Comparative advantage of Ethiopian textile and apparel industry

Abstract

Purpose Ethiopia’s economy is primarily based on agriculture, but starting form 2010, the government has been determined to diversify the exports with a priority set for strategic sectors like light manufacturing in which textile and apparel manufacturing industries are included. The purpose of this paper is to measure the comparative advantages of the Ethiopian textile and apparel industry using the revealed comparative advantage (RCA) in the period from 2007 to 2016. Design/methodology/approach For the purpose of the paper, secondary data were collected from the UN comtrade site, and related data sources were cited in the literature review for the purpose of triangulation (cross-checking of the analysis with theoretical background). From the theoretical background, the two indices of RCA (Balassa index and Lafay index) were used for the evaluation of the industries’ competitive advantage and to identify which industry (textiles or apparel) was of more importance in the country. Findings The findings of the study showed that Ethiopia was more competitive in the textile sector. However, and with reference to the Lafay index, the country has been focusing on apparel sector, because of the opportunities for job creation. Research limitations/implications For the purpose of this study, secondary data were used and the general conclusions are limited to the corresponding sources of data. Practical implications Because of the labor-intensive nature, the textile and apparel sector has been one of the areas promoted by the Ethiopian Government in its industrialization policy. The finding of this paper can be used by policy makers to evaluate the competitiveness of the country. Social implications The findings can be used to assess social upgrading issues in the textile and apparel sector. Originality/value The work is the first of its kind in the sector as well as the country.

Beyond the seams: evaluating competitiveness and comparative advantage in Vietnam’s apparel industry

“…India’s comparative advantage in the export of garments has decreased over the past several years, according to Kannan (2018), who used the RCA index to quantify the comparative advantage of India’s export of textile items. Rundassa et al (2019) used the RCA index to calculate the relative advantages of the Ethiopian textile and apparel industry. By examining the two- and four-digit harmonized system (HS) codes, Saki et al (2019) measured the comparative advantage of the American textile and clothing sector.…”

Cross-Country Potentials and Advantages in Trade in Fish and Seafood Products in the RCEP Member States

“…To the best of the authors' knowledge, the LI has never been applied to testing the comparative and trade advantages of RCEP countries in the fishery sector. However, based on several successful evidences of earlier use of the three-indexes approach in various segments of food markets and supply chains in Europe [100][101][102][103][104][105], Asia [80,95,106,107], and Africa [108,109], we applied the Lafay index for testing the RCA and the RTA datasets across [i;j] pairs of RCEP countries and p n product categories. If LI p ij > 0, a country i possesses a competitive advantage in trade in a product p with a country j, otherwise, there is a disadvantage.…”

Effects of economic freedom and ease of doing business on trade in global value chains: Evidence from sub‐Saharan Africa

“…Specifically, Rundassa and Azene (2018) listed a number of benefits that participating countries could derive from GVCs. The benefits include concentrating on own comparative advantage based on tasks and activities instead of building the whole production process, employment creation, and increasing living standards.…”