Weak Asymmetric Power and Looser Coordination among Actors: Hurdles for the Ethiopia's Leather Industry Competitiveness

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Though it is not equivalent to its potential, the leather industry in Ethiopia has been one of the key industries which support the special economic need of the nation called foreign currency generation, besides other economic benefits. Evidently, irrespective of the potential availability of relatively competitive resource base, cheap labor, policies and strategies, incentives as well as support institutions, the value captured by the core actors or individual firms and the export performance of the industry shows wider gap from the expectation mainly due to weak asymmetric power relation and looser coordination among different level of actors. But competitors, especially many emerging economies, have shifted their development strategies or business environment from simple export-oriented firm level thinking to an emphasis on gaining access to higher value adding strategies in global value chains. True, this necessitates systemic efficiency and competency of all actors along the value chain. Actually global value chain approach (VCA), as a method and development strategy, gives possibilities to appropriately analyze the efficiencies, competencies, opportunities and perhaps also the risks of the whole value chain and help forward the development or upgrading strategies so as to be globally competitive. In this respect, Ethiopia's leather value chain is characterized by very low supply of raw materials with poor quality, complex routes of input recovery, sluggish material flow with wider gap between end users expectations and producers' performance, very low value added, dysfunctional information flow, weakly exercising of governance functions and less coordination among macro-, meso- and micro-level actors along with some rivaby directions or policies. Thus, the immediate measures to be taken so as to make the sector competitive are to fill the gaps of those suboptimal value chain attributes and to reconcile and align those antagonistic directions and policies accordingly. Key Words: value chain, value added, governance, coordination, transaction cost, product flow, information flow, critical success factors, leverage points, benchmark, upgrading



Critical Success Factors, Leverage Points