Effectiveness of Firms’ Efforts to Mitigate AGOA Suspension the Case of Bole Lemi and Hawassa Industrial Parks
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Date
2023-07
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Addis Ababa University
Abstract
This study aims to evaluate the effectiveness of institutional efforts to mitigate the effects of AGOA suspension in Bole Lemi and Hawassa Industrial Parks. The study used a mixed-methods approach that considers both quantitative and qualitative data. Using judgmental non-probability selection approaches, 74 company managers and marketing directors from each of the businesses operating in the two industrial parks were chosen in accordance with the study's objectives. Data were collected from sample respondents using a well-designed survey tool, and the data were analyzed using SPSS version 26 software. As a result, AGOA has proven to be a viable market opportunity for firms investing in Ethiopian garment production. In addition to the country's comparative advantages in labor and electricity costs, the AGOA plays a vital role in recruiting global firms to invest in Ethiopia. AGOA's suspension had a significant detrimental effect on the firms' production and marketing capacities. Firms invested in Ethiopia's garment industry attempted to mitigate AGOA market loss through various mitigation mechanisms: market diversification, cost-cutting, looking for other duty-free and quota-free market opportunities, and cooperation among industry participants are the key mitigation strategies used by firms in both Bole Lemi and Hawassa Industrial Park to deal with the suspension of AGOA opportunities. The study analyzed the effectiveness of firms' efforts to mitigate the negative effects of AGOA suspension. The firms' mitigation measures, according to the research, were not long-term or strategic in character, since the mitigation was primarily focused on managing the existing loss of AGOA revenue and market opportunities. The government has also gradually implemented a few steps to assist the affected sectors, such as alternate market assistance for exporting enterprises, such as raising domestic sales of exportable items and encouraging the development of new export goods. Overall, this study presented firms' efforts to mitigate the effects of AGOA suspension on the firms operating in the Bole and Hawassa Industry Parks. In addition to firm-level mitigation, securing the country's peace and stability, renegotiating the country's retention of AGOA with the US government, developing alternative strategies to ease investor business, engaging with local investors through joint ventures, improving market information, fostering public-private dialogues, and promoting public-private partnerships could all be part of the mitigation strategy
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African Growth and Opportunity Act