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Determinants of Labor-intensive exports by the Developing Countries : A Cross Country Analysis

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  • Mottaleb Khondoker

    (International Rice Research Institute)

  • Kaliappa Kalirajan

    (Manila and Crawford School of Public Policy)

Abstract

While it is widely recognized that industrial development is imperative in developing countries to reduce poverty and to attain sustainable economic growth, there is no consensus on how to develop industries and where to start. Generally, the literature argues that developing countries should concentrate on promoting labour intensive industries and exports first due to their low capital stock and relatively abundant labor force. Though many developing countries are attempting to follow this path, the interesting observation is that not all developing countries are reaping the benefits of promoting labor intensive industries in terms of employment generation and sustaining economic growth. This raises an important question as to how it is possible for some developing countries to enjoy more benefits from labor intensive industries, while others are not able to do so. Using cross-country panel data in explaining heterogeneous performance in exporting labor intensive products by the developing countries, an attempt has been made in this paper to identify the important factors over and above the conventional factors such as low labor wages that contribute to the sustained growth of labor intensive exports from developing countries. The empirical findings of this paper emphasizes that even to initiate and sustain the growth of the low value added industries, such as garments, the developing countries should develop basic infrastructure and maintain a friendly business environment.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series EABER Working Papers with number 23304.

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Date of creation: Jul 2012
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Handle: RePEc:eab:wpaper:23304

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Keywords: Developing country; Garment and textile export; Infrastructure; Business Environment; Asia; Sub-Saharan Africa.;

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  1. Kinda, Tidiane, 2010. "Investment Climate and FDI in Developing Countries: Firm-Level Evidence," World Development, Elsevier, Elsevier, vol. 38(4), pages 498-513, April.
  2. Vu Hoang Nam & Tetsushi Sonobe & Keijiro Otsuka, 2010. "An Inquiry into the Development Process of Village Industries: The Case of a Knitwear Cluster in Northern Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 312-330.
  3. Moschos, Demetrios, 1989. "Export expansion, growth and the level of economic development: An empirical analysis," Journal of Development Economics, Elsevier, Elsevier, vol. 30(1), pages 93-102, January.
  4. Hidemi Kimura & Yasuyuki Todo, 2009. "Is Foreign Aid a Vanguard of Foreign Direct Investment? A Gravity-Equation Approach," Development Economics Working Papers 22881, East Asian Bureau of Economic Research.
  5. Khondoker Abdul Mottaleb & Tetsushi Sonobe, 2011. "An Inquiry into the Rapid Growth of the Garment Industry in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 60(1), pages 67 - 89.
  6. Eiji Yamamura & Tetsushi Sonobe & Keijiro Otsuka, 2003. "Human capital, cluster formation, and international relocation: the case of the garment industry in Japan, 1968--98," Journal of Economic Geography, Oxford University Press, Oxford University Press, vol. 3(1), pages 37-56, January.
  7. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
  8. J. David Brown & John S. Earle & Dana Lup, 2004. "Finance, Human Capital, Technical Assistance, and the Business Environment in Romania," William Davidson Institute Working Papers Series 2004-639, William Davidson Institute at the University of Michigan.
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