Determinants of Export competitiveness: The Case of Textile and Apparel Industry in Ethiopia
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Date
2022-07
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Addis Ababa University
Abstract
Ethiopia has strong potential in the textile and apparel sector, due to low cost and trainablemanpower, raw material availability, and strong compliance and risk performance. In the past
decades, the export contribution of the textile and apparel industry has shown a sharp rise. However, the sector has been challenged in obtaining quality raw materials, labor productivity,
logistics, and infrastructure challenges. Despite these challenges, the textile industry has shown
an increasing and comparable competitive advantage in the international market. The objective of the study is to examine factors that determine the competitiveness of the textile industry of
Ethiopia. For this purpose, firstly, RCA and RSCA index for textile industry export is calculated. Then panel data techniques were employed to test the effect of FDI inflow, exchange rate, inflation
rate, infrastructure, human capital and raw material using time series data extended from 1991 to 2020. Furthermore, primary data using in-depth interviews with selected experts were used to
draw conclusions and forward recommendations. The results revealed that despite the potentialand the increasing trends in exports, Ethiopia’s textile industry hadn’t achieved the optimal level
of competitiveness in the global market. To reach its optimal competitiveness, constraints related to raw material and backward linkage, labor productivity, logistics and infrastructure need to be
addressed.
Key Word: Competitiveness, Textile, Industrial Park, Determinants of exports,