The Role of the Namayande in Iran's Textile Industry

The Iranian textile industry still remains important as one of the largest sources of employment within the non-petroleum sector, although it no longer plays the large role it used in the country's economy (having been replaced by petroleum as the economy's primary industry). The subject of this study are middlemen known as namayande in the Iranian textile industry who plays a very important role in the operations of the innumerable small and medium-sized private firms. When private firms import materials from abroad, namayande make the connections between them and foreign sellers. These middlemen are not local sales agents of foreign companies as is usually the case; rather the namayande specialize in purchasing goods for local buyers. This study will point out some of the reasons why the namayande exist, and examine the present state of Iran's textile industry along with the particular management problems found within the firms' operations.

FDI and Export Participation of Local Firms in Africa: The Case of the Kenyan Garment Industry

FDI in the garment sector has been the single case of large-scale manufacturing investment in African low-income countries since the 1990s. While FDI has triggered the development of local industries in many developing countries, it has not yet been realized in Africa. This paper describes the spillover process in the Kenyan garment industry and investigates the background of local firms' behavior through firm interviews and simulation of expected profits in export market. It shows that credit constraint, rather than absorptive capacity, is a primary source of inactive participation in export opportunity. Only firms which afford additional production facilities without sacrificing stable domestic supply may be motivated to start exporting. However, in comparison with successful Asian exporters, those firms were not as motivated as Asian firms due to the large gap in expected profits.

Firm dynamics in the Cambodian garment industry: firm turnover, productivity growth, and wage profile under trade liberalization

The international garment trade was liberalized in 2005 following the termination of the MFA (Multifibre Arrangement) and ever since then, price competition has intensified. Employing a unique firm dataset collected by the authors, this paper examines the changes in the performance of Cambodian garment firms between 2002/03 and 2008/09. During the period concerned, frequent firm turnover led to an improvement of the industry’s productivity, and the study found that the average total-factor productivity (TFP) of new entrants was substantially higher than that of exiting firms. Furthermore, we observed that thanks to productivity growth, an improvement in workers’ welfare, including a rise in the relative wages of the low-skilled, was taking place. These industrial dynamics differ considerably from those indicated by the “race to the bottom” argument as applied to labor-intensive industrialization in low income countries.

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

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.

米国経済制裁によるミャンマー縫製産業への影響－苦しむのは誰か？－

2003年7月、米国はミャンマー製品の全面的な輸入禁止という、厳しい経済制裁を発動した。この制裁の最大の被害者は、ミャンマー縫製産業であった。制裁発動前、ミャンマーの対米輸出の８割以上は衣料品だったからである。多くの企業が倒産し、多くの労働者が職を失った。しかし、これまでその影響を包括的かつ正確に評価した調査・研究は皆無であった。本論文は現地での詳細なフィールド・ワークに基づき、経済制裁がミャンマー縫製産業に与えた影響を分析する。経済制裁で苦しむのは誰か。そして、経済制裁は所期の効果を上げているのか。これらの疑問に答える。

Competitiveness of the knitwear industry in Bangladesh : a study of industrial development amid global competition

This paper assesses the technical efficiency and profitability of the knitwear industry in Bangladesh taking into account the sector’s role in poverty reduction. While stochastic frontier analysis was invoked to assess technical efficiency, three alternative measures, namely the rate of return, total factor productivity and the Solow residual, were used to gauge the extent and determinants of the profitability of the industry based on firm-level data collected in 2001. The estimation results indicate the high profitability of the knitwear firms. In Bangladesh, the dynamic development of the industry has entailed great diversity in efficiency in comparison with the garment industries of other developing countries. While there is a significant scale effect in profitability and productivity, no supporting evidence was found for the positive impact on competitiveness of industrial upgrading in terms of usage of expensive machinery and vertical integration and industrial agglomeration.

Is the Vietnamese garment industry at a turning point? : upgrading from the export to the domestic market

Vietnam’s garment industry has been loosely 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 paper 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.

Prospects for Development of the Garment Industry in Developing Countries: What Has Happened Since the MFA Phase-Out?

On January 1, 2005, the controlled trade regime on textiles and clothing which was based on the Multi-Fiber Arrangement (MFA) made in 1974 was abolished. This institutional change wrought great impacts on the world market for textiles and clothing.This paper reviews the impacts of the changes on the main markets and examines the prospects for the markets and the source countries. The main conclusions are as follows: (1) after the renewal of quantitative restrictions on Chinese garment exports were agreed with the US and the EU, the post-MFA surge in Chinese garment exports was significantly attenuated; (2) instead, the growth in garment exports from other Asian low-income countries to the two markets was revived in 2006; (3) the Japanese market has been kept almost intact from the impact of the regime shift; (4) some developing countries, such as Bangladesh and Cambodia, not only survived the liberalization but also have steadily expanded their garment exports throughout the transition; and (5) an indicative fact is that the profitability of the garment industry in Bangladesh and Cambodia was high on average according to surveys conducted in 2003, which might have bolstered the steady growth of garment exports in the past, and possibly future growth, too.

