance of the textile-clothing sector in Bangladesh in comparison with some selected Asian textile-clothing producing countries using input-output (IO) table. Firstly, this paper introduces the textile-clothing sector of Bangladesh briefly. Then, the input output methodology, in short, is specified. A set of indicators is used for the comparative analysis using input coefficient matrix and competitive import type inverse matrix. The textile-clothing sector of the selected 6 countries (Bangladesh, India, Sri Lanka, Thailand, Vietnam and China) is examined in terms of textile-clothing share in the economic structures; direct and total (direct & indirect) textile-clothing sector’s backward and forward linkage. The key findings include that Bangladesh produces highest (15%) output and exports highest amount (71%) of textile-clothing outputs relative to total supply & demand. China is holding the 1 st position in total domestic push & pull power mechanism having 1.77 and 2.55 points respectively followed by India but when import repercussions are included Viet Nam is best. Lack of recent data from Bangladesh, as the country does not compile input output table, limits the scope of the study. Since being the first study in this field in Bangladesh, this analysis importance to design long-term sustainable strategies in Bangladesh as well as that for the Asian textile-clothing sector. Keywords: Textile-clothing industry, Input-output analysis, Asian textile-clothing producing countries. ------------------------------------------------------------------------------------------------------------ 1. Introduction Textile-clothing business in Bangladesh was started in the late 1970s 1 . Soon it became one of the major economic strengths for Bangladesh 2 . The share of clothing has increased dramatically from 0.2% of total exports in 1980 to about 74.8% in 1997-98 (Raihan, 1999), which is 80% at present (EPB, 2014). The clothing industry in Bangladesh had flourished and by the early 1990s it had emerged as a major employer (Yunus, 2010). The sector employs 4 million people at present of which 80% is women i.e. the sector employs 3.2 million women (Masum & Islam, 2014). Growth of clothing sector has spawned a whole new set of linkage industries and facilitated expansion of many service sector activities (Bhattacharya, et al., 2002). The present growth rate is 12.71% 3 on average. 1 http://www.bkmea.com/History-of-Development-of-Knitwear-of-Bangladesh.html (28 May 2014) 2 http://garments-bangladesh.blogspot.com/2013/01/impact-of-rmg-sector-in-bangladesh.html (20 May 2014) 3 http://www.bkmea.com/facts-figures.html (26 May 2014)
Transcript
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
November 27, 2015. Bangkok, Thailand
101
A comparative input output analysis of the textile-clothing sector in
Bangladesh and some Asian countries
Md. MASUM Doctoral Student, Graduate School of Economics, Ritsumeikan University, Japan and Assistant Professor,
Bangladesh University of Textiles, Bangladesh.
Kazuo INABA, Ph.D
Professor, Graduate School of Economics, Ritsumeikan University, Japan.
Abstract The objective of this paper is to examine the performance of the textile-clothing sector in
Bangladesh in comparison with some selected Asian textile-clothing producing countries using
input-output (IO) table. Firstly, this paper introduces the textile-clothing sector of Bangladesh
briefly. Then, the input output methodology, in short, is specified. A set of indicators is used for
the comparative analysis using input coefficient matrix and competitive import type inverse
matrix. The textile-clothing sector of the selected 6 countries (Bangladesh, India, Sri Lanka,
Thailand, Vietnam and China) is examined in terms of textile-clothing share in the economic
structures; direct and total (direct & indirect) textile-clothing sector’s backward and forward
linkage. The key findings include that Bangladesh produces highest (15%) output and exports
highest amount (71%) of textile-clothing outputs relative to total supply & demand. China is holding the 1st position in total domestic push & pull power mechanism having 1.77 and 2.55
points respectively followed by India but when import repercussions are included Viet Nam is
best. Lack of recent data from Bangladesh, as the country does not compile input output table,
limits the scope of the study. Since being the first study in this field in Bangladesh, this analysis
importance to design long-term sustainable strategies in Bangladesh as well as that for the Asian
textile-clothing sector.
