Apparel Value Chain

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sectoral studies series

T H E G L O B A L A P PA R E L VA L U E C H A I N :
What Prospects for Upgrading by Developing Countries

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
economy environment employment

sectoral studies series

THE GLOBAL APPAREL VALUE CHAIN:
What Prospects for Upgrading by Developing Countries

Gary Gereffi Department of Sociology, Duke University Durham, USA and Olga Memedovic UNIDO, Strategic Research and Economics Branch

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna, 2003

This paper has not been formally edited. The views expressed therein, the designations employed as well as the presentation of material in this publication do not imply the expressions of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Designations such as “industrialized”, “developed” and “developing” countries are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not imply endorsement by UNIDO. Material in this paper may be freely quoted but acknowledgement is requested, together with a copy of the publication containing the quotation or reprint.

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Acknowledgement
This publication has been prepared by Gary Gereffi, Department of Sociology, Duke University, and Olga Memedovic, UNIDO staff member from the Strategic Research and Economics Branch. Frédéric Richard, Director of the Strategic Research and Economics Branch, provided overall guidance. UNIDO intern Arjan Stavast provided assistance. The authors are grateful to Mr. John-Peter Moll, UNIDO expert on textile and clothing, for providing his comments during the preparation of this paper. Penelope Plowden and Georgina Wilde were the principal English language editors of the publication. Penny Butler was the copy-editor.

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Contents
Acknowledgement Abstract Introduction Global value chains Big buyers and global sourcing Global sourcing in apparel Apparel sourcing in North America European and Japanese variations in apparel sourcing networks World market trends Conclusion References iii vii 1 2 6 8 16 22 26 31 33

Tables
Table 1 Table 2 Table 3 Trends in United States’ apparel imports by region and country, 1983-2001 World's 25 leading apparel exporters, 1980, 1990 and 2000 Position of apparel among leading export items, 1980-2000 10 27 30

Figures
Figure 1 The apparel value chain Figure 2 Shifts in the regional structure of United States' apparel imports, 1990-2000 Figure 3 Shifts in the regional structure of European apparel imports, 1990-2000 Figure 4 Shifts in the regional structure of Japanese apparel imports, 1990-2000 5 18 24 25

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Boxes
Box 1 Box 2 International production systems WTO Agreement on Textiles and Clothing 1 12

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Abstract
The paper uses the global value chain framework to explain the transformations in production, trade and corporate strategies that altered the apparel industry over the past decades and changed the conditions for innovation and learning in the industry. The apparel industry is identified as a buyer-driven value chain that contains three types of lead firms: retailers, marketers and branded manufacturers. With the globalization of apparel production, competition between the leading firms in the industry has intensified as each type of lead firm has developed extensive global sourcing capabilities. While “de-verticalizing” out of production, these firms are fortifying their activities in the high value-added design and marketing segments of the apparel chain, leading to a blurring of the boundaries between them and a realignment of interests within the chain. Innovation in the global apparel...
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