Apparel exportism in Kenya

338 Pages·2011·2.64 MB·English

- 1 -

APPAREL EXPORTISM IN KENYA:
INTERNATIONAL REGIMES, CHAIN GOVERNANCE AND UPGRADING

A Thesis Submitted in Fulfilment of the Requirements for the Award of the Degree of Doctor of
Philosophy

MOSES MPURIA KINDIKI

Development Planning Unit
University College London

2011
- 2 -

DECLARATION

I, Moses Mpuria Kindiki, declare that the work presented in this thesis is my own. Where
information has been derived from other sources I confirm that this has been indicated in the thesis.

2 August 2011
- 3 -

ACKNOWLEDGEMENTS

I am deeply indebted to particular individuals and institutions whose support made the completion
of this thesis a reality. First is my principal supervisor Dr Robert Biel who has tirelessly worked with
me not only throughout the research period but also earlier on during my masters studies. His
guidance as a specialist in International Political Economy was particularly crucial given that the
thesis partly falls within this terrain. He deserves sincere thanks also for encouraging me along the
way when sometimes personal, family and financial challenges were beckoning me to give up. Dr
Robinson Rojas as well deserves earnest thanks for his contribution as a co-member with Dr Biel of
my supervisory committee. He shared insightful ideas on the international economic structure. Also,
a debt is owed to Dr Pauline Amos-Wilson for her guidance in research methodology.

Thanks are also due to University College London for awarding me the Graduate Research Student
Scholarship.

I am also indebted to all my interviewees in Kenya at the Ministry of Trade and Industry (Mr David
Rono, Mr Ongubo Nyakundi, Mr Elijah Manyara and Mr Erastus Kimuri), Export Processing
Zones Authority (EPZA) (Mr Benjamin Chesang and Dr Joseph Bii), Protex Export Processing
Zone Ltd (Mr Rudolf Isinga), Kenya Association of Manufacturers (Mr Fred Kariuki), Kenya
Human Rights Commission (Mr Steve Ouma) and Kenya Textile and Tailors Workers Union (Mr
William Muga). These gladly shared their opinions with me. Dr Mutuma Ruteere introduced me to
Mr Ouma, who, in turn, linked me with Mr Abraham Opuko. The latter organised for me to
interview 71 Protex shop floor workers. I am therefore further grateful to these three and, above all,
the 71 workers for sharing with me their time, opinions and experiences. I also thank Mr Francis
Rotich of EPZA for availing to me EPZs contacts.

Further, my thanks go to my wife Lilian and to my daughter Christine for their patience with me, as
well as my extended family and my friends for all their support. And finally I thank the living God,
His Christ, and His Spirit, who gave me, and gives me, strength in all things.
- 4 -

ABSTRACT

An important question in development is how far can the contemporary global context create
industrial development opportunities for the South, particularly for Low Income Countries? In an
important sense, this can only be answered in non-abstract terms, since the institutional conditions
facing particular industries at particular times are highly specific. In this research, a configuration of
four regimes- the structural regime on production and trade in apparel, the labour regime, the neo-
statist European Union regime on production and trade in apparel and the neo-statist United States
regime on production and trade in apparel- creates a window of opportunity for a Kenyan export
oriented apparel industry. However, we must ask whether this industry is autonomous from these
regimes to the extent that its gains can be sustainably embedded within Kenya, notably in terms of
product and labour upgrading, or is it, rather, subservient to them?

My theoretical discussion shows that the Global Value Chain (GVC) approach presents lead firms as
the primary governors in GVCs, while International Relations theory presents regimes as the primary
governors in issue areas. The discussion gives a Dependency interpretation of regimes, subsuming the
GVC approach in that interpretation, and arguing that, as far as issue areas are concerned, ‗external‘
control-emergent regime governance of the GVC overrides ‗internal‘ control lead firm governance.
My empirical discussion shows that the upgrading of the Kenyan apparel industry has been
insignificant, and that the governance of regimes on production and trade in apparel, while not a
necessary condition, was a sufficient condition to undermine it. Nonetheless, the Kenyan
Government and social movements can exploit systemic weaknesses, the former by negotiating for a
single transformation of fabric and promoting export of folklore/ hand loomed/handmade
products, the latter by demanding for the full implementation of minimum labour conditions.
- 5 -