Keywords: Textile-clothing industry, Input-output analysis, Asian textile-clothing producing
Textile-clothing business in Bangladesh was started in the late 1970s1. Soon it became one of the major
economic strengths for Bangladesh2. The share of clothing has increased dramatically from 0.2% of total
exports in 1980 to about 74.8% in 1997-98 (Raihan, 1999), which is 80% at present (EPB, 2014). The clothing industry in Bangladesh had flourished and by the early 1990s it had emerged as a major
employer (Yunus, 2010). The sector employs 4 million people at present of which 80% is women i.e. the
sector employs 3.2 million women (Masum & Islam, 2014). Growth of clothing sector has spawned a whole new set of linkage industries and facilitated expansion of many service sector activities
(Bhattacharya, et al., 2002). The present growth rate is 12.71%3 on average.
1http://www.bkmea.com/History-of-Development-of-Knitwear-of-Bangladesh.html (28 May 2014)
2http://garments-bangladesh.blogspot.com/2013/01/impact-of-rmg-sector-in-bangladesh.html (20 May 2014)
3http://www.bkmea.com/facts-figures.html (26 May 2014)
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
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Textile-clothing industry of Bangladesh is playing a pivotal role towards the development of her national economy. The clothing sector contributes 12 per cent to the GDP. The export earnings from this sector
was about $24.0 billion in 2013-14 fiscal year accounting 80 percent of the total export earnings of the
country (EPB, 2014). For the last 3 decades, the sector has grown smoothly with spinning, weaving, denim, home textile, knitting and dyeing-finishing as primary textile sector along with secondary
development of knitwear and woven-wear. The country's widening share in the global clothing market
reached nearly 5 percent recently. At present, there are 385 spinning mills, 721 fabric manufacturing
mills, 233 dyeing-printing-finishing mills and 5,400 readymade garments units. The textile-clothing brings foreign currency which has enormous importance in our national economy as Bangladesh is an
import dependent country. The textile-clothing sector employed illiterate women and gives us a new
avenue of economic growth.
These contributions will be bleak if we cannot formulate meaningful strategies for the sustainable
development of the sector. To formulate such strategies, effective analysis is mandatory.
On this backdrop, this study is undertaken to compare the textile-clothing sector in Bangladesh and some
selected Asian countries using input output tables with specific objectives of: I) comparing the economic
structures of Bangladesh and some Asian countries and II) analyzing the backward and forward linkage
indicators of textile-clothing sector of comparing economies.
The paper is structured in the following sequence. Section 2 gives an overview of the textile-clothing industry of the comparing countries, Section 3 reviews literature with empirical studies, Section 4
specifies data source and methodology, Section 5 elaborates results and discussion, and Section 6
concludes the paper. At the end of the paper 15 X 15 input-output table of Bangladesh is given as appendix. The result and discussion part, in section 5, is subdivided into 5.1. Structure of the economy
with flow of supply and demand according to input output tables, broad categorization of industrial
production (agriculture, manufacturing, services), import-export structure of the countries, etc. and 5.2. Backward & forward linkage with priority sector identification, sectoral structure of the countries based
on input-output analysis, linkage indicators, etc.
2. Overview of the Textile Industries
India: In the global exports of clothing, India ranked as the fourth largest exporter as per WTO data –
2013; the textile-clothing industry accounts for 14% of industrial production which is 4% of GDP;
accounts for 13% share of the country’s total exports basket; India is major exporting country as far as
textile sector is concerned and not dependent on import; with worth of USD 15.7 billion clothing exports.
(Ministry of Textiles, 2015). India is the largest exporter of yarn in the international market and has a
share of 25% in world cotton yarn exports; India accounts for 12% of the world’s production of textile
fibres and yarn; in terms of spindle, the Indian textile industry is ranked second, after China, and accounts
for 23% of the world’s spindle capacity; around 6% of global rotor capacity is in India; the country has
the highest loom capacity, including handlooms, with a share of 61% in world loom.4
China: Kane (2015) stated that over 10 million people are employed in the clothing sector in China;
garment workers as percentage of total workforce is 1.28%; garment % of export is 4% (2013) valuing
$164.13 billion; China is the world’s largest manufacturer, exporter and consumer of garments having
4 https://www.dnb.co.in/SMEstextile/overview.asp (accessed on 19/10/2015)
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
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38% stake; China is not enjoying GSP facility because China is one of the 'high' or 'upper-middle income'
countries as per World Bank classification for three consecutive years.
