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AN EXAMINATION of FACTORS RELATED to the IMPROVEMENT of the APPAREL MANUFACTURING INDUSTRY in MALAWI by MIRIAM KHATAZA KUMWEN

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AN EXAMINATION of FACTORS RELATED to the IMPROVEMENT of the APPAREL MANUFACTURING INDUSTRY in MALAWI by MIRIAM KHATAZA KUMWEN 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 ii 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 v 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
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