Comparative advantage of Ethiopian textile and apparel industry

Merertu Wakuma Rundassa · Daniel Kitaw · Eshetie Berhan

22 citations0/0 files storedResearch Journal of Textile and Apparel

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Global Trade and Competitiveness Global trade and economics Economic and Technological Innovation

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.

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References

1965Trade Liberalisation and “Revealed” Comparative Advantage 1 1983On the theoretical interpretation of indices of trade intensity and revealed comparative advantage 2017Revealed comparative advantage: What is it good for?2007Revealed comparative advantage and competitiveness in services 2003Analysing Comparative Advantage and Competitiveness: An Application to Australia's Textile and Clothing Industries 2014Comparative Advantage and Competitive Advantage: An Economics Perspective and a Synthesis 2013Analyzing competitiveness of clothing export sector of India and Bangladesh 2018An overview of textile and apparel business advances in Ethiopia

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