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Cornelia Staritz

University of Vienna

Cornelia Staritz is Tenure Track Professor in Development Economics at the Department of Development Studies at the University of Vienna. She is also member of the Advisory Board of the Austrian Foundation for Development Research (ÖFSE) and Research Associate at the Policy Research on International Services and Manufacturing (PRISM) at the Department of Economics at the University of Cape Town. She holds a PhD in Economics from the New School for Social Research and a Doctorate in Economics from the Vienna University of Economics and Business. Her research focuses on development economics and policy, international trade and trade policy, global production networks and value chains, and commodity-based development.
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publication
Local supplier firms in Madagascar’s apparel export industry: Upgrading paths, transnational social relations and regional production networks

This article asks whether and how local firms in low-income countries can participate, upgrade and capture value in apparel global value chains in the context of increased entry barriers and asymmetric power relations. It focuses on Madagascar, which is the top apparel exporter in Sub-Saharan Africa and one where there is a significant number of local firms. The article examines the capability-building processes of local firms, which are the basis for upgrading paths and broader sector development. We do this by combining conceptual insights from the Technological Capabilities literature with the conjunctural approach to Global Value Chains and Global Production Networks. Based on extensive fieldwork in Madagascar’s apparel export sector, the article explains how the relational, local and regional assets that local firms can leverage in building technological capabilities influence their choices with regards to export strategies and their upgrading paths. In turn, these assets are linked to different types of local ownership, and they emerge through historical legacies and the national socio-economic context, which give rise to specific transnational social relations, as well as through regional economic formations and global value chain dynamics.

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Global Value Chains, Industrial Policy and Economic Upgrading in Ethiopia's Apparel Sector

This article examines whether low‐income countries can still benefit from participating in manufacturing global value chains (GVCs) in terms of broader industrial development in a global context of greater competition and higher requirements. It contends that developing internationally competitive local firms and domestic linkages, in addition to upgrading, is crucial for participation in GVCs to drive industrialization. The study focuses on Ethiopia's recent experience with developing an apparel export industry through strategic industrial policy. Based on original empirical data collected through firm‐level surveys and interviews with government officials, industry experts and buyers, the article analyses the upgrading and localization trajectories of foreign and local apparel‐exporting firms. It argues that value‐capture benefits in assembly positions in apparel GVCs have become more difficult. The potential for localization benefits depends on the type of global buyers and foreign producers and their levels of embeddedness, but whether this potential is realized also depends on local firm characteristics and related industrial policy. Ethiopia's industrial policy has been relatively successful regarding national economy linkages, but less successful in developing competitive local export firms due to a weak local manufacturing tradition combined with a global context that has led to a supplier squeeze.

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The Learning Trap in Late Industrialisation: Local Firms and Capability Building in Ethiopia’s Apparel Export Industry

Local firms in new supplier countries face major challenges in entering manufacturing global value chains (GVCs) in the context of increased competition and requirements. To understand these challenges, we argue for the importance of looking more closely at local firm capability building, which is a costly and uncertain process and in the early stage of industrialisation was historically facilitated by industrial policy and leveraging foreign knowledge. This article examines the opportunities and constraints that Ethiopian-owned firms faced in building capabilities to enter apparel GVCs, using a survey designed to measure firms’ capabilities and firm histories to understand learning paths. We find that local export firms had a large capability gap between their existing capabilities and what is required to enter apparel GVCs, leading to high learning costs and risks, while the profit margins were very low, and there were limited learning channels. Industrial policy evolved taking into account these constraints, but faced challenges in providing learning channels for local firms in the context of a weak manufacturing class and hyper-competitive apparel GVCs. This resulted in a learning trap where local firms do not even try to enter manufacturing GVCs, or enter but fail to remain.

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Technological Capabilities, Upgrading, and Value Capture in Global Value Chains: Local Apparel and Floriculture Firms in Sub-Saharan Africa

Many local firms in sub-Saharan African countries are failing to enter and upgrade in new manufacturing and agribusiness export sectors. This article argues that we need to look more closely at the costly, risky, and uncertain firm-level processes of building capabilities in order to understand this challenge. However, local firm agency is constrained and has to be situated in asymmetric structures that are determined by transnational interfirm relations in global value chains (GVCs) as well as the country and region in which local firms are embedded. The article presents a new framework for researching how firms build capabilities in GVCs, and demonstrates how it can be applied using the cases of apparel and floriculture export sectors in Ethiopia, Kenya, and Madagascar. The cases show that firms build specific capabilities linked to export strategies, leading to uneven capability-building, specific upgrading paths, and value capture trajectories. Variations in local firms’ export strategies and success with those strategies are explained by differences in the financial capital, tacit knowledge, and social networks that they can leverage in building capabilities. The nature and extent of these intrafirm resources, especially in the early period of export industry development, are shaped by shared networks between local and foreign supplier firms, regional proximity to existing supplier countries, strategic interests of global buyers, and government industrial policy.

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Delivering on Promises? The Expected Impacts and Implementation Challenges of the Economic Partnership Agreements between the European Union and Africa

Economic partnership agreements (EPAs) mark a new era in economic relations between the European Union and African, Caribbean and Pacific (ACP) countries that will lead to reciprocal tariff liberalization. Model‐based impact assessments have become a powerful tool in trade negotiations and mixed results are reported for ACP countries. Given their set‐up within a neoclassical framework, these models neglect important issues such as impacts on employment, macroeconomic balances and adjustment costs. The structuralist computable general equilibrium model applied in this article for three African EPA regions addresses these shortcomings and shows negative macroeconomic and distributional effects and important adjustment costs associated with employment and public revenue losses. These results highlight the importance of policy responses to deliver on promises associated with EPAs, namely sustainable economic development. More generally, they show the importance of alternative models to understand implementation challenges and facilitate broader debates about bilateral trade agreements.

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Industrialization paths and industrial policy for developing countries in global value chains

Structural transformation to higher productivity and value-added activities remains a key objective for developing countries. Industrial policy has historically had an important role in supporting such transformation processes. Today, the external context is fundamentally different with the rise of global value chains (GVCs). This requires a reconceptualization of how GVCs shape industrialization paths and industrial policy options in developing countries. The chapter does this by (1) providing a critical discussion of opportunities and challenges for industrialization in developing countries related to the rise of GVCs; (2) highlighting the importance of different GVC types and of the contested nature of upgrading; and (3) stressing industrial policy implications relating to the importance of connecting to and leveraging lead firms, of thinning, stretching and thickening in different GVC types and integration phases, of strategically linking global, regional and domestic markets, and of building locally embedded productive capacities.

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Financialization and Global Commodity Chains: Distributional Implications for Cotton in Sub-Saharan Africa

Restructuring of global and local markets has led to an increased influence of commodity derivatives markets on commodity price setting. This has critical implications for price risks experienced by actors along commodity chains. Commodity derivatives markets have undergone significant changes that have been referred to as the ‘financialization of commodities’, which we define as an increase in trading activity by financial investors and the reorientation of business strategies by commodity trading houses towards risk management and financial activities. This article assesses how these global financialization processes affect commodity producers in low‐income countries via the operational dynamics of global commodity chains and national market structures. It investigates how prices are set and transmitted and how risks are distributed and managed in the cotton sectors in Burkina Faso, Mozambique and Tanzania. It concludes that uneven exposure to price instability and access to price risk management have important distributional implications. Whilst international traders have the capacity to deal with price risks through hedging, in addition to expanding their profit possibilities through financial activities on derivatives markets, local actors in producing countries face the challenge of increased short‐termism — albeit to different extents depending on national market structures — with limited access to risk management.

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