Journal of African Economies Advance Access published online on January 7, 2008
Journal of African Economies, doi:10.1093/jae/ejm030
Who Benefits from Export-led Growth? Evidence from Madagascar's Textile and Apparel Industry
Development Research Group, Trade (DECRG-TR), World Bank, Washington, DC, USA
1 Corresponding author: Alessandro Nicita, Development Research Group, Trade (DECRG-TR), World Bank, 1818 H Street, NW, Washington, DC 20433, USA. E-mail: anicita{at}worldbank.org
Fuelled by low labour costs and preferential trade agreements, exports of textile products originating from Sub-Saharan countries have grown dramatically in the last decades. This paper analyses some of the implications that export growth in the textile and apparel sector have for social welfare and poverty reduction in Madagascar. The paper proposes a simulation exercise utilising household level data and a methodology that combines the wage premium literature with matching methods. The results point to a large variation in the distribution of the benefits from export growth, with skilled workers and urban areas benefiting most. From a gender perspective, women are found to benefit substantially less than men. Although total welfare effects are significant, the benefits are largely reaped by non-poor households. From a poverty perspective, export-led growth in the textile and apparel sector is expected to have only a small effect on overall poverty.
JEL Classification: F16, I30, L67
The author wishes to thank Carol Box, Jaime de Melo, Marcelo Olarreaga, José Ramirez, Susan Razzaz and Isidro Soloaga for helpful comments and discussions. The views expressed here are those of the author and they should not be attributed to the institutions with which he is affiliated.