Making the cut?: low-income countries and the global clothing value chain in a post-quota and post-crisis world

The clothing sector has traditionally been a gateway to export diversification and industrial development for low-income countries (LICs) due to its low fix costs, relatively simple technology, and labor-intensive nature. It has served to absorb large numbers of unskilled, and mostly female, workers and build capital and know-how for more technologically advanced activities within and across sectors. But the environment for global clothing trade has changed significantly which may condition the role the sector can play in promoting export diversification and industrial development in LICs today. Main drivers have been the rise of global buyers and their global sourcing strategies, the phase out of quotas in the Multi-Fiber Arrangement (MFA), and, more recently, the global economic crisis. In the context of these changes, this study analyzes how the clothing sector can still provide a gateway to export diversification and industrial development for LICs today. The key objectives of this study are to assess main developments in the global clothing sector associated with the Multi-Fiber Arrangement (MFA) phase out, global buyers and their sourcing strategies, and the global economic crisis; analyze challenges that LICs are facing in the post-quota and post-crisis world in entering and upgrading within global clothing value chains; and identify policy recommendations to increase the competitiveness of LIC clothing exporters as well as to further their integration into and improve their positions within global clothing value chains. For the study interviews with buyers in the US, the EU and South Africa as well as case studies in Sub-Saharan African LICs (Kenya, Lesotho and Swaziland), Cambodia and Bangladesh were conducted. The study finds that global consolidation in the clothing sector has increased entry barriers at the country and firm level.