The Garment Industry in Low-income Countries ― An Entry Point of Industrialization

The diversification of economic structure is a central issue in economic development particularly for low-income countries. In the past many countries began industrialization with labor-intensive industries, typically the textile industry. This study examines increasing concerns over the sustainability of growth and the degradation in working conditions throughout the ongoing globalization and trade liberalization. It explores the means through which the garment industry contributes to industrialization, poverty reduction, empowerment of undereducated workers, in particular female laborers, and shared growth in contemporary low-income countries. Through seven in-depth studies of countries - Bangladesh, Cambodia, Kenya, Madagascar, Myanmar, Pakistan, Vietnam and a cross-country study - it demonstrates dynamism in the industry which successfully leads to growth under the trade liberalization without degradation of wages and working conditions.

The Garment Industry in Low-Income Countries provides evidence against the argument that the garment industry is a static and non-innovative activity, and even a 'dead-end sector of industrialization.' It demonstrates heterogeneity within and across countries in terms of growth performance, productivity, and product upgrading. It also explores conditions of the labor market with respect to wages and female labor participation, access to the export markets which is often determined by political consideration in developed countries, and the differences in business and environment yield across different countries. Moreover, the study shows how firm-level heterogeneity in productivity has led to active firm entry and exit, which contributed to the growth of industry-level productivity. By incorporating the diverse experiences in seven countries, this text provides a broader range of implications of the development of the garment industry on industrial dynamism in low-income countries.

Takahiro Fukunishi is an Associate Senior Research Fellow at the Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). He received a PhD in economics from the School of Oriental and African Studies (SOAS), University of London, UK. His main areas of interest include industrial development, the labor market in Africa, and apparel industry in low-income countries. He has published many journal articles, contributed to books, and recently edited, Delivering Sustainable Growth in Africa: African Farmers and Firms in a Changing World, Palgrave Macmillan, 2013.

Tatsufumi Yamagata is Secretary General and Professor at the Institute of Developing Economies Advanced School (IDEAS). He received his PhD in economics from the University of Rochester, USA. He is also a co-editor of Poverty Reduction and Beyond, Palgrave Macmillan, 2009.