The rise and fall of (Chinese) African apparel exports

Abstract

During the final years of the Multifiber Agreement the US imposed strict import quotas on Chinese apparel while it gave African apparel duty-and quota-free access. The combination of these policies led to a rapid but ephemeral rise of African exports. In this paper we argue that the African success can be explained by a temporary transhipment of Chinese apparel driven by quota-hopping Chinese assembly firms. We first provide a large body of anecdotal evidence on the Chinese apparel wave in African countries. Second, we show that Chinese apparel exports to African countries predict US imports from the same countries and in the same apparel categories but only where transhipment incentives are present, i.e. for products with binding quotas in the US and for countries with preferential access to the US unconstrained by rules of origin. Using input-output linkages, we then show that African countries imported quasi-finished products with little assembly work left to do, rather than primary textile inputs. We estimate that direct transhipment may account for around half of AGOA countries apparel exports.

Why Is China Investing in Africa? Evidence from the Firm Level

“…Lederman, Mengistae and Xu (2013) also offer micro and macro evidence of the benefits of FDI in Africa. There is also a growing literature about the effects of trade and industrialization of the content (e.g., Einhorn, 2008 andRotunno, Vezina, andWang, 2012 -2011. 11 Globally, the allocation of FDI can be explained quite well by a parsimonious set of variables that measure (1) market size (total PPP GDP); (2) natural resource rents as a share of the economy; and (3) governance.…”

Transient global value chains and preferential trade agreements: rules of origin in US trade agreements with Jordan and Egypt

“…A key characteristic of these chains/networks is that they are highly contingent organisationally and geographically (Coe et al 2008). In the textile and garments industry, an important outcome of these shifts has been the rise of Asian trans-national producers as key "carriers" and organisers of important segments in the GVC with the presence of these companies documented in many low-income production locations (Azmeh and Nadvi 2014, Appelbaum 2008, Gibbon 2003Lall 2005;Chiu 2007;Kaplinsky and Morris 2008;Phelps et al 2009;Gereffi and Bair 2010;Natsuda et al 2010;Fernandez-Stark et al 2011;Morris et al 2011;Rotunno et al 2012). …”

The sub-national economic and spatial development impacts of AGOA in Lesotho: An exploratory study

“…It has, however, been argued that the wages and salaries tied to these jobs have been far below the living wage, and as such only 'kept the workers going' from one day to the next, and have not enabled them to live decent and meaningful lives (Rotunno et al, 2012;Wax, 2003;Hickel, 2011). In addition, it has been argued that the majority of the factories in the SSA region were set up by Chinese and Taiwanese companies who have had little interest in developing the local population or imparting skills to them (Rotunno et al, 2012;Lall, 2005Lall, : 1008Fosu, 2011). At the same time, this has meant that a large part of the benefit to be derived from AGOA by the non-USA trading partners has gone to the non-SSA companies and their home countries (Lall, 2005;Rotunno et al, 2012;Hickel, 2011;Kamara, 2008: 27).…”

“…In addition, it has been argued that the majority of the factories in the SSA region were set up by Chinese and Taiwanese companies who have had little interest in developing the local population or imparting skills to them (Rotunno et al, 2012;Lall, 2005Lall, : 1008Fosu, 2011). At the same time, this has meant that a large part of the benefit to be derived from AGOA by the non-USA trading partners has gone to the non-SSA companies and their home countries (Lall, 2005;Rotunno et al, 2012;Hickel, 2011;Kamara, 2008: 27). It has also been argued that the main interests of the Chinese companies in 'the AGOA project' have been to use the financial 1 Kushner (2015), for instance, observes that AGOA has created 350,000 direct jobs and increased annual USA-Africa trade from $7billion to $25billion, while Wroblewska (2015) puts the total number of new jobs created in Africa at 1.3 million, and Green (2013: online) reports that AGOA has "indirectly supported" a further 10 million jobs on the continent.…”

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