Life-time patterns of capacity utilization by manufacturing firms in an LDC: A study of jute spinning in Bangladesh

Many studies of capacity underutilization in manufacturing industry in LDCs examine its causes and suggest policies to reduce the extent of the underutilization. Failure or inability to utilize installed capacity fully results in considerable loss of manufacturing production in the Third World and to some extent may be avoided by better economic organization. However, not all capacity underutilization is avoidable and to some extent it varies inherently with the age of machines and plants. In this essay, some of the causes of capacity underutilization in Jute spinning mills in Bangladesh are identified but its main purpose is to explore whether and how capacity utilization varies with the age of jute spinning mills in Bangladesh. Indeed, it advances the hypothesis that there is a typical life-time or age-dependent pattern of utilization of installed capacity because machines are not replaced or are infrequently replaced.