Productivity Improvements in LIC Manufacturing Sectors: Multidimensional Evidence from Bangladeshi Garment Factories

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Manufacturing sectors in developing countries show a far greater dispersion in firm productivity and management practices than counterparts in high-income countries. Sustained increases in wages and employment creation depend on increases in productivity. This project aims to deepen our understanding of the process of productivity improvement in manufacturing firms in low-income countries (LICs) and to gain insights as to why productivity and innovation lag. We focus on the Bangladeshi RMG sector, the largest source of urban employment in Bangladesh. We study the effects of a training program developed and offered by Solutions for Management International (S4Mi), a not-for-profit consulting firm established as a part of DFID's Responsible and Accountable Garment Sector (RAGS) program. The S4Mi program has elements of training and consulting, with both classroom and in-factory components. S4Mi and the participating factories select a single pilot production line on which to focus. During the first year of the program, there are seven one-week classroom training sessions, four focused on production / planning and three on HR. Each classroom session is followed by in-factory activations, which focus on providing tools and developing a culture suitable for problem solving. Following the initial activation phase, the program is rolled out to other lines in the factory. Further dimensions of particular interest, therefore, are the determinants of the diffusion of practices across the lines.We incorporate a random selection of pilot lines to provide a valid comparison group prior to the factory-wide rollout. We combine extremely detailed productivity analysis with innovative survey and interview data. The productivity analysis provides an impact assessment of training provided as part of the project. Through the lens of the evaluation, the intense training offers an opportunity to observe a set of factories transitioning - or attempting to transition - internal processes and procedures. The survey and interview data will provide a unique window onto the internal processes of change that accompany the transition. A sample of the key questions we address is:a. Does the training program increase productivity, and, if so, do gains in productivity translate into better working conditions? b. Which share of taught practices are managers aware of at baseline? Are managers capable of predicting which practices will lead to improvement and which won't?c. Which factors affect diffusion of practices across lines? Do these factors differ depending on whether the suggested improvement comes from management or production floor workers? d. Which production lines and manager characteristics correlate with resistance to change?Mid-level management training is very commonly noted by key stakeholders as a critical bottleneck. Hence, there is demand for information about what works with regard to this training. We, the PIs, have been working on related projects in the sector in Bangladesh for more than two years. During this time, we have built important relationships with a number of foreign buyers (Tesco, Sainsbury's and H&M, for example), the industry associations (BGMEA and BKMEA), relevant government ministries (Commerce and Revenue), and foreign aid agencies (GIZ and DIFD). We will use these links both to inform the work during the project and to disseminate the results as we obtain them.While the project fits squarely in the innovation theme, there is an important gender component as well. An estimated 80% of workers in the garment sector are female. Improving productivity in the sector, therefore, has the potential to have a tremendous impact on incomes of and job opportunities for women, as well as to reduce their working hours and to afford them more stable jobs.