Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia
South Asia is in the midst of a demographic transition. For the next three decades, the growth of the region’s working age population will far outpace the growth of dependents. Close to one million individuals will enter the workforce every month. This large, economically active population can increase the region’s capacity to save and make crucial investments in physical capital, job training, and technological advancement. But for South Asia to realize these dividends, it must ensure that its working-age population is productively employed. As one of the most prominent labor-intensive industries in developing countries, apparel manufacturing is a prime contender. With around 4.7 million workers in the formal sector and another estimated 20.3 million informally employed (combined with textiles), apparel already constitutes close to 40 percent of manufacturing employment. And given that much of apparel production continues to be labor-intensive, the potential to create more and better jobs is immense.There is a huge window of opportunity now for South Asia, given that China, the dominant producer for the last ten years, has started to cede some ground due to higher wages. But the region faces strong competition from East Asia—with Cambodia, Indonesia, and Vietnam already pulling ahead. Plus the sector suffers from production inefficiencies and policy bottlenecks that have prevented it from achieving its potential.Against this backdrop, this report hopes to inform the debate by measuring the employment gains that the four most populous countries in South Asia—Bangladesh, India, Pakistan and Sri Lanka (hereafter 'SAR countries’)—can expect in this new environment of increased competition and scrutiny. Its main message is that it is important for South Asian economies to remove existing impediments and facilitate growth in apparel to capture more production and create more employment as wages rise in China. The successful manufacturers will be those who can supply a wide range of quality products to buyers rapidly and reliably—not just offer low costs.
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Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia
South Asia is in the midst of a demographic transition. For the next three decades, the growth of the region’s working age population will far outpace the growth of dependents. Close to one million individuals will enter the workforce every month. This large, economically active population can increase the region’s capacity to save and make crucial investments in physical capital, job training, and technological advancement. But for South Asia to realize these dividends, it must ensure that its working-age population is productively employed. As one of the most prominent labor-intensive industries in developing countries, apparel manufacturing is a prime contender. With around 4.7 million workers in the formal sector and another estimated 20.3 million informally employed (combined with textiles), apparel already constitutes close to 40 percent of manufacturing employment. And given that much of apparel production continues to be labor-intensive, the potential to create more and better jobs is immense.There is a huge window of opportunity now for South Asia, given that China, the dominant producer for the last ten years, has started to cede some ground due to higher wages. But the region faces strong competition from East Asia—with Cambodia, Indonesia, and Vietnam already pulling ahead. Plus the sector suffers from production inefficiencies and policy bottlenecks that have prevented it from achieving its potential.Against this backdrop, this report hopes to inform the debate by measuring the employment gains that the four most populous countries in South Asia—Bangladesh, India, Pakistan and Sri Lanka (hereafter 'SAR countries’)—can expect in this new environment of increased competition and scrutiny. Its main message is that it is important for South Asian economies to remove existing impediments and facilitate growth in apparel to capture more production and create more employment as wages rise in China. The successful manufacturers will be those who can supply a wide range of quality products to buyers rapidly and reliably—not just offer low costs.
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Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia

Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia

Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia
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Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia

Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia

Overview

South Asia is in the midst of a demographic transition. For the next three decades, the growth of the region’s working age population will far outpace the growth of dependents. Close to one million individuals will enter the workforce every month. This large, economically active population can increase the region’s capacity to save and make crucial investments in physical capital, job training, and technological advancement. But for South Asia to realize these dividends, it must ensure that its working-age population is productively employed. As one of the most prominent labor-intensive industries in developing countries, apparel manufacturing is a prime contender. With around 4.7 million workers in the formal sector and another estimated 20.3 million informally employed (combined with textiles), apparel already constitutes close to 40 percent of manufacturing employment. And given that much of apparel production continues to be labor-intensive, the potential to create more and better jobs is immense.There is a huge window of opportunity now for South Asia, given that China, the dominant producer for the last ten years, has started to cede some ground due to higher wages. But the region faces strong competition from East Asia—with Cambodia, Indonesia, and Vietnam already pulling ahead. Plus the sector suffers from production inefficiencies and policy bottlenecks that have prevented it from achieving its potential.Against this backdrop, this report hopes to inform the debate by measuring the employment gains that the four most populous countries in South Asia—Bangladesh, India, Pakistan and Sri Lanka (hereafter 'SAR countries’)—can expect in this new environment of increased competition and scrutiny. Its main message is that it is important for South Asian economies to remove existing impediments and facilitate growth in apparel to capture more production and create more employment as wages rise in China. The successful manufacturers will be those who can supply a wide range of quality products to buyers rapidly and reliably—not just offer low costs.

Product Details

ISBN-13: 9781464808142
Publisher: World Bank Publications
Publication date: 03/28/2016
Series: Directions in Development - Poverty
Sold by: Barnes & Noble
Format: eBook
Pages: 204
File size: 13 MB
Note: This product may take a few minutes to download.