TABLE OF CONTENTS

DECLARATION .................................................................................................................................................... - 2 -
ACKNOWLEDGEMENTS ................................................................................................................................. - 3 -
ABSTRACT ............................................................................................................................................................. - 4 -
TABLE OF CONTENTS ..................................................................................................................................... - 5 -
LIST OF CHARTS, TABLES AND MAPS ..................................................................................................... - 9 -
CHARTS .......................................................................................................................................................................... - 9 -
TABLES ............................................................................................................................................................................ - 9 -
MAPS ............................................................................................................................................................................... - 10 -
ABBREVIATIONS .............................................................................................................................................. - 11 -
1 INTRODUCTION AND METHODOLOGY ....................................................................................... - 15 -
1.1 INTRODUCTION ............................................................................................................................................. - 15 -
1.2 METHODOLOGY ............................................................................................................................................. - 19 -
1.2.1 Research Design ............................................................................................................................................ - 19 -
1.2.2 Research Strategy .......................................................................................................................................... - 20 -
1.2.3 Main Concepts and Conceptual Model ................................................................................................... - 21 -
1.2.4 Data Collection Methods ............................................................................................................................ - 36 -
1.2.5 Data Selection ................................................................................................................................................ - 37 -
1.2.6 Data Reduction and Analysis ..................................................................................................................... - 40 -
1.3 ORGANISATION AND SUMMARY OF THE REST OF THE THESIS ................................... - 40 -
2 THEORETICAL FRAMEWORK .............................................................................................................. - 48 -
2.1 INTRODUCTION ............................................................................................................................................. - 48 -
2.2 APPROACHES TO INDUSTRIAL DIFFUSION................................................................................... - 48 -
2.3 THE GLOBAL VALUE CHAIN APPROACH ........................................................................................ - 54 -
2.3.1 Introduction and the Four Dimensions ................................................................................................... - 54 -
2.3.2 ‗Internal‘ Chain Governance ....................................................................................................................... - 56 -
2.3.3 ‗External‘ Chain Governance ...................................................................................................................... - 59 -
2.4 INTERNATIONAL REGIMES ..................................................................................................................... - 74 -
2.4.1 Mainstream International Relations View .............................................................................................. - 74 -
2.4.2 A Dependency View: Overall Theoretical Approach ........................................................................... - 79 -
2.4.3 The Relevance of a Dependency Framework for the Upgrading Debate ........................................ - 91 -
- 6 -

2.5 HYPOTHESIS ...................................................................................................................................................... - 92 -
2.6 SUMMARY ........................................................................................................................................................... - 92 -
3 BACKGROUND TO REGIMES AND TO KENYAN APPAREL EXPORTISM .............................. 94
3.1 INTRODUCTION .................................................................................................................................................. 94
3.2 APPAREL REGIMES: EVOLUTION AND IMPACT ON GLOBAL APPAREL TRADE .......... 95
3.2.1 Main International Regimes in the Apparel Industry ................................................................................ 95
3.2.2 The Unchanging Role of the Periphery within Regime Instrumentality............................................ 117
3.2.3 Major Trends in Global Trade in Apparel ................................................................................................ 118
3.3 BACKGROUND TO KENYAN APPAREL EXPORTISM .................................................................... 124
3.3.1 General Political and Economic Background ............................................................................................ 124
3.3.2 Industrial Background with Specific Reference to the Apparel Industry............................................ 126
3.3.3 Existing Apparel Industry with Specific Reference to the Export Dimension .................................. 142
3.4 SUMMARY ........................................................................................................................................................ - 155 -
4 PRODUCT AND LABOUR UPGRADING .......................................................................................... - 158 -
4.1 INTRODUCTION .......................................................................................................................................... - 158 -
4.2 PRODUCT UPGRADING: EXPORTS EXPANSION ...................................................................... - 158 -
4.2.1 Introduction................................................................................................................................................. - 158 -
4.2.2 Exports Expansion ..................................................................................................................................... - 159 -
4.3 PRODUCT UPGRADING: MOVEMENT FROM ASSEMBLY TO OEM .............................. - 169 -
4.3.1 Introduction................................................................................................................................................. - 169 -
4.3.2 Local Integration ........................................................................................................................................ - 171 -
4.3.3 Fabric Value Addition .............................................................................................................................. - 177 -
4.3.4 Export of Folklore/ Hand loomed/ Handmade Products ............................................................. - 181 -
4.3.5 Integration into the Apparel GVC ......................................................................................................... - 183 -
4.4 LABOUR UPGRADING ............................................................................................................................... - 192 -
4.4.1 Introduction................................................................................................................................................. - 192 -
4.4.2 Minimum Age for the Employment of Children ............................................................................... - 193 -
4.4.3 Acceptable Conditions of Work: Wages ............................................................................................. - 193 -
4.4.4 Acceptable Conditions of Work: Hours of Work ............................................................................ - 194 -
4.4.5 Acceptable Conditions of Work: Occupational Safety and Health ............................................... - 196 -
4.4.6 Forced Labour ............................................................................................................................................. - 197 -
4.4.7 Right of Association and Right to Organise and Bargain Collectively ......................................... - 198 -
- 7 -

