[notahacker]

The thing about sweatshops is that they could make the same clothes, retailing in the West at the same prices, if they hired adults on a 45 hour weeks with genuinely optional overtime and didn't treat their staff abusively. There would actually be higher employment rather than lower employment in the local economy as a result. In many cases the only people that lose out would be middlemen that earn very well by developing world standards reallocating outsourcing contracts to cheaper factories offering worse conditions. Sure, the fact that economic globalization allows people in poorer countries to earn an income doing work for richer countries benefits them, and it's very difficult for factories and even local governments to unilaterally enforce better working conditions, but that doesn't mean that the people whose best option is working in the garment industry wouldn't on average be better off if retailers actually knew where their clothes were made and regulation was so pervasive internationally and effectively enforced that buyers didn't have the option of getting T-shirts for a cent less from the factory that employed actual slaves.

The evidence so far doesn't support outsourced garment manufacture as being a route to developed country status either.

[PeterisP]

Your hypothesis in the first sentence is testable - would a Bangladeshi factory owner who chose to do as you say be more competitive than others, getting higher productivity while being able to sell for the same prices? Are the most successful manufacturers there doing it right now, and if not, why not?