Cornelia Staritz

Local embeddedness, upgrading, and skill development: Global value chains and foreign direct investment in Lesotho's apparel industry

Abstract Many low-income countries (LICs) are integrated into apparel global value chains (GVCs) through foreign direct investment (FDI). This is also the case in Lesotho, which developed into the largest Sub-Sahara African (SSA) apparel exporter to the US under the African Growth and Opportunity Act (AGOA). More recently, a new apparel export market opportunity has emerged in Lesotho, that of the regional market of South Africa. The two export markets, the US and South Africa, are supplied by different types of FDI firms, affiliates of largely Taiwanese transnational producers and of South African manufacturers that are incorporated into distinct value chains. This paper assesses the implications for upgrading integration into these two value chains in Lesotho, the first value chain characterized by Taiwanese investment and feeding into the US market under AGOA and the second characterized by South African investment and feeding into the South African market. These value chains differ with regard to ownership patterns, end markets, export products, governance structures and firm set-up, investors’ motivations and perceptions on the main challenges. These different characteristics have crucial impacts on upgrading possibilities, including functional, process and ‘local’ upgrading. Thus, from the perspective of upgrading and sustainability, ownership patterns, local embeddedness and market diversification matter. The emergence of South Africa as an alternative end market and the different value chain dynamics operating in the South African retailer-governed value chain open up new opportunities away from those of the AGOA-/Taiwanese-dominated value chain.

Guyana: Why Has Growth Stopped? An Empirical Study on the Stagnation of Economic Growth

After a period of exceptionally strong economic performance, Guyanas growth has stagnated since 1998. The paper tries to identify the factors that can explain this dramatic deterioration in economic performance. The paper first attempts to explain the decline of growth with a growth accounting exercise which shows that there was a significant swing in total factor productivity, and than uses a panel regression framework to analyze the growth impact of changes in various factors. Finally, through a series of cross-country exercises, the paper shows that the primary reasons for the divergence between the economic performance of Guyana and other Caribbean, HIPC, and PRGF-eligible countries in 1998-2004 are a substantial decline in share of net foreign and private domestic investment in GDP, a decline in the labor force, and a less favorable political and institutional environment.

Regionalism, end markets and ownership matter: Shifting dynamics in the apparel export industry in Sub Saharan Africa

This paper shows the importance of ownership, end markets and regionalism within the global value chain and related conceptual frameworks. This is done through unpacking the development trajectories of the major Sub Saharan African apparel export industries against the backdrop of trade regime changes. Ownership characteristics of supplier firms shape the ability to shift between different end markets and respond to lead firm requirements; and the level of their local and regional embeddedness impacts on different forms of upgrading. The emergence of new regionalism centred around investment and end markets provides pathways for new trajectories of more sustainable value chains and local industrialization. More locally and regionally embedded firms have been able to shift with uneven success to new, and in particular regional, markets. In contrast, Asian-owned transnational producers remain focused on the US market with limited market opportunities and upgrading potential. Different types of ownership and embeddedness dynamics are therefore important to explain the co-evolution of highly differentiated value chain dynamics creating a variety of apparel industrialization trajectories in the apparel export industry in Sub Saharan African.

Assessing the adjustment implications of trade policy changes using TRIST (tariff reform impact simulation tool)

TRIST is a simple, easy to use tool to assess the adjustment implications of trade reform. It improves on existing tools. First, it is an improvement in terms of accuracy because projections are based on revenues actually collected at the tariff line level rather than simply applying statutory rates. Second, it is transparent and open; runs in Excel, with formulas and calculation steps visible to the user; and is open-source and users are free to change, extend, or improve according to their needs. Third, TRIST has greater policy relevance because it projects the impact of tariff reform on total fiscal revenue (including VAT and excise) and results are broken down to the product level so that sensitive products or sectors can be identified. And fourth, the tool is flexible and can incorporate tariff liberalization scenarios involving any group of trading partners and any schedules of products. This paper describes the TRIST tool and provides a range of examples that demonstrate the insights that the tool can provide to policy makers on the adjustment impacts of reducing tariffs.

