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Local embeddedness and economic and social upgrading in Madagascar's export apparel industry

Cornelia Staritz and Mike Morris

No 38, Working Papers from Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research

Abstract: Over the past decade, several Sub-Saharan African (SSA) countries have developed or expanded export-oriented apparel industries in the context of the Multi-Fibre Arrangement (MFA) quotas and preferential market access, most importantly under the African Growth and Opportunity Act (AGOA). Madagascar is different to the other main SSA low-income country (LIC) apparel exporters - Kenya, Lesotho and Swaziland - given its more diverse end markets and ownership structures and the political instability that led to the loss of AGOA status at the end of 2009. This paper assesses the development of Madagascar's export-oriented apparel industry and economic and social upgrading dynamics in particular in the context of the AGOA loss. It identifies four types of firms and value chains that differ with regard to ownership patterns, end markets and, most importantly, 'local embeddedness', with important implications for both economic upgrading dynamics and possibilities and the sustainability of the industry. The paper concludes that, despite the contraction in the exportoriented apparel industry post-AGOA, Madagascar is still a more successful apparel producer in terms of economic upgrading than the other main apparel-exporting LICs in SSA. The key to this trajectory lies in the differentiation of global value chain (GVC) relationships, local embeddedness and export diversification.

Keywords: Global value chains; upgrading; apparel/clothing industry; foreign direct investment; ownership; embeddedness; end market diversification; African Growth and Opportunity Act; Madagascar; Sub-Saharan Africa (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-int
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