Sri Lanka: Chelina Capital Corporation (2013)5 reported that the total export income of the sector for the
year 2011 was equivalent to 39.6%. The export growth in 2011 is 24% year on year. The employment
generation exceeds 283,000 in 2011. The industry, for its part, has gained a reputation among buyers for
quality, on-time deliveries and customer service. Importantly, its reputation also extends to ethical and environmentally friendly practices, and good working conditions. Sri Lanka’s apparel exports rose from
US$3.16 billion in 2009 to US$4.74 billion in 2014.6
Table 1: Clothing statistics of 2013-14
Bangladesh India China Sri Lanka Thailand Viet Nam
% of total Export 80 13 4 40 4 18
Position Held in Clothing Export 2nd 4th 1st - - 5th
Thailand: According to the Ministry of Commerce’s Department of Export Promotion, private textile
mills were established shortly after World War II as a result of textile shortages. In 1960, the Investment
Promotion Act prompted local and Chinese investors to buy and expand mills that were once military-owned. Soon after, some Japanese companies joined Thai textile firms in joint ventures. Thailand’s
modern textile industry has since grown beyond its military beginnings and now plays a key role in the
Southeast Asian country’s economy. There were 400 dyeing, printing, and finishing firms, in addition to 2,500 apparel firms. Those mills employed more than 1 million workers, or 22.1 percent of the country’s
entire industrial labor force. The exports of textile and clothing from the Southeast Asian nation of
Thailand earned US$ 7.459 billion last year, showing a marginal decline of 0.3 per cent over 2013’s exports of $7.482 billion
9. That contribution made up 12.3 percent of Thailand’s gross domestic product.
Viet Nam: Thomasson (2014) described that in 2013, Viet Nam’s textile-clothing exports increased 18
percent year over year to total approximately US$20 billion, accounting for 15 percent of the country’s gross domestic product and 18 percent of its total exports. The textile-clothing industry comprises some
4,000 enterprises and provides employment for more than 7.7 million people. Though the Vietnamese
textile-clothing sector is a major exporter of textiles and garments, it is heavily dependent upon imported raw materials and inputs, especially from China, to meet its production requirements. Viet Nam’s cotton
production satisfies only 1 percent of the sector’s demand, and its fabric production satisfies only about
12 to 13 percent of demand. The industry has maintained a stable growth rate, with exports increasing an average of 16 percent from 2008 through 2012; and it is expected to achieve a growth rate of more than
10 percent.
5 https://www.academia.edu/4634295/Textile_and_Apparel_Industry_of_Sri_Lanka_an_Overview_Contents. Accessed on 19 October 2015
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
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3. Literature Review
On the basis of input output model the first attempts to supply quantitative evaluation of backward and forward linkage were made by Chenery and Watanabe (1958) in their studies on the international
comparisons of the structure of production (Temurshoev, 2004).The spread of input-output studies
suggests a new use for this type of analysis: the making of international comparisons of the structure of production; such studies may eventually shed light on the bases for international trade, the mechanism of
economic growth, and other economic problems whose understanding requires an empirical knowledge of
the nature of interdependence (Chenery & Watanabe, 1958). The core of input output analysis is a matrix
of technical coefficients that summarizes the interdependencies between the sectors of production (Raa, 2005). Input output table is an economic tool or model which help economic managers make decisions,
social-economic solutions benefiting national development (Chung, 2014). Polenske and Fournier
indicate (1993) that an input-output table provides a detailed statistical account of the flow of goods and services between the producing and purchasing sectors of an economy and it shows all intermediate
transactions among producers and purchasers within a consistent accounting framework (Li, 2004).
Since Leontief (1972), researchers from all over the world have extensively used input-output techniques
into study economic issues and analyze government policies and input-output models provide direct,
indirect, and induced effects among different sectors within an economy and among economies (Li, 2004). Analysts can also derive valuable multipliers, including output multipliers, input multipliers, and
employment multipliers, to assist policy design and decision-making (Ilhan & Yaman, 2011). The Input-
output analysis offers two distinctive results for each analyses sector, namely backward linkages and forward linkages (Chung, 2014). Researcher (Li, 2004) studied application of input output tables of
China’s National Accounts in demand-supply chains. Total backward linkage indicators are also called
output multipliers and total forward linkage indicators are known as input multipliers (Ilhan & Yaman,
2011).
The output multipliers measure the total effect of a monetary unit change in final demand for the goods
and services of the one sector on the output of all sectors (Ilhan & Yaman, 2011). The input multiplier
measures the effect of a monetary unit change in primary input available to a sector on the input of all
industries (Bon, 2000). The matrix multiplier is used to calculate the total impact of an economic shock
(Sophearith, 2009). Direct impacts and indirect impacts are type-I multiplier (Hara, 2008).
