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COVID-19’s impacts on global value chains, as seen in the apparel industry

Author

Listed:
  • Castañeda-Navarrete, Jennifer
  • Hauge, Jostein
  • López-Gómez, Carlos

Abstract

Motivation: The COVID-19 pandemic has massively disrupted international trade and global value chains. Impacts, however, differ across regions and industries. This article contributes to a better understanding of the scale of disruptions to industries and value chains integral to the economies of and livelihoods in developing countries, and what role policy can play to mitigate harm. Purpose: This article aims to: (1) analyse and characterize disruptions to the global apparel value chain caused by the COVID-19 pandemic, focusing on how developing countries have been impacted, and; (2) identify key policies to support a resilient, inclusive and sustainable recovery. Approach and methods: We review COVID-19 related reports published by international and non-governmental organizations, international trade and production statistics, industry surveys and media reports. We frame our analysis predominantly within the Global Value Chains literature. Findings: The global apparel value chain has been severely disrupted by the pandemic, owing to direct effects of sickness on workers in factories, reduced output of materials—cloth, thread, etc.—used to fabricate clothing, and to reduced demand for apparel in high-income countries. Developing countries are suffering disproportionately in terms of profits, wages, job security and job safety. Women workers in the apparel chain have been hit especially hard, not only because most workers in the chain are women, but also because they have experienced increasing unpaid care work and higher risk of gender-based violence. Policy implications: Five key areas of policy to support a resilient, inclusive and sustainable recovery stand out: (1) delivering emergency responses to ensure firm survival and the protection of workers’ livelihoods; (2) reformulating FDI attraction strategies and promoting market diversification; (3) supporting technology adoption and skills development; (4) deploying labour standards to improve workers’ conditions and strengthening social protection systems; and (5) adopting gender-sensitive responses.

Suggested Citation

  • Castañeda-Navarrete, Jennifer & Hauge, Jostein & López-Gómez, Carlos, 2021. "COVID-19’s impacts on global value chains, as seen in the apparel industry," LSE Research Online Documents on Economics 112527, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:112527
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    References listed on IDEAS

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    1. Altenburg, Tilman & Chen, Xiao & Lütkenhorst, Wilfried & Staritz, Cornelia & Whitfield, Lindsay, 2020. "Exporting out of China or out of Africa? Automation versus relocation in the global clothing industry," IDOS Discussion Papers 1/2020, German Institute of Development and Sustainability (IDOS).
    2. Jostein Hauge, 2020. "Industrial policy in the era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan," The World Economy, Wiley Blackwell, vol. 43(8), pages 2070-2092, August.
    3. Martin Hess & Henry Wai-Chung Yeung, 2006. "Whither Global Production Networks in Economic Geography? Past, Present, and Future," Environment and Planning A, , vol. 38(7), pages 1193-1204, July.
    4. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
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    Cited by:

    1. Choi, Tsan-Ming & Shi, Xiutian, 2022. "Reducing supply risks by supply guarantee deposit payments in the fashion industry in the “new normal after COVID-19”," Omega, Elsevier, vol. 109(C).

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    More about this item

    Keywords

    apparel industry; Covid-19; economic development; global value chains; power disparities; reshoring; supply chains; coronavirus;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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