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Apparel exports - still a path for industrial development? Dynamics in apparel global value chains and implications for low-income countries

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  • Staritz, Cornelia

Abstract

The apparel sector has traditionally been a gateway to export diversification and industrial development for low-income countries (LICs). In the context of heightened competition and recent changes in the global apparel sector related to trade liberalization and global buyers' sourcing policies, the paper discusses to what extent the apparel sector can still provide this role for LICs today. Recent developments have important implications for LICs that aim to develop through apparel exports, in particular related to (i) increasing entry barriers and global consolidation, (ii) global demand, supply and asymmetric market structures, (iii) high competition in wages and labor standards, (iv) shifting end markets to emerging and regional markets, and (v) the importance of foreign investment with often limited local linkages. The paper concludes that global consolidation and asymmetric market and power structure have increased entry barriers and made upgrading processes more complicated and contested. Even if LIC suppliers fulfill higher requirements and achieve upgrading this does not necessarily secure improved rewards in terms of higher prices, more secure orders and better working conditions. However, shifting end markets to large developing countries, regional and domestic markets, and the increasing importance of developing countries' buyers lead to new opportunities for LIC apparel exporters. Overall, the sector still provides opportunities for industrial development; however, this requires proactive industrial policies in LICs to further upgrading and local value capture as well as a focus away from solely exporting to the US and Europe to regional and domestic markets. At the EU and international level, regulations to secure labor standards and responsible business practices of buyers and changes in the trade and investment regime to increase policy space to support upgrading and industrial development in LICs are necessary.

Suggested Citation

  • Staritz, Cornelia, 2012. "Apparel exports - still a path for industrial development? Dynamics in apparel global value chains and implications for low-income countries," Working Papers 34, Austrian Foundation for Development Research (ÖFSE).
    • Handle: RePEc:zbw:oefsew:34
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    2. Plank, Leonhard & Rossi, Arianna & Staritz, Cornelia, 2012. "Workers and social upgrading in "fast fashion": The case of the apparel industry in Morocco and Romania," Working Papers 33, Austrian Foundation for Development Research (ÖFSE).
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    7. Mike Morris & Cornelia Staritz & Justin Barnes, 2011. "Value chain dynamics, local embeddedness, and upgrading in the clothing sectors of Lesotho and Swaziland," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 4(1/2/3), pages 96-119.
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    Cited by:

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    2. Farhad Uddin Ahmed & Louis Brennan, 2019. "Performance determinants of early internationalizing firms: The role of international entrepreneurial orientation," Journal of International Entrepreneurship, Springer, vol. 17(3), pages 389-424, September.
    3. Grumiller, Jan & Azmeh, Shamel & Staritz, Cornelia & Raza, Werner & Grohs, Hannes & Tröster, Bernhard, 2018. "Strategies for sustainable upgrading in global value chains: The Tunisian textile and apparel sector," Policy Notes 27/2018, Austrian Foundation for Development Research (ÖFSE).
    4. Farhad Uddin Ahmed & Louis Brennan, 2019. "The impact of Founder’s human capital on firms’ extent of early internationalisation: Evidence from a least-developed country," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 615-659, September.
    5. Louise Curran & Khalid Nadvi, 2015. "Shifting trade preferences and value chain impacts in the Bangladesh textiles and garment industry," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(3), pages 459-474.
    6. Tiago Domingues, 2018. "Global Value Chains and Vertical Specialization: The case of Portuguese Textiles and Shoes exports," GEE Papers 00117, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jan 2019.
    7. Nathalie Homlong & Elisabeth Springler, 2016. "Cambodiaʼs Garment Industry and Labor Conditions - A Showcase for Social Sustainability, or not better than its Neighbors?," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 2(1), pages 33-46, January.

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