Empirical study on Viet Nam’s textile and clothing sector shows that in 1996 and 2000 the total backward
linkage indicators were 1.799 & 2.122 respectively; whereas total forward linkage indicators were 3.351
& 2.821 respectively (Chung, 2014). In 2006-07 gross output multiplier for readymade garments in India
was 3.7 and in Bangladesh was 3.97 (Raihan & Khondker, 2010).
4. Data Source and Methodology
The comparison of the textile-clothing sector in Bangladesh and selected Asian textile-clothing
producing countries is analyzed using IO tables (China 2005, Bangladesh 2006, India 2006, Sri Lanka
2006, Thailand 2007 and Viet Nam 2007) c o m p i l e d by Asian Development Bank. This paper examines the textile-clothing sector from different points of view via i n p u t o u t p u t ( IO) analysis
following the method used in previous studies, especially techniques used by Ministry of Internal Affairs
and Communication of Japan to analyze input output table of 2005.
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November 27, 2015. Bangkok, Thailand
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The input output table shows some columns and rows. For methodology explanation, we indicate ‘i’ as rows and ‘j’ as columns and ‘n’ as number of sectors. IO table is then converted into input output
coefficient table where coefficient is defined as:
aij = xij/Xj --------------------------------------------------------(1) Here, Xj is total output of ‘j’, xij is the input of ‘j’ from ‘i’. aij is defined as input coefficient which shows
the required direct input from ‘i’ in order to produce 1 unit of ‘j’ product. Input coefficient matrix (A), in
other words, the matrix comprised of ‘aij’s, is generated from IO tables is as the following matrix:
In this paper, mainly we consider [I - (I - M̂ ) A]-1 type model, that accounts for import inputs where
‘M̂’ is the diagonal matrix of import coefficients and ‘I’ is the identity matrix, for accurate
determination of domestic production repercussions and to find the import leakage in the textile-clothing sector of the concerned economies.
The direct linkages are obtained from input coefficient matrix (A). The elements of input coefficient matrix
(A) give the direct input that a sector needs to get from other sector to produce 1 unit. Moreover, it shows the direct backward and forward linkage indicators. The sum of the column elements is equal to the
direct backward linkage indicator (Bj) of the sector associated with that column.
The same calculation of equation (3) using [I - (I - M̂ ) A]-1 model results domestic direct and indirect backward linkage indicator, i.e. total domestic backward linkage indicator (TDB) and equation (4) total
Backward linkage indicators are also called output multipliers and forward linkage indicators are known
as input multipliers. Forward and backward linkage indicators reflect the push and pull power of sectors for other sectors in the economy, respectively.
Finally economic leakage (Guo & Planting, 2000) is calculated by subtracting indicators of [I - (I - M̂ )
A]-1 type model from the indicators of Leontief inverse matrix (I-A)-1
as in the following equation. Backward Leakage = TB-TDB --------------------------------------------------------(7)
Where a*j is the vertical (column) sum of the sector and µ is the average of the total vertical (column)
sum of the sectors. ISD = aj*/µ --------------------------------------------------------(10)
Where a*j is the horizontal (row) sum of the sector and µ is the average of the total horizontal (row) sum
of the sectors.
IPD and ISD indicate the magnitudes of production repercussion power of the each sector on the other sectors when one unit of final demand is increased or decreased in any sector.
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
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5. Results & Discussion
5.1 Structure of the economies Status of the economy of a particular nation for a particular period of time may be obtained from the
input-output tables by analyzing the inter-industrial goods and service transactions as recorded under the
matrix column. As an illustration, a straightforward overall picture of the 2006 input-output table for Bangladesh with 15 sectors is depicted in Appendix A and the economic structure as inferred from the
aforesaid table is shown in figure 1.
Figure 1: Flow of supply and demand according to the 2006 input-output table of Bangladesh
It is deduced from the said table that the total supply of goods and services in 2006 is USD 98.6 billion of which the domestic production amounted to 84.8 billion US dollar (86% of the total supply) while the
imports valued at 13.8 billion US dollar (14% of the total supply value).
