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

Asuyama Yoko, Chhun Dalin, Takahiro Fukunishi, Neou Seiha and Tatsufumi Yamagata

No 268, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: 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.

Keywords: Cambodia; Firm turnover; Garments; Labor-intensive industrialization; Multifibre arrangement; Race to the bottom; Total factor productivity; Apparel industry; Productivity; Wages; Employment (search for similar items in EconPapers)
JEL-codes: D24 J31 L67 O14 O53 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-dev and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 268. 2010-12

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Journal Article: Firm dynamics in the Cambodian garment industry: firm turnover, productivity growth and wage profile under trade liberalization (2013)
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