Challenges in Global Market Competitiveness: The Textile and Garment Industry within the Ethiopian Context
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Date
2015-05
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Addis Ababa University
Abstract
Ethiopia‟s textile and garment industry has a long history which began in 1939. It is now the third largest manufacturing industry undergoing major developments aided by cheap labor force and lower energy costs compared to other countries in the region. Over the past ten years the sector has registered unprecedented growth and has yet to reach its full potential. However, despite the observable growth, the sector‟s overall export performance against the ambitious five year Growth and Transformation Plan (GTP) was poor. The aim of this paper is to examine factors that are centrally affecting global competitiveness of the textile and garment companies in Ethiopia. The study find out major issues affecting the overall global competitiveness of firms in the sector taking core major issues of inputs, labor, infrastructure, and finance. In Addition, Michael Porter‟s diamond model that states; the characteristics of the „home base‟ play a central role in explaining the international competitiveness of the firm and as such assessed the strength of elements effect under their categories of factor conditions, demand conditions, related and supporting industries, firms structure and rivalry, and government. The result shows that, inefficiencies and lack of skilled labor as the first and foremost drawback, heavy dependency on imports of high cost, a need for a stable source of finance to employ innovative technologies and expansion for better competitiveness are major performance downsizings by shrinking their products demand in the global market. This paper is a contribution, in highlighting known issues in the industry are still persisting and pulling the growth of the industry backwards from achieving its full potential. This survey was conducted taking fifteen textile and garment companies from private, government and foreign investments located in central, northern, southern and eastern part of Ethiopia.
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Ethiopia‟s textile, garment industry, energy costs