Mapping the Technological Capabilities of Ethiopian-owned Firms in the Apparel Global Value Chain

Lindsay Whitfield, Cornelia Staritz

Research output: Working paperResearchpeer-review

117 Downloads (Pure)

Abstract

Foreign direct investment has played an important role in the apparel export industry in Ethiopia, but what makes Ethiopia different to most other Sub-Saharan African countries is the existence of locally owned exporting firms. There were 48 Ethiopianowned firms in 2016, of which 14 firms were exporting apparel or made-up textiles. To export, local firms have to be able to deliver consistently products at a certain price and quality and to meet delivery deadlines, which require developing new technological capabilities. This paper analyses the level of capabilities among Ethiopian-owned exporting firms and their positions within the apparel global value chain, as well as how they have fared and which challenges they continue to face. Generally, the 14 local
exporting firms have low technological capabilities and struggle to meet export
requirements, despite important diversity among them. Learning is a costly process and takes time, thus many local firms are experiencing losses or just break even in their export business. Straddling the domestic and export market plays an important role, as firms make profits in the protected domestic market while they are learning how to meet the cost, quality and delivery standards of export markets. Therefore, most local firms use the domestic market as a means to subsidize the cost of learning to compete, but they also use what they learn through exporting in terms of productivity, quality and design for their domestic market business.
Original languageEnglish
Place of PublicationRoskilde
PublisherRoskilde Universitet
Number of pages57
ISBN (Electronic)9788773499528
Publication statusPublished - 2017
Externally publishedYes
SeriesCAE Working Papers
Number2017: 4
ISSN2446-337X

Cite this