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Slow and steady wins the race : how the garment industry leads industrialization in low-income countries

By Takahiro Fukunishi and Tatsufumi Yamagata

Abstract

This paper investigates how the garment industry escapes this vicious cycle and argues for the validity of labor-intensive industry as a starting point for full-fledged industrialization, even though it might at first seem to be a digression from the path to an innovation-led economy. By examining original firm-level data on garment-producing firms collected in 2002 and 2008 in Bangladesh, Cambodia, Kenya and Madagascar, the following conclusions are drawn: (1) low wages, though still sufficient for poverty reduction, are the main source of competitiveness in low-income countries; (2) after the successful initiation of industrialization causes wages to begin to rise, there is still a possibility for productivity enhancement; and (3) skill bias in technological progress is not yet a major factor, implying that the garment industry is still a labor-intensive industry. In sum, labor-intensive industry should not be discounted as a part of the development strategy of low-income countries

Topics: Developing countries, Bangladesh, Cambodia, Kenya, Madagascar, Apparel industry, Textile industry, Industrialization, International competition, Competitiveness, Garment, Race to the bottom, 589.2, AHCB Cambodia カンボジア, ASBG Bangladesh バングラデシュ, C Developing countries 発展途上国, FEKE Kenya ケニア, FSMG Madagascar マダガスカル, D24 - Production;, L67 - Other Consumer Nondurables:, O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology, O33 - Technological Change: Choices and Consequences; Diffusion Processes, O53 - Asia including Middle East, O55 - Africa, F63 - Economic Development
Publisher: 日本貿易振興機構アジア経済研究所
Year: 2013
OAI identifier: oai:ir:2344/1264
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