What Does ‘Fast Fashion’ Mean for Workers? Apparel Production in Morocco and Romania

The expansion of organizationally fragmented and geographically dispersed global production networks (GPNs) has been an important source of employment generation in many developing and transition countries over the past decades. However, the quality of employment generated in these GPNs is often characterized by a high degree of flexibility, uncertainty and precariousness. These employment quality characteristics may be specifically relevant in the increasingly important fast fashion segment of the apparel industry. At the heart of the fast fashion strategy lies a business model based on increased variety, flexibility and permanently shrinking product life cycles that require bringing new products to markets at an increasing pace and in shorter time spans. This implies not only increased organizational flexibility and shrinking lead times for supplier firms but also delivering high quality apparel items at low cost. In this context, supplier firms may struggle to accommodate potentially conflicting requirements and may pass on these pressures in the form of expanded and flexible work hours, intensified production processes and delayed wage payments to their workforce. These pressures may be particularly intense for regional suppliers located in countries in geographic proximity to the key end markets of the EU-15, the United States and Japan that derive their competitive advantage from being integrated into the fast fashion segment of apparel GPNs.

Introduction: global commodity chains and production networks understanding uneven development in the global economy

Development – whichever definition one might choose – is a moving target. is paper aims to investigate the contributions various chain and network approaches – namely the global commodity chain (GCC), global value chain (GVC) and global production networks (GPN) frameworks – can offer to investigate geographically uneven development. To this end, the paper draws on epistemological discussions in development studies and cognate social sciences and looks at development both as a historical process of the expansion of (capitalist) systems of production, circulation and consumption, and as processes of social intervention and the struggle for securing livelihoods. It concludes by supporting a hybrid development research agenda to which network approaches can substantially contribute. Entwicklung, welche Definition man auch zugrunde legt, ist ein Konzept mit sich verändernden Bedeutungen. Vor diesem Hintergrund diskutiert der Autor, welchen Beitrag Netzwerkansätze in der Entwicklungsforschung leisten können, um räumlich ungleiche Entwicklung zu analysieren. Dabei wird zwischen dem Ansatz der globalen Warenkette, der globalen Wertschöpfungskette und der globalen Produktionsnetzwerke unterschieden. Bezug nehmend auf erkenntnistheoretische Diskussionen in der Entwicklungsforschung und in verwandten sozialwissenschaftlichen Disziplinen wird Entwicklung zugleich aus zwei Perspektiven betrachtet: als historischer Prozess der Ausbreitung kapitalistischer Wirtschaftssysteme und als Prozess sozialer Intervention zur Sicherung des Lebensunterhalts. Der Artikel schließt mit einem Plädoyer für eine „hybride“ Agenda in der

Industrial upgrading and development in Lesotho’s apparel industry: global value chains, foreign direct investment, and market diversification

Abstract Many low-income countries are integrated into apparel global value chains through foreign direct investment (FDI), including Lesotho, which has become the largest Sub-Saharan African apparel exporter to the US under the African Growth and Opportunity Act. More recently, South Africa has emerged as a new apparel export market in Lesotho. The two markets are supplied by different types of FDI firms – affiliates of Taiwanese transnational producers and South African manufacturers – which are part of different value chain variants. The paper assesses the implications for industrial upgrading and development of integration into these two value chain variants in Lesotho, drawing on firm-level and institutional interviews. We show that their different characteristics in terms of investors’ motivation, governance structure, end markets, firm set up and most importantly and causally, ownership and embeddedness have crucial impacts on functional, product and process upgrading, local linkages, and skill development.

Social up- and downgrading of apparel workers in Romania: fast fashion, post-socialist transformation, Europeanization, and the global economic crisis

Although the expansion of global production networks (GPNs) has been an important source of employment generation in many developing and transition countries, the qualitative aspects of this employment are less promising, often being characterized by high flexibility, uncertainty and precariousness. Drivers of these outcomes are industry dynamics and lead firm strategies such as fast fashion in the apparel industry. Equally important are, however, multi-scalar institutional contexts and state policies that influence social up- and downgrading trajectories. Against this background, the article assesses the up-/downgrading of apparel workers in Romania, a key regional supplier of western European markets. In addition to the sourcing practices of lead firms, and particularly fast fashion, we highlight the legacy of the country’s state socialist past and its post-socialist transformation, Europeanization and the global economic crisis as drivers of GPN outcomes.