Publications
Here you can find all publications from our research and related research outputs by C&CV team members.
Shareholders as the main beneficiaries of globalized production: Corporate financialization and value capture along global value chains
Felix Maile and Cornelia Staritz
Global value chain (GVC) analysis examines the distribution of value between lead firms and suppliers but overlooks profit leakage to actors outside GVCs, especially financial markets. We address this gap by integrating GVC analysis with the corporate financialization literature, examining value capture between shareholders, lead firms, and suppliers. Using S&P Capital IQ data, we analyze lead firms’ financialization of objectives, investments, operations, and value capture across four GVCs (apparel, automotive, copper, and coffee/cocoa) from 1993 to 2022. We show that GVCs serve lead firms as a “source of value” by lowering sourcing costs to increase profit margins and shareholder returns, and as a “source of liquidity,” extending supplier payment terms that enhance working capital. Overall, shareholders emerge as the main beneficiaries of GVCs. While issuing equity plays a minor role in financing lead firms, these firms sustain stock markets through large shareholder payouts, funded through the profits generated in GVCs.
Lead firm strategies in the global textile and apparel industry: Are disruptions reconfiguring the geographies of production?
Felix Maile and Cornelia Staritz
This article examines how disruptions in global production networks (GPNs) reshape lead firm strategies and the geographies of production. We adapt the GPN 2.0 framework by incorporating three mediating factors on lead firm strategy—supplier investment case, path dependencies, and state action. Focusing on textile and apparel GPNs, we find: (1) since the mid-2010s, lead firm strategies have been disrupted by increased online sales and geopolitical tensions; (2) lead firms adapted their sourcing strategies by increasing nearshoring, verticality, and ‘China + 1’ strategies; (3) these strategies materialized in apparel assembly, while production of inputs (fabric, fibers, accessories) remains concentrated in China.
Rethinking economic upgrading in apparel GVCs: Value capture through strategic partnerships in product innovation cycles
Felix Maile and Lindsay Whitfield
The global value chain (GVC) literature usually approaches the question of value capture among supplier firms in global supply chains through the conceptual lens of economic upgrading, defined as moving from contract manufacturing to design and then to own brand. However, in the global apparel industry, research shows that few if any apparel manufacturers have developed their own global brand and that apparel suppliers have taken on ever more tasks within manufacturing and logistics without increasing their profit share per product. Given that GVC scholars have been concerned with the distribution of the profit share within the chain and how supplier firms can capture more of it, we argue that it is time to re-think how the GVC approach conceptualizes value capture in globalized industries. This paper offers one way of re-thinking value capture, through our product innovation cycle framework. This framework is tailored to the global apparel industry, building on the work of scholars in economic geography and business studies as well as iterative theory building with original empirical data on the top transnational apparel suppliers. However, we think that it can contribute to a broader rethinking of how to explain value capture by supplier firms in globalized industries.
Why do labor regimes change? Structural transformation, worker power, and the supplier squeeze in the global apparel industry
Kristoffer Marslev and Lindsay Whitfield
Debates on labor regimes situate worker outcomes at the intersection of globalized production and specific social formations, but they do not specify how and why labor regimes change over time. This article presents a new approach to explaining how labor regimes change in the global apparel industry, the labor-led profit squeeze approach, combining insights from global production networks (GPN), development economics and labor studies. This approach argues that workers’ bargaining power is largely conditional upon processes of structural transformation. The article demonstrates this conceptual approach through a comparative analysis of the apparel export industries in Madagascar, Cambodia, and Vietnam.
China-Ethiopia relations and industrial development: A brief evaluation
John H. S. Åberg and Haftom Bayray Kahsay
Over the past two decades, Ethiopia has pursued an ambitious goal: to become Africa’s light manufacturing hub and reach lower middle-income status by 2025. Inspired in part by China’s state-led development model, Ethiopian leaders embraced industrial policy, special economic zones, and export-oriented manufacturing as the path to transform. For a while, the story looked promising. Ethiopia recorded doble-digit economic growth between 2004 and 2017. Industrial parks proliferated across the country, investment from China poured in, and the Ethiopian “developmental state” model was commended by international organizations. But how far has that project really gone? In this article, we argue that despite the impressive growth figures, Ethiopia has not become a manufacturing powerhouse. Instead, structural transformation remains limited, and the economy became fragile, and deeply vulnerable.
The state of living wage in Ethiopia’s apparel industries: Evidence from Hawassa Industrial Parks
Kidanemariam Gebregziabher Gebrehiwot, Fekadu Nigussie Deresse and Haftom Bayray Kahsay
The purpose of this study is to ascertain whether the compensation provided by corporations at Hawassa Industrial Park (HIP) is adequate to ensure that workers and their families can maintain a decent life. The data were collected between July 2021 and January 2022 from 17 fully operational garment and apparel firms in the HIP, Ethiopia, with the financial support of the MasterCard Foundation’s BRIDGES program. The percentage of workers earning below the living wage was estimated using a modified Foster–Greer–Thorbecke class of poverty measure model and a quantile regression to identify the determinants of wages.
