Global Apparel Value Chain in the Post‐ <scp>MFA</scp> Era: Exploring Bangladesh's Competitive Edge

ABSTRACT This study revisits Bangladesh's competitive edge by examining patterns of global apparel trade during the post‐Multi‐Fibre Arrangement (MFA) era using a large bilateral panel of 27 leading apparel exporters trading with 163 destinations with coverage of 90% of the world apparel exports. Utilising a theory‐consistent structural gravity framework estimated with the Poisson Pseudo Maximum Likelihood (PPML) estimator, this study finds that long geographical distance from major markets such as the US and the EU has not placed Bangladesh in a specific disadvantageous position in this industry. While standard gravity expectations suggest that remoteness should penalise distant Asian suppliers, the results reveal a more nuanced pattern. Bangladesh's exports are less affected by distance at the aggregate level, and for core basic apparel items such as T‐shirts and denim trousers, the Bangladesh‐distance interaction is positive and statistically significant, with contiguity turning negative. This reflects product specialisation, whereby global buyers source standardised, time‐insensitive apparel from distant but low‐cost, scale‐efficient suppliers. Wage competitiveness and bilateral real exchange rate (RER) conditions are also associated with performance, although interpreted as correlated rather than strictly causal. Overall, the findings suggest that Bangladesh successfully leveraged specialisation, scale and cost advantage to overcome the ‘tyranny of distance’ in the post‐MFA global apparel market.