Can Garment Exports from Cambodia, Laos and Burma be Sustained?

Abstract

This paper examines institutional and firm-level technological capabilities to assess the capacity of Cambodia, Laos and Burma to sustain garment exports over the long term. Although the preferential access enjoyed by products from these countries in the developed markets has helped attract strong foreign direct investment inflows that have supported rapid growth in employment and exports, the empirical evidence shows that institutional support needs to be upgraded if garment exports from the three countries are to be sustained. Burma and Laos show the least potential to benefit among the three countries from this opportunity, with the former experiencing severe political instability and trade sanctions by the USA and the latter landlocked and endowed with a small labour force. The paper argues that unless the institutional and firm-level technological capabilities are developed further, all three countries will find it difficult to retain a significant presence of garment firms once the trade privileges are withdrawn.

Knowledge-based productivity in "low-tech" industries: evidence from firms in developing countries

“…The use of modern machinery -mainly imported from Western Europe or Japan (Audet, 2004)stands out as crucial (Gruber, 1998, Barba Navaretti et al, 2004, Gehl Sampath, 2007. In Asian LDCs this imported machinery is often relocated after use in other Asian countries (Rasiah, 2007). Innovation in the chemical industry is equally important for the development of new textiles in non-natural fibre and for the improvement of its quality.…”

“…market trends. The acquisition of design skills and market-related knowledge and the ability to establish forward linkages into distribution channels have become even more important in the post ATC period, in which China emerged as an increasingly fierce competitor (Rasiah, 2007). In Bangladesh, firms continue to lack design capabilities and buy designs from Indian designers or follow buyer specifications (Gehl Sampath, 2007).…”

Ownership, Technological Capabilities and Exports of Garment Firms in Myanmar

“…Many of these firms relocate low value added labor-intensive activities in countries that offer them location specific advantages to export. The prime motive of foreign firms relocating in Myanmar is to access the preferential quota privileges provided by the developed countries, though, wages and land costs are also lower than the rival sites in the rest of Southeast and East Asia (Rasiah 2009). This also fits into Dunning's (1995) eclectic paradigm of OLI where both ownership (market access) and location (host-site's quota privileges and low wages) conditions were instrumental in foreign firms relocating operations in Myanmar.…”

“…Because developed markets demand standardized quality, price and delivery times of low margin firms targeting such markets ought to show similar technological capabilities irrespective of ownership. However, with their stronger firm-specific assets foreign firms in LDCs can easily relocate capabilities from home to host sites and also operate on a large scale compared to national firms who will have to acquire or develop capabilities from scratch (Dunning 1995;Rasiah 2009;Narula, Dunning 2010).…”

Industrial Policy and Structural Change in Taiwan's Textile and Garment Industry

“…The massive outward movement of garment investment to mainland China and Southeast Asia, including the transition to least developed countries (LDCs) from the late 1990s (see Chiu Chen, 2004;Rasiah, 2009), also facilitated the shift towards the capital-intensive textile sub-sector in the overall industry. The share of production of woven textiles and garments in overall production of textile and garments in Taiwan have shown a trend fall from 63.3% and 15.5%, respectively, in 2000 to 59.2% and 8.5%, respectively, in 2007 (Table 4).…”