The Impact of Accord & Alliance Compliance Measures on RMG Firm Performance in Bangladesh

Monzur Hossain, Kazi Iqbal and Tahreen Tahrima Chowdhury

The World Economy, 2025, vol. 48, issue 9, 2155-2170

Abstract: This paper examines the impact of a buyer‐driven compliance initiative on ready‐made garment (RMG) firms. Following the devastating Rana Plaza collapse in 2013, U.S. and European garment buyers launched two workplace safety compliance initiatives, the Accord and the Alliance (A&A), aimed at improving workplace safety and labour conditions in the RMG sector, a major source of export earnings and female employment in Bangladesh. Approximately 2000 RMG firms, which account for nearly 60% of the total, entered into a five‐year agreement with A&A from 2014 to 2018 to enhance compliance standards [Correction added on 7 July 2025, after first online publication: The percentage of RMG firms in this sentence was incorrectly stated as 660%. This has been corrected to 60% in this version.]. Using primary survey data from 322 firms—179 treatment and 143 non‐treatment—we apply the difference‐in‐differences method to investigate the causal impact of compliance measures on various firm outcomes. Our results indicate that the compliance impact is positive and significant only for labour productivity, but not for profitability or market access. Improved workplace safety protocols enhance job satisfaction, which in turn boosts labour productivity. However, the positive effect of workplace safety on profitability or market access may be realised in the long run, alongside increased labour productivity.

Date: 2025
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