Who benefits and how much? : how gender affects welfare impacts of a booming textile industry

Exports of textile products originating from Sub-Saharan African countries have grown dramatically in the past decade. Recent trade initiatives, such as the"African Growth Opportunity Act"and"Everything but Arms,"along with low labor costs and improved integration into world markets, are giving further stimulus to the growth of the textile and apparel industry in Sub-Saharan African countries. Nicita and Razzaz explore the extent to which the poor are also beneficiaries of the export-led growth of particular economic sectors, or whether the poor are unable to reap any of the benefits and therefore fall further behind. They use a methodology that combines the matching methods literature (to identify individuals more likely to fill the new jobs of the expanding sector) with the industry wage premium literature (to quantify the gains of the individuals that move into the expanding sector). The results indicate that a sustained export-driven growth in Madagascar's textile and apparel industry will lead to a substantial increase in the income of poor households, with a consequent decrease in poverty. In a scenario simulating five years of expansion of the textile sector, the authors estimate that more than one million individuals will directly or indirectly receive some benefit. On average, households in which one or more members work in the textile sector get an increase in purchasing power of about 24 percent or US$14 a month. The results further show that benefits are unevenly distributed across male and female workers. Households in which a male member is employed in the textile and apparel industry increase their purchasing power by 36 percent or US$24.5 a month, compared with 22 percent or US$12.2 a month in the case of a female worker.