Governance and Trade: A Mixed-Method Analysis of Governance Impact on Bangladeshi Apparel Trade Performance

Abstract

This thesis advances the governance-trade relationship model to capture the factors responsible for trade growth within a weakly governed environment, as well as how the impact of governance is transmitted to the firm level. The empirical support for the governance-trade relationship model is established by scoping the apparel industry of Bangladesh. The contributions of the thesis, to the governance-trade knowledge domain, are: (i) confirmation of the positive impact of good governance, (ii) identification of three transmission channels (lead time, quality and cost of manufacturing), (iii) justification of trade growth without governance, and (iv) identification of the ways comparative advantages stem from the formal and informal institutional systems of governance.
A mixed-methods approach formed of exploratory quantitative study and explanatory qualitative study is applied in this study. The trade gravity equation is applied to analyse a panel data set consisting of 145 countries that traded apparel with Bangladeshi firms between 2000 and 2015. Furthermore, a case study is developed on the governance-trade relationship in Bangladesh from 17 semi-structured interviews with apparel industry practitioners.
In general, this study suggests that rule of law and control of corruption are the components of governance most robustly associated with apparel trade performance. On the whole, political stability is prioritised over democracy in Bangladesh. The findings also suggest that predictability of misgovernance reduces its negative impact on businesses, and the domestic trade in apparel will be relatively more attractive if the quality of governance would improve in Bangladesh.
This study also indicates that firms experienced in conducting business in a weakly governed environment are able to transform institutional obstacles into opportunities, which increases their likelihood of success in another weakly governed country should they internationalise. The new insights into how country governance can drive the capacity of firms to achieve success in international markets enrich our understanding of the governance-trade relationship.

Date of Award	14 Aug 2018
Original language	English
Supervisor	Stefania Paladini (Director of Studies)