Upgrading, Relocating, Informalising? Local Strategies in the Era of Globalisation: The Thai Garment Industry

Abstract

The garment industry was once the leading manufacturing-based export sector of Thailand. While its international competitiveness has been diminishing since the 1990s primarily due to increases in wage levels, it nevertheless remains an important source of income for a large number of workers. Given this fact, we look at what survival strategies garment suppliers have adopted. In particular, this paper will examine the Thai garment industry from a global value chains perspective, and determine whether upgrading in process, products or functions has occurred. In this context, the paper shows that the Thai garment industry has been stagnating in terms of process and product upgrading. This, in turn, has induced suppliers to move to rural areas where cheaper labour, including migrant labour, is more readily available. We attempt to provide a more evidence-based account of this industrial relocation using unpublished data. Functional upgrading in more locally oriented production networks has occurred; however, competition in such functions has also increased, leading to price-based competition and the erosion of economic rents of network co-ordinators. The paper further argues that informalisation is becoming more common in production and employment relationships, and concludes that such strategies may not be viable in the long run.

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