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Egypt after the Multi-Fiber Arrangement: Global Apparel and Textile Supply Chains as a Route for Industrial Upgrading

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  • Dan Magder

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    (Capital One)

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    Abstract

    Exporting through international supply chains was a successful way for East Asian countries to develop their textile and apparel industries in the 1970s and 1980s, but it is a less clear route for countries like Egypt trying to compete today. The challenge is particularly acute given the strength of competitors like China, and even more so in the post-MFA era. Some analysts suggest that “lean retailing” increases the importance of geography in exporting in the world of rapidly changing apparel fashion, in a way that could benefit a country like Egypt with its proximity to European end markets. Using a supply chain model, this paper suggests that shortening lead times can indeed have an impact on profits, but that the effect is not tremendous, being in the range of a 0.3 percent to 0.9 percent increase in profits for every week of improvement in lead times. The study also finds that the business environment in Egypt lags key comparator countries in several areas that help the firms compete in global apparel chains, although recent reforms by the Egyptian government are working to address several of these aspects. It concludes by exploring to what extent geography, trade preferences, and local production factors may help Egypt’s textile and apparel industry carve out a role for itself in global supply chains, and provide an engine to drive industrial upgrading throughout the country.

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    Bibliographic Info

    Paper provided by Peterson Institute for International Economics in its series Working Paper Series with number WP05-8.

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    Date of creation: Aug 2005
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    Handle: RePEc:iie:wpaper:wp05-8

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    Keywords: Egypt; textile/apparel; supply chain; supply chain management; geography; Multi-Fiber Arrangement;

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    1. Carolyn L. Evans & James Harrigan, 2003. "Distance, Time, and Specialization," NBER Working Papers 9729, National Bureau of Economic Research, Inc.
    2. Gary Clyde Hufbauer & Yee Wong, 2004. "China Bashing 2004," Policy Briefs PB04-05, Peterson Institute for International Economics.
    3. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
    4. Clark, Ximena & Dollar, David & Micco, Alejandro, 2004. "Port efficiency, maritime transport costs, and bilateral trade," Journal of Development Economics, Elsevier, vol. 75(2), pages 417-450, December.
    5. Robert Z. Lawrence & Ahmed Galal, 2005. "Anchoring Reform with a US-Egypt Free Trade Agreement," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa74.
    6. Bernard Hoekman & Denise Konan & Keith Maskus, 1998. "An Egypt-U.S. Free Trade Agreement: Economic Incentives and Effects," Working Papers 199802, University of Hawaii at Manoa, Department of Economics.
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