Total Supply at Basic Prices
(USD 98.6 billion)
(BDT 7890 billion)
Intermediate Input
(35%)
Gross Value Added
(65%)
Total Demand at Basic Prices
(USD 98.6 billion)
Intermediate Demand
(35%)
Goods (68%) Services
(32%)
Final Demand
(65%)
Domestic Demand (85%) Export (15%)
Clothing (71%)
Other Export (29%)
Import (14%) and Domestic Production (86%)
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
November 27, 2015. Bangkok, Thailand
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Agriculture & Mining,
14%
Manufacturing, 39%
Services, 47%
Gross value added, which is another structural element for domestic consumption, amounted to 64.1 billion US dollar, and the ratio of gross value added, which represents the ratio accounted for by gross
value added in domestic production, is 65%.
Looking from the demand side, the total amount of goods and services demanded in 2006 is USD 98.6
billion out of which the value of intermediate demand is amounted to 34.5 billion US dollar (35% of the total demand value) and the value of final demand totaled at 64.1 billion US dollar (65% of the total
demand value), while the value of exports totaled at 9.6 billion US dollar (15% of the final demand
value). Whereas 71% of the total exports of Bangladesh is clothing.
Table 2: Flow of supply and demand according to the input-output tables of comparing economies
Bangladesh India China Sri Lanka Thailand Viet Nam
Total Demand(billion$) $98.6 $1,396 $9,752 $44.6 $ 786 $176.5
Intermediate Demand 35% 44% 60% 34% 48% 45%
Final Demand 65% 56% 40% 66% 52% 55%
Domestic Demand 85% 82% 73% 79% 56% 64%
Export 15% 18% 27% 21% 44% 36%
Clothing Export 71% 9% 15% 30% 5% 25%
Clothing Output 15% 3% 5% 7% 3% 6%
When comparative study (Table 1) is done on the economic structure of some Asian countries, it is evident that highest intermediate input is used in China ($5,851.2 billion) followed by Thailand ($ 393
billion) whereas highest gross value added is in Bangladesh (65%) followed by Sri Lanka. To analyze the
import structure of the economy, the highest important dependant country is Viet Nam (27%) and the lowest important dependant country is
China (10%). The greatest domestic
demand is in Bangladesh (85%) and top
exporter is Thailand (44%) in relation to the total demand of a nation. But when
we analyze the clothing export in the
export basket, we find that Bangladesh exports 71% of the 15% output (the
highest percentage of clothing output in
the region).
Broad categorization of production by industry: According to IOT 2006,
production by industries, in Bangladesh
(Figure 2) service sector holds the highest ratio (47%), followed, in sequence, by manufacturing (39%)
and agriculture (14%). In terms of primary, secondary, and tertiary industries of Bangladesh; the ratio for
secondary industries is 50% followed by tertiary industry 37% and primary industry (13%).
Figure 2: Production by industry in Bangladesh
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November 27, 2015. Bangkok, Thailand
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Viet Nam is more manufacturing oriented country among the six comparable countries, Table 2, whereas Sri Lanka is in the bottom of the rank. Bangladesh & India remain as agrarian economy. Service industry
is rising more rapidly in Sri Lanka holding 1st position in the economic structure. In regard to clothing &
leather production, Bangladesh produces highest percentage, whereas India & Thailand produce lowest
percentage of total output.
Table 3: Production by industry of the comparing economies
Bangladesh India China Sri Lanka Thailand Vietnam
Agriculture & Mining 14% 14% 11% 12% 8% 13%
Manufacturing 39% 40% 53% 36% 53% 55%
Services 47% 46% 36% 52% 39% 32%
Clothing & Leather 15% 3% 5% 7% 3% 6%
Import export structure: Import structure of an economy is vital sometimes because it reflects the
dependency of the economy or the independence. Self reliant economy does not depend on the imported
products. In our analysis it unveils that Bangladesh is more dependent on import for agricultural (13%) &
food (12%) product than all other countries and India is most independent country in agricultural sector.
For mining, paper, metal, and real estate industries Sri Lanka is the highest dependent on import.
