AN EXAMINATION OF FACTORS RELATED TO THE IMPROVEMENT OF THE APPAREL ...

177 Pages·2012·5.17 MB·English

by  Miriam Kumwenda

AN EXAMINATION OF FACTORS RELATED TO
THE IMPROVEMENT OF THE APPAREL
MANUFACTURING INDUSTRY
IN MALAWI

By
MIRIAM KHATAZA KUMWENDA
Master of Science in Apparel Design and Production
Oklahoma State University
Stillwater, OK
2011

Submitted to the Faculty of the
Graduate College of the
Oklahoma State University
in partial fulfillment of
the requirements for
the Degree of
MASTER OF SCIENCE
December, 2011
AN EXAMINATION OF FACTORS RELATED TO
THE IMPROVEMENT OF THE APPAREL
MANUFACTURING INDUSTRY
IN MALAWI

Thesis Approved:

Dr. Gina Peek
Thesis Adviser
Dr. Lynne Richards

Dr. Semra Peksoz

Dr. Adriana Petrova

Dr. Sheryl Tucker
Dean of the Graduate College
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TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS ...................................................................................................
LIST OF TABLES ............................................................................................................ vii
LIST OF FIGURES ......................................................................................................... viii

CHAPTER 1
1 Introduction ........................................................................................................1
Research Question .......................................................................................1
Study Location .............................................................................................2
Significance of the Study .............................................................................3
Operational Definitions ................................................................................5
Definition of Export Processing Zones ............................................5
Definition of Industrialization..........................................................6
Definition of Export Promotion .......................................................7
Definition of Import Substitution.....................................................7
Definition of Trade Liberalization ...................................................8
Definition of Second Hand Clothing ...............................................9
Definition of Metropolitan Country and Colony .............................9
Definition of Tariffs .......................................................................10
Definition of Quotas ......................................................................10
iii
Definition of Preferential Trading Arrangements ..........................11
Definition of Labor-Intensive Industries .......................................11
Expected Contributions to the Literature ...................................................13
Organization of the Remainder of the Thesis ............................................13

CHAPTER 2
2 Literature Review.............................................................................................14
Theory and Empirical Work ........................................................................14
Competitive Advantage Theory Description ...............................................14
Four Determinants of Competitive Advantage ..............................15
Determinant One: Factor Conditions .............................................15
Determinant Two: Demand Factors ...............................................16
Determinant Three: Related and Supporting Industries .................16
Determinant Four: Firm Strategy, Structure and Rivalry ..............16
Other Factors: Chance and Government Role .............................................17
Four Determinants in the Malawian Apparel Industry Context ..................19
Literature Review ........................................................................................20
Apparel Manufacturing and Economic Development in Africa ....20
Colonial Policy, Import Substitution and Apparel Manufacturing in
Sub-Saharan Africa ........................................................................22
Apparel Manufacturing in Malawi .................................................24
Malawian Apparel Industry Challenges: Non Domestic and Domestic ......24
Non-Domestic Challenges: International Trade Agreements .....................25
iv
African Growth and Opportunity Act (AGOA) .............................26
Exporting Processing Zones (EPZs) ..............................................27
World Trade Organization (WTO) ................................................29
Protectionism and Trade Liberalization .........................................30
Pro-Trade View of Trade Liberalization........................................32
Second Clothing and its Trade .......................................................33
China's Investment in Sub-Saharan Africa Apparel
Manufacturing Industry .................................................................35
Observation on Trade Agreements and Trade Liberalization
Policies ...........................................................................................38
Domestic Challenges .......................................................................................39
Malawi's Economic Climate ........................................................................39
Geographic Location and Poor Infrastructure in Malawi ............................40
Transportation Infrastructure .......................................................................41
Electricity and Water Supply ......................................................................43
Government's Efforts to Improve Electricity and Water Problems .......43
Fragmentation of the Cotton Textile and Garment Value Chain ................45
Poor Working Conditions in Malawi ..........................................................47
Other Domestic Challenges in Malawi .......................................................48
Attempts by Malawi Government to Improve the Apparel Manufacturing
Industry ....................................................................................................... 48
Conclusion ...................................................................................................49

