Dual-Track Dynamics and Divergent Upgrading in Apparel in Bangladesh and Sri Lanka

This article examines why Bangladesh and Sri Lanka, despite participating in the same buyer-driven apparel global value chain, have followed divergent upgrading trajectories. It develops a dual-track interaction framework to analyse how different forms of political stability shape the co-evolution of institutions and industrial capabilities. The central argument is that effective political stability is not merely a matter of regime continuity; rather, it depends on the state’s capacity to generate credible expectations, sustain policy commitments, and support sectoral co-ordination. Bangladesh’s apparel sector has achieved remarkable export growth and strong production capabilities, but surface-level political stability – at least until 2024 – combined with underlying polarisation, uneven enforcement, and patronage-based state–business relations has constrained functional upgrading. Sri Lanka, despite broader national volatility, developed a sector-specific consensus around apparel exports, more professionalised state–business co-ordination, and collective branding around quality and ethical production. These institutional conditions supported capability upgrading into higher-value niches. By linking political stability, state–business relations, and global value chain upgrading, the article offers a middle-range political economy explanation for divergent manufacturing trajectories in South Asia.