Table 4: Import export ratio in terms of total supply and demand of the economies
Import Export
Ind
ust
ries
Ban
gla
des
h
India
Chin
a
Sri
Lan
ka
Thai
land
Vie
t N
am
Ban
gla
des
h
India
Chin
a
Sri
Lan
ka
Thai
land
Vie
t N
am
Agriculture, Forestry and
Fishery Products
0.13
0.02
0.04
0.11
0.06
0.06
0.03
0.04
0.01
0.09
0.14
0.24
Products of Mining and
Quarrying
0.48
0.63
0.24
0.69
0.67
0.03
0.00
0.13
0.03
0.20
0.05
0.78
Food, Beverages and Tobacco Products
0.12
0.06
0.04
0.09
0.08
0.09
0.01
0.06
0.06
0.03
0.26
0.26
Clothing and Wearing Apparel,
and others
0.13
0.04
0.07
0.54
0.13
0.29
0.46
0.28
0.33
0.64
0.31
0.80
Products of Wood, Paper and Paper Products
0.11
0.14
0.07
0.78
0.17
0.25
0.01
0.03
0.12
0.27
0.24
0.10
Basic Metals, Fabricated
Metals, & others
0.67
0.26
0.20
0.85
0.34
0.53
0.02
0.15
0.21
0.11
0.35
0.09
Other Manufacturing
0.32
0.21
0.12
0.27
0.21
0.53
0.05
0.11
0.11
0.14
0.27
0.15
Electricity, Town Gas, Steam and Hot Water
-
-
0.00
-
0.01
0.03
-
-
0.00
0.00
0.00
0.00
Water
-
-
-
0.00
-
0.00
-
-
-
0.01
-
-
Construction Services
0.00
-
0.00
0.00
-
-
0.00
-
0.00
0.01
-
-
Wholesale and Retail Trade
Services
-
-
-
-
-
-
0.09
0.11
0.14
0.18
0.28
0.21
Transportation,
Proceedings of The 10th International Conference on the Regional Innovation and cooperation in Asia.
In respect of textile-clothing industry, Sri Lanka is the highest import dependent country (54%) and Viet Nam is 2
nd largest import dependent country with 29% import of the total supply. India (4%) is the least
dependent on import followed by China (7%).
Export contribution in the Viet Nam’s economy is significant. Viet Nam exports 24% of agricultural
products, 78% of mining products, 26% of food products and 80% of the clothing products which are
highest in these industries in the region. In textile-clothing export Sri Lanka holds second position and
Bangladesh holds third position with 64% and 46% respectively. However, all countries hold very good
ratio in textile clothing export.
5.2 Backward and forward linkage
Domestically Bangladesh, India and China have strong backward linkage for textile-clothing industry
having 1.86, 2.14, and 2.55 domestic indices respectively; Sri Lanka and Viet Nam are strong for food
industry having 1.61 and 2.31 indices; and Thailand is best for electricity, gas and hot water industry
with 2.33 index. For forward linkage no country in the region is perfect for textile-clothing industry.
Table 5: Priority sectors of the economies
Country Highest Backward Multiplier Sector
Highest Forward Multiplier Sector
Highest Backward Multiplier Sector
Highest Forward Multiplier Sector
13%
4% 7%
54%
13%
29%
46%
28% 33%
64%
31%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Bangladesh India China Sri Lanka Thailand Viet Nam
Import
Export
Figure 3: Import export ratio of textile-clothing produce in respect of total supply and demand
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November 27, 2015. Bangkok, Thailand
110
Domestic10 Total11
Bangladesh Clothing Other Services Clothing Metal
India Clothing Other Manufacturing Metal Other Manufacturing
China Clothing Other Manufacturing Metal Metal
Sri Lanka Food Other Manufacturing Other Manufacturing Other Manufacturing
Thailand Electricity Other Manufacturing Metal Metal
Viet Nam Food Agriculture Metal Other Manufacturing
But when total (including import repercussions) are considered metal is the most important industry for
any economy either in case of input or output multipliers. If we look at the total backward linkage
indicators of the economies, it is evident that economy of Bangladesh is fit for clothing industry with 2.42
index having a import leakage of 0.56 [2.42 (total) minus 1.86 (domestic)]; economy of India, China, and
Thailand are best for metal industry; whereas Sri Lanka is fit for other manufacturing. When we talk
about forward linkage indicator, it speaks that metal and other manufacturing are playing pivotal role for
each economy in the region.
