Repositioning in the Global Apparel Value Chain in the Post-MFA Era: Strategic Issues and Evidence from Sri Lanka

Prema-chandra Athukorala and Raveen Ekanayake

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: A widely-held view in the lead-up to the abolition of the Multi-fiber Arrangement (MFA) quotas in 2005 was that, in a quota-free global market, large low cost countries (in particular China and India) and countries in proximity to the major markets (such as Mexico, Turkey and countries in the European periphery) would crowd out export performance of the other developing countries. The post-MFA world apparel trade has, however, brought in many surprises: a number of 'predicted losers' have maintained or increased their market shares, while some 'predicted gainers' have performed poorly. This paper aims to broaden our understanding of the determinants of these inter-country differences through a case study of the export-oriented apparel industry in Sri Lanka. The evidence suggests that apparel is a bundle of differentiated products, not a homogenous commodity as commonly assumed by the trade flow modelers, and individual exporting countries have room for carving out a niche in specific products. Sri Lankan apparel industry has managed to maintain growth dynamism through specialization in fashion-basic products, in particular intimate apparel (lingerie) and upmarket casualwear.

Keywords: multi-fiber arrangement (MFA); apparel industry; global value chain (GVC); Sri Lanka (search for similar items in EconPapers)
JEL-codes: F13 F53 O24 O53 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2014
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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