Table of Contents

Acknowledgments xi

About the Editors and Contributors xiii

Abbreviations xv

Overview 1

Focusing on Jobs for Development 1

Analytical Framework 4

South Asia's Potential to Expand. Apparel Exports 5

How Higher Exports Would Affect SAR's Labor Market 8

South Asia's Potential to Create Jobs 9

Thoughts on a New Strategic Approach 11

Bibliography 14

Chapter 1 Setting the Stage 17

South Asia's Jobs Challenge 17

Transformational Jobs in Apparel 19

Opportunities in the Global Apparel Market 22

Analytical Framework 27

Our Roadmap 30

Notes 33

Bibliography 33

Part 1 What Is South Asia's Apparel Export Potential? 37

Chapter 2 Benchmarking South Asia in the Global Apparel Industry 39

A Vital Industry for South Asia 39

Introduction to Benchmarking 41

Ranking Performance Based on Exports 42

Drivers of Export Performance: Products and End Markets 44

Key Factors for Global Buyers 50

Better, but Still Lagging behind Competitors 57

Annex 2A Data Description 60

Annex 2B Characteristics of Apparel Industries in the SAR and SEAB Countries 63

Annex 2C World Bank Global Buyer Survey 65

Notes 70

Bibliography 71

Chapter 3 South Asia's Potential Share of China's Apparel Trade 77

An Intense Competition 77

A Snapshot of U.S. and EU Imports 79

Model and Estimation Approach 84

Reaping the Most from Higher Imports 90

Annex 3A Theoretic Foundation of the Estimation Approach 90

Annex 3B Alternative Estimation Approaches 92

Notes 97

Bibliography 97

Part 2 How Will Increased Apparel Production Affect Jobs? 99

Chapter 4 Market Responses to Higher Apparel and Textile Exports 101

Why Focus on Garments and Women? 101

South Asia's Textile and Apparel Labor Market 103

Labor Demand Analysis 111

Labor Supply Analysis 117

Matching More Jobs with Workers 123

Annex 4A Data Description 123

Annex 4B Firm Distribution, Male/Female, and Permanent/Temporary Employment Ratios by Industry and Size 125

Annex 4C Labor Demand Model and Empirical Estimation Strategy 126

Annex 4D Labor Supply Model 127

Annex 4E Log Labor Demand Regressions Estimations for Male versus Female Workers with Foreign and Domestic Output, Bangladesh 128

Annex 4F Log Labor Demand Regressions Estimations for Permanent versus Temporary Workers, by Country 129

Annex 4G Log Wage Regressions Estimations by Country 130

Annex 4H Probit Model Estimation of Female Labor Force Participation, Marginal Effects 133

Notes 137

Bibliography 138

Part 3 What Role Can Policy Play in Increasing Apparel Exports and Jobs? 141

Chapter 5 Policies to Foster Apparel Exports and Jobs 143

How Policies Fit In 143

Predicting Job Effects in South Asia 145

How Policies and Processes Interact in Apparel 147

Key Policies Relevant to South Asia's Apparel Industry 150

Annex 5 A: Examples of Key Policies and Stakeholders in South Asia 168

Notes 171

Bibliography 171

Appendix South Asian Country Fact Sheets 179

Boxes

0.1 Moving up the Global Value Chain in Apparel 3

0.2 Growing International Concern about South Asian Working Conditions 7

1.1 South Asia's Apparel Profiles Vary Greatly among Countries 24

2.1 A Snapshot of South Asia's Major Apparel Exporters 44

2.2 Don't Forget Domestic Apparel Markets 49

2.3 Offering the Full Package 55

2.4 How South Asia Countries Are Handling the Intense Apparel Competition 58

4.1 A Profile of Bangladeshi Apparel Exporters 106

4.2 Why Focus on Women? 108

5.1 South Asia's Schemes to Reduce Import Tariffs for Exporters 154

5.2 Using FDI to Make Inroads into Textile and Apparel Markets 156

5.3 Relocating to a Bangladeshi Industrial Zone 161

5.4 Bangladesh Takes Steps to Boost Compliance 165

5.5 Possible Strategic Steps for South Asia's Apparel Sector 166

Figures

0.1 Overarching Framework for Studies to Riches 4

1.1 The Apparel Sector Is One of the Most Important Employers in Developing Countries 20

1.2 "Flying Geese" Model Depicts the Process of Industrialization for Developing Countries 22

1.3 Structure of the Global Value Chain for Apparel 23

1.4 Apparel Imports Have Been Steady in High-Income Countries 26

1.5 Overarching Framework for Stitches to Riches 31

2.1 Emerging Asian Countries Fared Well Post-MFA and Despite the Global Economic Crisis 43

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