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This study examines the impact of social capital on the poverty of rural households in eastern Bhutan, with a particular focus on households' participation in community groups, which can be a proxy for the structural aspect of social capital. Using a two‐stage probit least squares simultaneous equation model, the present study reveals that social capital positively contributes to poverty reduction in Bhutan. This study also finds that non‐farm income is important for poverty reduction in rural areas. Our results, however, indicate that poor households in remote areas are discouraged from participating in community groups.

It has been argued that restrictions on industrial policy implemented under World Trade Organization rules in the 2000s have greatly reduced the 'policy space' in which developing countries can promote industrialisation. This paper examines the case of Thailand's policies in developing one of the most successful automotive industries in the Southeast Asian region. We show that Thailand's use of local content requirements, later abolished under WTO rules, helped promote local suppliers and did not deter foreign investors. Substantial tariff protection of vehicles and components production did not deter exports, and has continued to the present, even under liberalisation policies. Supplementing tariff protection by various fiscal means to promote product champions in the automotive industry, Thailand has succeeded in retaining substantial policy freedom.

This article examines the competitiveness of Cambodia's garment export industry, on which the country's recent and successful economic development has depended to an unusually heavy extent. Using primary interviews and drawing on a wide range of secondary sources, it documents how Cambodia was drawn into garment global value chains, based almost entirely on inward investment. Despite its expansion in the face of strong Chinese competition, since the end of the Agreement on Textiles and Clothing in December 2004, the industry remains vulnerable as a result of deficient infrastructure, labour unrest, official corruption and the absence of an adequate domestic textile industry, all of which serve to diminish its attractiveness to global buyers.Cet article a pour but d 0 examiner la compe´titivite´de l 0 industrie d 0 exportation du veˆtement au Cambodge, dont le de´veloppement e´conomique re´cent du pays a e´te´particulie`rement de´pendent. À partir d 0 entretiens primaires ainsi que diverses sources secondaires, nous montrons comment le Cambodge s 0 est inse´re´dans les chaıˆnes de valeur internationales de la confection en s 0 appuyant presque entie`rement sur des investissements internes. Malgre´une croissance e´conomique qui en de´pit de la forte concurrence chinoise se poursuit depuis la fin de l 0 Accord sur les Textiles et les Veˆtements, en de´cembre 2004, l 0 industrie reste vulne´rable en raison d 0 infrastructures de´ficientes, de conditions ouvrie`res instables, de la corruption ainsi que de la faiblesse de l 0 industrie domestique du textile, qui sont tous des facteurs qui nuisent a`son attractivite´aupre`s des investisseurs internationaux.

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Although China has diversified into sophisticated, higher value‐added exports, it is still a formidable competitor in global markets for basic labour‐intensive products. It is the world's largest exporting country of textiles and garments, the archetypical driver of industrial growth both in developed countries in the past and in most newly industrializing countries more recently. When the export restrictions under the Multi‐Fibre Arrangement (MFA) ended at the start of 2005, it was predicted that China would greatly increase its market shares at the expense of most competitors, except perhaps India. Vietnam has proved to be an effective competitor in the garment industry in markets where China is dominant. In this article, we investigate how key export‐oriented garment suppliers of Vietnam have been coping with competitive challenges in the post MFA era at a time when global buyers have been reorganizing their international production networks. We emphasize the influence of different global value chains on upgrading since Vietnamese suppliers switched to the US market after the implementation of the US Bilateral Trade Agreement in 2001. We note the uneven performance of Vietnamese garment suppliers, with some lagging behind others in upgrading and competitiveness, and their different responses to Vietnam's growing labour shortages. We base the article mainly on interviews conducted over the 2001–2008 period with garment companies and global buyers in Vietnam, Hong Kong and China.

This article traces the development of industrial policy towards the Indonesian motor industry within the automotive global value chain. Showing the current dominance of Japanese motor assemblers in Indonesia, it notes the rather undeveloped nature of the locally owned supporting industry, particularly compared with that of neighbouring Thailand. Most investment in auto-parts production has been by foreigners. Nevertheless, Indonesia's rapid domestic-market growth has allowed it to attract foreign automotive investment without having to offer excessively generous incentives. While the continued entry of foreign suppliers of auto parts into Indonesia offers opportunities for local suppliers to upgrade their productive capabilities, it also limits their chances of becoming first-tier suppliers themselves. Japanese automotive investors are optimistic about Indonesia's export potential, more so than Malaysia's.

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