According to the findings, 98.7%, 96.6%, 93.5%, 87% and 78.3% of workers, respectively, fall below the living wage benchmark (ETB 2121) when comparing their starting salary, current wage, current wage with bonus, current wage with food subsidy and current wage with bonus and food subsidy. Wage levels were found to be significantly influenced by workers’ education, work experience, job attitude and company size, according to quantile regression analysis. Because this study used cross-sectional data and all wage and living calculations were calculated based on the circumstances before the significant shift in the country’s foreign exchange regime and the extraordinary inflation that beset the economy after the reform, a follow-up study is required to capture the new dynamics. Creating jobs, ensuring decent pay and lifting their young people out of extreme poverty are some of the main reasons developing countries strive to attract international investment. Through increased productivity, devoted workers, lower attrition rates and the creation of a positive work atmosphere, industries profit financially. Nevertheless, there is still a dearth of empirical study on the relationship between wage adequacy and living expenses in the apparel and textile industries of Sub-Saharan Africa, with little attention paid to the setting of developing nations.
Labour-market dynamics and worker power in apparel global value chains
Kristoffer Marslev and Lindsay Whitfield
The apparel industry is notorious for its poor wages and rampant labour-rights violations, with Covid-19 having aggravated these problems. As part of the 2024 Annual Report of the Research Network on Sustainable Global Supply Chains, this chapter shows that processes of structural transformation are central to increasing worker power, and that worker power is central to achieving better wages and working conditions. ‘Structural transformation’ refers to a set of processes which include the absorption of un- and underemployed labour into the formal economy through improved access to alternative livelihoods in the formal sector. However, these ‘decent work’ gains can be eroded to a certain degree by the responses hereto of apparel-export firms as well as governments, because apparel manufacturing is characterised by its limited scope for economic upgrading. Thus, firms respond to rising wages by intensifying work, leading to declining working conditions and violations of rights, and governments, meanwhile, use labour repression to undermine workers’ collective action.
Toward shorter and greener supply chains? Understanding shifts in the
global textile and apparel industry
Felix Maile and Cornelia Staritz
Since the outbreak of the COVID-19 pandemic, there has been much talk about a geographical reconfiguration of the global apparel industry. The anticipated transformations range from a shift to online sales and digitalization, low carbon and circular production and supply chain laws, to a ‘de-coupling’ from China, given the US-China trade war and the Uyghur Forced Labor Prevention Act (UFLPA). Some analysts conclude that these transformations will result in the ‘nearshoring’ or even ‘reshoring’ of apparel supply chains. As part of the Annual Report 2023 of the Research Network Sustainable Global Supply Chains, our paper 'Towards Shorter and Greener Supply Chains' (pages 89-117) investigates to which extent these shifts are materializing, the factors that drive these transformations, and to which extent they contribute to shorter apparel supply chains.
Working Conditions in Madagascar’s Apparel Industry: Comparing Export and Domestic Market Firms
Kristoffer Marslev and Lindsay Whitfield
The apparel export industry in Madagascar is one of the largest in Sub-Saharan Africa, yet limited data exists on the conditions of its 180,000 predominantly female workers. Our analysis of new ILO data generated in 2021 and 2022 shows important variations by end market. While workers in export firms are more likely to do excessive overtime and have inadequate rest time, they earn higher wages and enjoy better social protections such as paid leave, insurance, pension, and maternity than workers in firms producing for the domestic market. These findings point to a paradox in which workers in export firms are more exploited in terms of their labor power but better off in terms of wages and benefits. The paper attributes these differences to the governance dynamics of global apparel supply chains, in which buyers on the one hand require suppliers to meet certain social standards and to comply with domestic labor laws, but on the other hand impose high flexibility demands that incentivize excessive overtime and work intensification.
Current Capabilities and Future Potential of African Textile & Apparel Value Chains: Focus on West Africa
Lindsay Whitfield
African countries export very little of what is traded within apparel global supply chains and across the African continent, except in the case of cotton, but import a large amount of what the rest of the world produces. Most apparel exports from the continent come from North Africa, followed far behind by East and Southern Africa. African countries have the opportunity to build sustainable textile and apparel industries from the start, which can give them a competitive advantage as apparel-supplying countries in South and Southeast Asia do not (yet) have ‘green’ industries. The cost of renewable energy technology is falling and renewable energy technologies to power industries are evolving. New fibre and recycling technologies also offer a window of opportunity to leapfrog into the next generation of technologies. Taking advantage of this window of opportunity requires that the African government look forward and not backward, that they think in terms of building new and not rebuilding the existing textile industries.
The Business Strategies of South African Textile Firms and Global Trends in 4IR and Sustainability Technologies
Lindsay Whitfield and Vuyiswa Mkhabela
This paper argues that the sustainability shift in apparel and textile global supply chains has led to innovations that combine digitalisation and biotechnology in ways that will have bigger disruptive effects on the global apparel and textile industry. It examines the extent to which South African textile firms are adopting 4IR technologies as well as environmental sustainability technologies in their business strategies, drawing on original
empirical materials from a survey of a sample of textile firms carried out in August 2022. The survey findings show a quite limited adoption of 4IR technologies among textile firms, pointing to the structural constraints within the South African textile and apparel industry and the general domestic economy that limit the adoption of 4IR and sustainability technologies. It concludes by arguing that the South African textile and apparel industry is relatively well placed to capitalise on the window of opportunity to adopt the latest fibre and textile technologies and to engage in research and development in these areas.