The political economy of industrialization trajectories in Uganda's apparels sector: multi-scalar embeddedness and the pressures against industrial policy
(University of Manchester)
Paper short abstract:
This paper examines why the two dominant apparels firms in Uganda have adopted very different production strategies, highlighting how domestic political economy and the lack of government policies has failed to motivate changes in the firms' preferences.
Paper long abstract:
Industrialization has been increasingly prioritized across the African continent. Most governments have aimed to revive their nascent manufacturing sectors by focusing on export-led growth and accessing lead firm-dominated Global Value Chains/Global Production Networks (GVC/GPNs). However, there is variation in the strategies of firms located in developing countries, with some firms (often owned by domestic investors) preferring to produce for regional and domestic markets. This paper examines how the Ugandan government's industrial policies have evolved in an environment where its two largest apparel firms have different growth strategies (with one preferring to produce for the domestic market and the other targeting international markets in the long-term). The government has tried to enact specific industrial policies aimed at supporting locally based companies through public procurement (Buy Uganda, Build Uganda) and through increasing tariffs on used clothes.
Through an examination of Uganda's apparels sector, this paper explains that the existing GVC/GPNs literature correctly argues that multi-scalar embeddedness explains why different firms - one transnational firm and one indigenous firm - have developed two contrasting strategies; the former focusing on exporting to Western countries and the latter preferring regional markets. However, the GVC/GPNs literature, in focusing on the embeddedness of firms, has neglected the role of the state in shaping industrialization trajectories. An examination of the Uganda case shows why a broader understanding of domestic political economy pressures explains why firm embeddedness often wins out against industrial policies in developing countries where market-led reforms have been dominant in recent decades.
Global value chains, the state and the political economy of development