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CHAPTER 3
3 Research Methods ............................................................................................50
Chapter Overview ........................................................................................50
Research Questions .....................................................................................50
Respondents .................................................................................................51
Respondents: Paper and Pen Questionnaires ...............................................51
Respondents: In-Depth Oral Interviews ......................................................52
Assumptions ................................................................................................54
Assumptions about Competitive Advantage Theory ...............................54
Assumptions Regarding Data Collection and Content Analysis .............55
Instrumentation ............................................................................................56
Sampling Process ........................................................................................57
Data Analysis ..............................................................................................58
Content Analysis Major Themes .................................................................59
Paper and Pen Questionnaire for Managers ................................................59
In-Depth Oral Interviews Question Guides .................................................60
Consent and Confidentiality ........................................................................60
Conclusion ...................................................................................................61

CHAPTER 4
4 Results ..............................................................................................................62
Meeting Research Questions and Assumptions ..........................................62
Sample Size Used for Data Analysis ...........................................................62
vi
Sources and Presentation of Data ................................................................64
Status of the Apparel Manufacturing Industry in Malawi ...........................64
Results of the Manager Paper and Pen Questionnaire ................................65
Contributing Factors to the Slow Growth of the Apparel Manufacturing
Industry ........................................................................................................68
Strategies Implemented by the Malawi Government ..................................70
Improving the Apparel Manufacturing Industry in Malawi ........................71
Suggestions from the Paper and Pen Questionnaire ......................71
Suggestions Derived from In-Depth Interviews ............................72
Diagram of the Malawian Apparel Manufacturing Industry .......................73
Conclusion ...................................................................................................76

CHAPTER 5
5 Discussion ........................................................................................................77
Chapter Overview ........................................................................................77
Malawian Apparel Export Production: Status and Contributing Factors ....78
Contributing Factor: Transportation Networks ..............................79
Contributing Factor: Water and Electricity Supply .......................80
Contributing Factor: Lack of Training Institutes ...........................81
Contributing Factor: Lack of Raw Materials .................................82
Contributing Factor: Trade Agreements and Trade Liberalization
Policies ..........................................................................................83
Contributing Factor: Lack of Political Will ...................................87
vii
Contributing Factor: Capital for Business .....................................88
Respondents Suggestions to Improve Apparel Industry .............................89
Respondents Suggestions: Government to Continue Inviting
Foreign Investors ...........................................................................90
Respondents Suggestion: Need for Political Will ..........................91
Respondents Suggestion: Strengthening Domestic Industry to
Export .............................................................................................92
Respondents Suggestion: Create Training Institutes .....................93
Respondents Suggestion: Revive the Garment and Textile
Manufacturers Association of Malawi ...........................................93
Respondents Suggestion: Lending Institutions Interest Rate Reduction .....94
Respondents Suggestion: Diversification ....................................................95
Respondents Suggestion: Conducive Trade Agreement and Trade
Liberalization Policies .................................................................................95
Researcher's Suggestions .............................................................................97
Conclusion ...................................................................................................98

CHAPTER 6
6 Conclusion and Implications............................................................................99
Findings, Limitations and Implications for Future Research ......................99
Findings..........................................................................................99
Limitations of the Study...............................................................100
Future Research .......................................................................... 101
viii
Final Observations ...................................................................................102
REFERENCES ................................................................................................................104
APPENDICES .................................................................................................................118

ix
LIST OF TABLES
Page
Table 1: Assessing the Malawian Apparel Manufacturing Industry using the Four
Determinants of Porter’s Competitive Advantage Theory ................................18
Table 2: A summary of research questions for data collection ..........................................51
Table 3: A summary of respondents ..................................................................................53
Table 4: Paper and pen questionnaire results: Managerial Personnel Company A
Location, employee characteristics, and training provided ...............................66
Table 5: Paper and pen questionnaire results: Managerial Personnel Company A
Sourcing of raw materials, apparel produced, and exporting country ...............67
Table 6: Paper and pen questionnaire results: Managerial Personnel Company A: Salary,
benefits, and morale building activities .............................................................68
Table 7: Suggestions from in-depth oral interviews for further improvement of the
apparel manufacturing industry .........................................................................73

x