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Making South Asian Apparel Exports More Competitive

Ritika D’Souza's picture

Apparel workers in Bangladesh

There is now a huge window of opportunity for South Asia to create more apparel jobs, as rising wages in China compel buyers to look to other sourcing destinations.  Our new report – Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia  –  estimates that the region could create 1.5 million new apparel jobs, of which half a million would be for women. And these jobs would be good for development, because they employ low-skilled workers in large numbers, bring women into the workforce (which benefits their families and society), and facilitate knowledge spillovers that benefit the economy as a whole.

But for these jobs to be created, our report finds that apparel producers will need to become more competitive – chiefly by (i) strengthening links between the apparel and textile sectors; (ii) moving into design, marketing, and branding; and (iii) shifting from a concentration on cotton products to including those made from man-made fibers (MMFs) – now discouraged by high tariffs and import barriers. These suggestions recently drew strong support from panels of academics and representatives from the private sector and government when the report was launched mid-year in Colombo, Delhi, Dhaka, and Islamabad. South Asia is now moving on some of these fronts but a lot more could be done.

Moving up the apparel value chain
Stitches to Riches? finds that South Asia’s abundant low-cost labor supply makes it extremely cost competitive (except for possibly Sri Lanka). But rapidly rising living costs in apparel manufacturing hubs, coupled with international scrutiny, are increasing pressure on producers to raise wages. Plus, countries like Ethiopia and Kenya, who enjoy a similar cost advantage, are entering the fray, and some East Asian countries already pose a big challenge. The good news is that the policy reforms needed to keep the apparel sector competitive would likely benefit other export industries and transform economies (view end of the blog).

Tourism energizes South Africa’s job market

Christopher Rooney's picture
Christopher Rooney, guest blogger, is a junior researcher at the Development Policy Research Unit at the University of Cape Town
Tourism in South Africa is seen as a driver for growth because of its linkages with other parts of the economy. Photo: Trevor Samson / World Bank

There is strong evidence that suggests that the South African tourism industry can help create a large number of secure, inclusive jobs. Despite the global financial crisis and a sector which competes on a global level, it created 48,000 jobs since 2008. Furthermore, many of these jobs are low-skilled, located in towns where there is not much other economic activity and have a higher-than-average representation of women and the youth. In addition, there are also opportunities for employees to increase their skills and their wages, so they do not remain in a low-wage, low productivity wage cycle permanently.

What are some critical innovations for improving port-hinterland connectivity?

Bernard Aritua's picture
Photo credit: Hxdyl/Shutterstock
Imagine landing in the wee hours of the morning into Netaji Subhas Chandra Bose International Airport in Kolkata, India. As you leave the airport in a taxi, you find yourself stuck in heavy traffic and this at 4:00am in the morning! It does not take long to realize that you are sharing the roads with other early rising passengers riding in cars and buses, but also with a long queue of freight trucks, which seem to be the majority of vehicles along the road. Why are so many freight trucks winding through the city center? You soon learn from the taxi driver that some of the trucks are heading to, or coming from the famous ‘Barabazar’ market, but others are heading towards Kolkata port.

As your taxi leaves the line of trucks behind, you realize that you could be in any port-city in India or, for that matter, in China, USA or Europe. The types and number of trucks, and the freight carried may vary, but the challenges of port-generated traffic affecting the city hinterland is common. Of course, urban mobility solutions are multi-dimensional and usually include complementary strategies, investments and actors. However, the root cause of port-generated city traffic is simply a product of conventional port planning.

In Kolkata, the problem of port-generated traffic could get worse with the completion of the Eastern Dedicated Freight Corridor and National Waterway 1 (Jal Marg Vikas project). However, thanks to an innovative port-hinterland connectivity solution, supported by the World Bank, the ports of Kolkata and Haldia will dramatically increase their capacity while solving the issue of port-generated traffic. This is great news for the many truck drivers, who can often take a whole night just to get in queue to enter the port.

Chart: High-Tech Exports on the Rise in South Asia

Erin Scronce's picture

 

In South Asia, high-tech exports comprise a much larger share of total manufactured exports today than they did in 1990. In fact, the percentage of high-tech exports more than doubled between 1990 and 2014, and have been trending upwards for the past 3 years. Aircraft, computers, and pharmaceuticals are all examples of high-tech exports, which rely on large outlays of research and development. As South Asia seeks to become more globally competitive, these industries can help propel the region's countries into middle-income levels.

Find more trade data from South Asia
Read the latest trade news and research from the World Bank Group 

Building on Six Decades of Partnership toward a Promising Future

Annette Dixon's picture
VP
Annette Dixon, World Bank Vice President for the South Asia Region and Idah Pswarayi-Riddihough, World Bank Country Director for Sri Lanka and the Maldives in conversation with an Internally Displaced Person (IDP) living in a temporary welfare camp. Photographer: Mokshana Wijeyeratne

Sri Lanka amazes me in many ways, with its smiling faces among a rich tapestry of cultures, diversity, and natural wonders. On this fourth visit and first time in the Northern Province, I once again found a resilient and industrious people eager to build their lives and advance the country together.