The business management strategy of Iran's large apparel firms : overview of results from a questionnaire survey and interviews 2009-2011

This paper is an overview of the results from a questionnaire survey and subsequent supplementary interviews of Iran's large apparel firms conducted by the author in 2009-2011. Most of the large apparel firms in Iran are based in Tehran and have been in business for some twenty years. They have a solid business with regular customers, but in general have hesitated to expand the size of their firms. Following the relaxation of restrictions on the procurement of raw materials that existed in the 1990s, the results of survey and interviews show that the firms have developed new channels of procurement although they depend to a considerable degree on imported raw materials and machinery. They have managed to maintain their level of output even with the rapid increase in imports since 2000, although the number of firms has decreased. Low-priced Chinese products have basically not been their rivals; instead, the inflow of foreign name-brand products have hit them heavily.

Political crisis and suspension of duty-free access in Madagascar : assessment of impacts on the garment industry

The export-oriented garment industry in Madagascar has displayed robust growth, thus both contributing to the economy and creating formal employment opportunities. However, it experienced a critical situation after the political turmoil that occurred in 2009. Our investigation using the trade data demonstrates that suspension of duty-free access to the US market (AGOA) resulting from the turmoil had a greater impact on exports, 64%–78% reduction, than the turmoil itself. Our original factory-level data demonstrates that AGOA suspension increased the probability of closure by 57.8% for the factories supplying exclusively to US market, and reduced 6405 jobs for low-skilled positions during the post turmoil period. The factory-level adverse impacts are much less than those on export value at the industry level because of the maintained duty-free access to EU, which has provided an alternative market. It suggests that if EU also had cancelled duty-free access, adverse impacts would have been enormous. Given the general pattern of comparative advantage in low-income countries, unplanned cancellation of duty-free access for them hurts labor-intensive industries and low-skilled workers.

Two-polar growth strategy in Myanmar : seeking "high" and "balanced" development

The Thein Sein government of Myanmar seeks higher and balanced economic growth. This is a challenge for the government since some economic literature identifies a trade-off between higher economic growth and better regional equality, especially for countries in the early stages of development. In this paper, we propose a two-polar growth strategy as one that includes both "high" and "balanced" growth. The first growth pole is Yangon, and the second is Mandalay. Nay Pyi Taw, the national capital, will develop as an administrative centre, not as an economic or commercial one. We also propose border development with enhanced connectivity with richer neighboring countries as a complementary strategy to the two growth poles. Effects of the two-polar growth strategy with border development are tested using a Geographical Simulation Model (GSM).

Myanmar's apparel industry in the new international environment : prospects and challenges

Myanmar’s apparel industry had long been denied access to Western markets due to sanctions against its military government. The birth of a "civilian" government in March 2011 improved Myanmar’s relations with the international community, and Western sanctions were largely lifted. Regained market access is expected to trigger rapid growth of Myanmar’s apparel exports. This paper examines this impact with a comparison to Vietnam’s apparel industry. The industry’s prospects are getting bright, but the business environment has recently changed drastically in Myanmar. A new challenge for Myanmar’s apparel industry is remaining globally competitive. This paper also examines advantages and disadvantages that apparel firms in Myanmar experience. Although its abundance of low-wage workers remains a source of competitiveness, Myanmar needs its government to play a more active role to build the foundation of the industry.

The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development

Cambodia's export-oriented garment industry has contributed greatly to poverty reduction in the country through employment of the poor. This paper provides a statistical verification of this contribution based on firm-level data from 164 sampled companies collected in 2003. Its main conclusions confirm the substantial impact that employment in the garment industry has had on poverty reduction in Cambodia. Firstly, entry-level workers receive wages far above the poverty line. Secondly, females make up the predominant share of the main category jobs in the industry. Thirdly, barriers to employment and to promotions up to certain job categories are not high in terms of education and experience. Another important finding is that a typical sample firm exhibited high profitability, although there was wide variation in profitability among firms. This average of high profitability could be a good predictor of Cambodia's viability in the intensified competition since the phase out of the Multi-Fiber Arrangement (MFA) at the beginning of 2005. A point of note is that Cambodia's pattern of industrial development led by a labor-intensive industry is similar to that of neighboring countries in East Asia which earlier went through the initial stage of industrial development, except that Cambodia has lacked a strong government industrial promotion policy which characterized the earlier group.

Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City

This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.