Table 6: Sectoral structure of the comparing economies
Domestic Output Multipliers12
Total Output Multipliers13
Sectors
Ban
gla
des
h
India
Chin
a
Sri
Lan
ka
Thai
land
Vie
t N
am
Ban
gla
des
h
India
Chin
a
Sri
Lan
ka
Thai
land
Vie
t N
am
Agriculture, Forestry and Fishery
Products
1.18
1.28
1.76
1.25
1.45
1.73
1.31
1.39
2.10
1.45
1.77
2.65
Products of Mining and Quarrying
1.07
1.12
1.78
1.06
1.13
1.21
1.25
1.52
2.68
1.32
1.66
1.74
Food, Beverages and Tobacco Products
1.62
2.14
2.30
1.61
1.96
2.31
1.95
2.45
2.78
1.88
2.48
3.61
Clothing and Wearing Apparel,
and others
1.86
2.14
2.55
1.16
1.93
1.59
2.42
2.58
3.40
1.69
2.72
3.77
Products of Wood, Paper and Paper Products
1.66
1.81
2.42
1.09
1.69
1.66
2.21
2.35
3.30
1.89
2.40
3.42
Basic Metals, Fabricated Metals,
& others
1.16
1.67
2.13
1.05
1.59
1.27
2.18
2.68
3.59
1.86
3.33
4.15
Other Manufacturing
1.40
1.64
2.23
1.41
1.49
1.30
1.90
2.44
3.28
2.06
2.34
3.45
Electricity, Town Gas, Steam and
Hot Water
1.21
1.70
2.14
1.54
2.23
1.50
1.39
2.12
2.97
1.82
3.16
2.09
Water
1.27
1.19
2.10
1.52
1.45
1.47
1.46
1.24
2.68
1.67
1.71
2.17
Construction Services
1.59
1.78
2.38
1.42
1.86
1.51
1.98
2.36
3.29
1.92
2.85
3.21
Wholesale and Retail Trade
1.11
1.23
1.91
1.23
1.56
1.28
1.16
1.31
2.36
1.31
1.93
1.72
10
Based on model [I - ( I - M̂ ) A]-1
11
Based on Leontief inverse model [(I-A)-1
] 12
Based on model [ I - (I - M̂ ) A]-1
13
Based on Leontief inverse model [(I-A)-1
]
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Services
Transportation, Communication,
and others
1.32
1.68
2.05
1.42
1.63
1.25
1.57
2.09
2.70
1.85
2.58
2.28
Financial Intermediation, Insurance & others
1.33
1.13
1.70
1.25
1.67
1.13
1.53
1.19
2.02
1.40
2.18
1.37
Real Estate, Leasing or Rental,
and Others
1.09
1.17
1.38
1.38
1.57
1.33
1.13
1.25
1.55
1.62
2.06
1.84
Other Services, n.e.c.
1.31
1.55
2.06
1.60
1.63
1.49
1.45
1.76
2.68
1.88
2.00
2.18
The result of input output analysis on clothing sector (Figure 4 and Table 7) shows that China and Viet
Nam hold the highest direct backward linkage effect (0.79). This means that if there is one unit change in
the final demand, clothing production will be changed by 0.79 times. This is direct effect. But indirectly, because of repercussion effects, the output will change more than direct amount, which is measured by
inverse matrix. Inverse matrix coefficients are observed in relation to production repercussions, for
instance, when one unit of final demand is generated in textile-clothing sector, production in the industry must increase (direct effect) to satisfy demand. Due to increase in textile-clothing production, other
sectors must increase production, the effects of which further increase production in textile-clothing
because of indirect effects. As a result, the production increase in the textile-clothing industry usually exceeds one unit.
The clothing industry of Viet Nam followed by China holds the highest degree of direct & indirect (total)
backward linkage indicator i.e. if there is one unit change in the final demand, in Viet Nam there will be 3.77 times change in clothing production and in China 3.40 times change.
This is also called the total output multiplier effect or pull power of the sector. It is to be noted that the larger the backward linkage indicator, the more inputs that industry receives from other industries. If the
output multiplier is high, it means that an increase in one-unit final demand increases total production, i.e.
it activates the other sectors by providing input.