As Sri Lanka recovers from an almost three-decade long conflict, much progress has been made. I am proud that the World Bank Group has been a close and trusted partner with the country to help restore lives, livelihoods, and unlocking the potential of all of its people, inclusive of men and women, diverse geographic locations, as well as different ethnic and religious backgrounds.

Chart: LED lights gaining market share globally

Jiemei Liu's picture

How can industry remain competitive in the global market while meeting targets to reduce greenhouse gas emissions?  A recently released report by the World Bank Group and partners, A Greener Path to Competitiveness, explains that to meet these dual objectives, governments, industries and consumers must all take action. The lighting industry is an example of one area where these three entities have come together to mainstream an energy-efficient option, LED lights.

Chart: What are the primary fuel sources for major industries?

Erin Scronce's picture

A new report from the World Bank Group in collaboration with CLASP and Carbon Trust, A Greener Path to Competitiveness, finds that industry has a large role to play in tackling climate change with huge untapped energy saving potential.

The report highlights the highest carbon-emitting sectors in the world’s economy: the production of iron and steel, aluminum, chemicals and cement. These industries continue to rely heavily on traditional fuel sources such as coal, natural gas and oil. There are significant opportunities to reduce these emissions, by using new technologies or retrofitting older plants to make production greener. Without urgent action, there is a danger that climate change targets set by the 195 signatories to the Paris Agreement will not be met.

Read more about how industries can find a greener path to competitiveness

Toward a more durable form of globalization, beyond 'neoliberal' negligence

Christopher Colford's picture

“Globalization and technological change create huge challenges for modern economies, but they are not uncontrollable forces of nature. The economy we have is the economy we choose to build. It is time to make different choices, and show that capitalism can be remade.” — Prof. Mariana Mazzucato of the University of Sussex and Prof. Michael Jacobs of University College London, the editors of “Rethinking Capitalism.”

The shadows lengthen and the daylight shortens amid these elegiac end-of-summer evenings — but there’s a palpable feeling nowadays, in Washington and other capitals, that we’re approaching not just the sunset of a season, but the twilight of an era.

The sudden change in the policy discourse over the past year has shattered the familiar old contours of the globalization debate, with a “populist explosion” in the world’s developed economies forcing policymakers everywhere to reconsider the boundaries of “the art of the possible.” In many of the world's developed economies, a recalibration of globalization is under way.

In this insolite interim, the fraught phrase of Antonio Gramsci comes to mind: “The crisis consists precisely in the fact that the old is dying and the new cannot [yet] be born. In this interregnum, a great variety of morbid symptoms appear.”

Three incisive recent analyses illustrate the impassioned arguments that underscore this end-of-an-era feeling. Together, the analyses set the stage for the imminent publication of a new book of essays by a group of eminent economists, whose ideas may chart the way toward a more durable, more inclusive approach to globalization.

 
  • Second: Diagnosing how a phase of economic history may have run its course, Nobel Prize-winner Joseph Stiglitz (a former Chief Economist of the World Bank) in Project Syndicate asserts that the laissez-faire approach to globalization has reached its (il)logical conclusion: “The failure of globalization to deliver on the promises of mainstream politicians has surely undermined trust and confidence in the ‘establishment.’ . . . Neoliberals have opposed welfare measures that would have protected the losers [of globalization]. But they can’t have it both ways: If globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of [their] social contract. . . . Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance.”  
 
  • Third: A series of insightful columns by Martin Sandbu in The Financial Times – tracing an “insurrection [that] has been a long time coming” – explores the links among economic stress and social-class anxiety that provoked this year’s social eruption: “Over the past generation, the trajectory of the white working class has no doubt changed the most for the worse, compared with the previous generation.”


The history-minded reflections of Jacques, Stiglitz and Sandbu underscore the fact that many economists are still pondering how so many of their policy prescriptions went so badly wrong, opening the way for the global financial crisis.

Chart: Poverty is Driving Informal Work Among Foreign Service Providers to Democratic Republic of Congo

Erin Scronce's picture

A new report, From Hair Stylists and Teachers to Accountants and Doctors - The Unexplored Potential of Trade in Services in Africa, indicates that African countries are trading in services, often in unexpected ways. Africa’s export potential in traditional services, such as tourism, is clearly recognized, but the emerging success of exports of nontraditional services is often overlooked. Hairdressers, doctors, educators, and accountants are all examples of service providers who are moving across borders to take advantage of employment opportunities away from home. Many of these workers are finding opportunity in the informal sector, driven to other countries due to poverty and lack of opportunities at home. Read more in the feature story and report


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