Institutional Determinants and National Competitiveness: A Cross-Country Study of the Textile Sector

Abstract

Building globally competitive industries has long been a strategic priority for national governments. In this context, the textile sectors of India and Bangladesh represent crucial contributors to their respective economies. This study investigates whether institutional characteristics exert a stronger influence on national competitive advantage in these two emerging economies than firm-level capabilities, market-oriented strategies, or country size. The central research question explores how institutional dimensions affect the competitive standing of India and Bangladesh within the textile industry. Grounded in institutional theory, the analysis focuses on the impact of coercive, normative, and mimetic forces in shaping competitiveness. The findings indicate that institutional conditions play a decisive role, with Bangladesh gaining a relative advantage through cost efficiencies supported by flexible labor laws, lenient environmental standards, and preferential access to EU markets. Conversely, India encounters difficulties in sustaining cost competitiveness. By emphasizing the significance of institutional pressures, this research contributes to the literature on industrial economics and international business, providing useful implications for policymakers and industry stakeholders. The results suggest that national competitiveness in the textile sector is largely determined by institutional frameworks rather than by economic scale.