Table 7: Backward and forward linkage indicators of clothing sector
Country
Direct
Backward
Linkage Indicator
Domestic Backward
Indicator
Total
Backward
Linkage Indicator
Direct
Forward
Linkage Indicator
Domestic Forward
Indicator
Total
Forward
Linkage Indicator
Bangladesh 0.73 1.86 2.42 0.056 1.45 1.74
India 0.77 2.14 2.58 0.011 1.33 1.39
China 0.79 2.55 3.40 0.027 1.77 2.10
Sri Lanka 0.41 1.93 1.69 0.010 1.42 1.30
Thailand 0.70 1.16 2.72 0.017 1.06 1.70
Viet Nam 0.79 1.59 3.77 0.038 1.46 2.81
In case of direct and total forward linkage indicators, deduced from Figure 4 and Table 7, Bangladesh
holds the highest direct forward linkage indicator, i.e. direct push power of clothing sector of Bangladesh
is the highest. But total push power of clothing sector of Viet Nam ( 2.81) is the highest followed by
China (2.10).
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Forward and backward linkage indicators reflecting the push and pull power of sectors for the other sectors, respectively, must be taken into consideration for investment decisions.
When inverse matrix is calculated accounting the imports using [I - (I - M̂ ) A]-1 type model, the picture
of the backward and forward linkage indicators are changed as indicated in the table 7.
In our previous analysis it is shown that Viet Nam is the strongest country in the region with backward linkage power. At the moment when we consider only domestic inducement indicator (excluding import
repercussions) it reveals that China holds the highest score in domestic backward linkage indicator, i.e.
China has the highest domestic output multiplier (2.55) followed by India (2.14). This examination indicates that Viet Nam is more import dependant on backward linkage in the textile-clothing sector.
Thailand is good considering domestic and total backward linkage indicators holding 3rd
position in the
region and Sri Lanka is very poor in backward linkage.
While the same analysis is done to calculate forward linkage indicator, it results that Chain again proves
that it is the domestically sound nation for the textile and clothing business having 1.77 points followed
0.73 0.77 0.79 0.41 0.70 0.79
2.42 2.58 3.40
1.69
2.72
3.77
Direct Backward Linkage Indicator
Total Backward Linkage Indicator
0.056
0.011
0.027
0.010
0.017
0.038
1.74
1.39
2.10
1.30
1.70
2.81
Bangladesh
India
China
Sri Lanka
Thailand
Viet Nam
Total Foreward Linkage Indicator
Direct Foreward Linkage Indicator
1.86 2.14
2.55
1.93
1.16 1.59
2.42 2.58
3.4
2.72
1.69
3.77
Domestic Backward Indicator
Total Backward Indicator
Bangladesh
India
China
Thailand
Sri Lanka
Vietnam
1.45
1.33
1.77
1.42
1.06
1.46
1.74
1.39
2.1
1.7
1.3
2.81
Total Forward Indicator
Domestic Forward Indicator
Figure 5: Comparison of domestic backward and total backward linkage indicators of the clothing sector
Figure 4: Direct and total backward and forward linkage indicators of the comparing countries
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by Viet Nam. Viet Nam is domestically good for input multiplier (1.46) holding 2nd
position. Sri Lanka
remains poor for domestic and total forward linkage.
6. Conclusion
The textile-clothing sector has an important role in the national economy of each country in the region.
The results of the comparative IO analysis point out that the general trend in the Bangladesh clothing sector is similar to the clothing sectors in the region because Bangladesh and the other comparing
countries are clothing export oriented countries.
From the input output tables we find that in the economic structure, the highest intermediate input is used
in China and the highest gross value added is in Bangladesh but when we discuss the clothing export pattern, we find that Bangladesh exports highest clothing of its total output. The output and input
multiplier effect or pull and push power of the clothing sector is greatest in Viet Nam but in domestic case
China still remains most powerful producer of textile-clothing produce in the region.
A comparison of the more detailed import dependency of the clothing industry and an employment
analysis can be considered as further researches. Analyzing the import dependency helps to identify the countries and sectors, which are more dependent on foreign sources and provides a comparative analysis
of the clothing sectors in respect to the imported inputs. In our future study, we will focus on import
export analysis and impact of input output table and potential demand supply chains within the region to accelerate economic cooperation. The employment analysis, furthermore, is also useful to understand the
share of the clothing sector in employment generation and its direct and indirect contribution to the
employment via using IO tables since textile-clothing sector has a great impact on employment
generation.
In the current study leather and leather goods are not separated from the textile & clothing goods (4th
sector of the input output table). In the final paper, segregation should be made with proper reference.
This is the beginning of the study, more detailed study of textile-clothing industry of the region will come
up in our future research.
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