Dynamics of the Garment Industry in Low-Income Countries: Experience of Asia and Africa
調査研究報告書
Edited by FUKUNISHI Takahiro
2012年3月発行
Chapter 1
Introduction (147KB) / Takahiro Fukunishi
The contribution of the garment industry to economy and employment opportunity is considerable particularly in low-income countries, but it has not been appreciated well as firms are considered to have little capacity of technological upgrading. Despite the critical views, the industry found to be capable to continue growth without degradation of working conditions after the trade liberalization in the apparel market. However, success of garment exports is neither uniform nor shared by all low-income countries. Experiences in Asia and Africa show that a development pattern has been affected by international politics through the market access as well as the country specific factors such as labor market conditions. This project aims at demonstrating heterogeneity of the development path in low-income countries through seven country studies.
Chapter 2
Vietnam’s garment industry was formerly characterized by the duality based on market orientation: export and domestic. Export-oriented garment suppliers were typically SOEs and foreign invested firms, while those producing for the domestic market have been mostly small, private companies.
With a booming economy, other industrial sectors have emerged, and the garment industry is no longer the sector most favored by workers. Wage rates have been increasing, and a supplier’s ability to cope with this through successful upgrading has been the key determinant of whether it can further grow and flourish. Those who fail to cope are finding themselves in an increasingly difficult position.
This chapter looks at both the export- and domestic-oriented garment suppliers, and attempts to highlight how the industry can further develop by examining the bottlenecks that vary depending on the type of supplier. It suggests that in the long run, upgrading and value addition in the domestic market will be the key strategy.
With a booming economy, other industrial sectors have emerged, and the garment industry is no longer the sector most favored by workers. Wage rates have been increasing, and a supplier’s ability to cope with this through successful upgrading has been the key determinant of whether it can further grow and flourish. Those who fail to cope are finding themselves in an increasingly difficult position.
This chapter looks at both the export- and domestic-oriented garment suppliers, and attempts to highlight how the industry can further develop by examining the bottlenecks that vary depending on the type of supplier. It suggests that in the long run, upgrading and value addition in the domestic market will be the key strategy.
Chapter 3
How Has the Cambodian Garment Industry Evolved? (292KB) / Yoko Asuyama and Seiha Neou
This chapter explores how the Cambodian garment industry has grown, even under the harsher business environment, by examining various contributing factors related to the international trade and investment environment, government policy and firm behaviors. Although the international trade and investment environment has been favorable to Cambodia, it was the Cambodian government and firms which seized every chance and took full advantage of it. The FDI-friendly policy and frequent dialog among various stakeholders contributed to the smooth and sustainable industry growth. Productivity improvement was also a key to the success of the industry. Finally, recent evidence seems to indicate that the Cambodian garment industry is continuously evolving towards a new stage of development.
Chapter 4
Garment Industry in Pakistan in the Post-MFA Period (402KB) / Momoe Makino
Pakistan’s knitwear exports have been struggling in the post-MFA period. The poor performance seems to be closely related to a particular feature of the garment industry in Pakistan, which is that most sewing operators have been males hired at piece rates. Recently, a few surviving knitwear factories have adopted a strategy to shift from male piece rate operators to female salaried ones. Female participation in the workforce is very limited in Pakistan and has several obstacles to overcome. Hiring female operators at fixed rates requires effort and expertise on the management side; moreover, there are socioeconomic and cultural reasons at the household level which prevent women from working outside their homes.
Chapter 5
The Kenyan Garment Industry: Is It Able to Revive in the Economic Boom? (675KB) / Takahiro Fukunishi
After trade liberalization, the Kenyan garment industry did not experience sustained growth despite low income per capita. This chapter explored whether the industry recovered under the economic growth after 2003. We found that garment firms supplying the local market do not take measures to enhance their competitiveness and instead avoid competition by specializing in uniforms. Given the large gap in labor costs, avoidance of competition could be an indispensable strategy, but detaching themselves from competitive pressure further weakened their competitiveness. Despite the strongest growth in demand in last two decades, firms did not improve productivity and firm turnover did not result in the entrance of productive firms and the exit of unproductive ones. The political turmoil occurred in 2008 does not explain such firm dynamics against the competitive market. There will be no prospects for growth until the wages in Asian countries significantly exceed Kenyan wages.
Chapter 6
The Garment Industry in Bangladesh (176KB) / Mohammad Yunus and Tatsufumi Yamagata
The garment industry in Bangladesh has been expanded almost uninterruptedly since the late 1970s. It survived Multi-Fiber Arrangement (MFA) phase out at the end of 2004, and remains internationally competitive to date. In this chapter, sources of competitiveness of the industry were discussed. There are three potential strengths, i.e. market force, government policy and dynamism inside the industry. Market force, which is represented by low wage of labor, is surely fundamental to the competitiveness. The roles of the government, industrial associations and technology transfer are still contentious issues to be discussed in the final report.
Chapter 7
Madagascar’s Garment Industry: Success of Africa’s Garment Exports? (332KB) / Takahiro Fukunishi and Herinjatovo Aimé Ramiarison
Madagascar is an exceptional case in sub-Saharan Africa in the development of its export-oriented manufacturing sector, namely its garment industry. This chapter aims to demonstrate its success in terms of exports and employment creation during the 1990s and 2000s and the difficulties that the industry has experienced since the political turmoil in 2009. This interim report presents the preliminary results of the original firm surveys as a step to the final version.
We found that production and employment underwent a considerable drop in 2009. Production for export decreased by 30.7%, the number of jobs fell by 19.5%, and real wages for low-skilled jobs fell by 12.7%. While these changes indicate the adverse effects of the turmoil on the poor, they also incorporate the effect of the financial crisis. A full analysis incorporating the effect of suspension of duty-free access to the US since 2010 will be presented in the final version.
We found that production and employment underwent a considerable drop in 2009. Production for export decreased by 30.7%, the number of jobs fell by 19.5%, and real wages for low-skilled jobs fell by 12.7%. While these changes indicate the adverse effects of the turmoil on the poor, they also incorporate the effect of the financial crisis. A full analysis incorporating the effect of suspension of duty-free access to the US since 2010 will be presented in the final version.
Chapter 8
How Has the Myanmar Garment Industry Evolved? (343KB) / Toshihiro Kudo
This chapter explores how the Myanmar garment industry has grown and declined over the previous two decades amidst the changing international economic environment and fragile availability of market access. This chapter also examines the international competitiveness of the Myanmar garment industry, comparing location advantages and disadvantages. Myanmar’s economy is suitable for a labor-intensive garment industry, and it has successfully exhibited growth potential. However, the garment industry in Myanmar has long faced several challenges, such as rapidly increasing wages due to the strong local currency and high production costs that include electricity and transport charges. To date, the Myanmar garment industry has grown through the private sector’s efforts without much government support. However, such growth has a limit, and a reduction in production costs and an appropriate exchange rate for the local currency are necessary for sustainable development.