Global Value Chains, Industrial Policy and Economic Upgrading in Ethiopia's Apparel Sector. Issue 4 (21st June 2020)

• Record Type: Journal Article
• Authors: Whitfield, Lindsay; Staritz, Cornelia; Morris, Mike
• Is Part Of: Development and change. Volume 51:Issue 4(2020)
• Page Start: 1018
• Page End: 1043
• Publication Date: 2020-06-21
• Subjects: Social sciences -- Periodicals; Economic development -- Periodicals; Social change -- Periodicals; Developing countries -- Periodicals; 303.483
• DOI: 10.1111/dech.12590
• Languages: English
• ISSNs: 0012-155X

Abstract

ABSTRACT: This article examines whether low‐income countries can still benefit from participating in manufacturing global value chains (GVCs) in terms of broader industrial development in a global context of greater competition and higher requirements. It contends that developing internationally competitive local firms and domestic linkages, in addition to upgrading, is crucial for participation in GVCs to drive industrialization. The study focuses on Ethiopia's recent experience with developing an apparel export industry through strategic industrial policy. Based on original empirical data collected through firm‐level surveys and interviews with government officials, industry experts and buyers, the article analyses the upgrading and localization trajectories of foreign and local apparel‐exporting firms. It argues that value‐capture benefits in assembly positions in apparel GVCs have become more difficult. The potential for localization benefits depends on the type of global buyers and foreign producers and their levels of embeddedness, but whether this potential is realized also depends on local firm characteristics and related industrial policy. Ethiopia's industrial policy has been relatively successful regarding national economy linkages, but less successful in developing competitive local export firms due to a weak local manufacturing tradition combined with a global context that has led to a supplier squeeze.