4.4.8 Lead Firm Auditing ................................................................................................................................... - 201 -
4.5 SUMMARY ........................................................................................................................................................ - 202 -
5 INTERNATIONAL REGIMES, CHAIN GOVERNANCE AND UPGRADING ..................... - 204 -
5.1 INTRODUCTION .......................................................................................................................................... - 204 -
5.2 INTERNATIONAL REGIMES ON PRODUCTION AND TRADE IN APPAREL ............ - 205 -
5.2.1 The Structural Regime: The Case of Post-ATC ................................................................................ - 205 -
5.2.2 EU-based and US-based Regimes: the Case of EU PTA and AGOA.......................................... - 210 -
5.2.3 The Interplay within Structuralism and between Structuralism and State-centric Regimes .... - 214 -
5.2.4 Regime Governance and Product Upgrading ...................................................................................... - 220 -
5.3 INTERNATIONAL REGIME ON LABOUR STANDARDS ........................................................ - 241 -
5.3.1 The Interplay within the Regime ........................................................................................................... - 241 -
5.3.2 Regime Governance and Labour Upgrading ....................................................................................... - 255 -
5.4 SUMMARY ........................................................................................................................................................ - 259 -
6 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ..................................................... - 262 -
6.1 INTRODUCTION .......................................................................................................................................... - 262 -
6.2 SUMMARY ........................................................................................................................................................ - 262 -
6.3 CONCLUSIONS ............................................................................................................................................... - 267 -
6.3.1 Limitations of the GVC Analysis .......................................................................................................... - 267 -
6.3.2 Regime Governance and the GVC Analysis ........................................................................................ - 268 -
6.3.3 Regime Governance and Upgrading ...................................................................................................... - 270 -
6.3.4 Kenyan Actors‘ Knowledge and Upgrading ......................................................................................... - 274 -
6.4 RECOMMENDATIONS .............................................................................................................................. - 275 -
6.4.1 Product and Labour Upgrading in General ......................................................................................... - 275 -
6.4.2 Product Upgrading .................................................................................................................................... - 276 -
6.4.3 Labour Upgrading...................................................................................................................................... - 280 -
REFERENCES ................................................................................................................................................... - 282 -
APPENDICES .................................................................................................................................................... - 317 -
APPENDIX A: List of Interviews ......................................................................................................................... - 317 -
APPENDIX B: Protex EPZ Ltd Structure .......................................................................................................... - 318 -
APPENDIX C: Apparel Manufacturing Firms: Summary of Main Indicators, 1973-80 ....................... - 319 -
APPENDIX D: World Textile and Apparel Imports, ca. 1980 .................................................................... - 320 -
APPENDIX E: EPZ Contribution to Kenyan Economy, Selected Indicators, 1997-2003 .................... - 321 -
- 8 -

APPENDIX F: % of Total Kenyan GDP (Constant 1982 Prices), 1992-1995 ...................................... - 323 -
APPENDIX G: Sectoral Percentage Shares to Kenyan GDP (Constant 1992 Prices), 1996-2000 ..... - 324 -
APPENDIX H: Kenyan GDP by Activity (%) .................................................................................................. - 325 -
APPENDIX I: EPZ Local Input Purchases, 2005 ............................................................................................ - 326 -
APPENDIX J: Leading Product Categories in Kenya under AGOA, 2003-5 ........................................... - 329 -
APPENDIX K: EPZ Skills Training and Technology Transfer, 2005 ....................................................... - 331 -
APPENDIX L: Annex to Memorandum of Understanding between the Government of the United States
and the People‘s Republic of China concerning Trade in Textile and Apparel Products ........................ - 334 -
APPENDIX M: EPZ Garments Enterprises, March 2007 ............................................................................. - 335 -
- 9 -

LIST OF CHARTS, TABLES AND MAPS

CHARTS

Chart 1: Upgrading model 1 ............................................................................................................................................ - 29 -
Chart 2: Upgrading model II ........................................................................................................................................... - 30 -
Chart 3: Upgrading routes ................................................................................................................................................ - 31 -
Chart 4: Overall conceptual model ................................................................................................................................. - 34 -
Chart 5: Kenya‘s annual GDP % growth (constant 1980 prices), 1992-2007 ...................................................... 125
Chart 6: Exports, leading world suppliers to US, 2005 (millions US$) .................................................................. 144
Chart 7: Exports, 48 SSA countries & Kenya to EU & US, 1999-2005 (millions US$) ................................... 145
Chart 8: Exports, Kenya to US, 2001-2 (millions US$) ............................................................................................. 146
Chart 9: Insertion of Kenyan apparel EPZ firms into GVC- a GAP model ..................................................... - 151 -
Chart 10: Exports, 48 SSA countries to EU & US, 1999-2006 (millions US$) ............................................ - 160 -
Chart 11: Exports, 6 leading SSA suppliers to EU & US, 1992-2006 (millions US$)................................. - 161 -
Chart 12: Distribution of exports, leading SSA suppliers to EU & US, 1992-2005 (millions US$) ........ - 162 -
Chart 13: Distribution of exports, 6 leading SSA suppliers to EU, 1992-2006 (millions US$) ................ - 165 -
Chart 14: Distribution of exports, 6 leading SSA suppliers to US, 1992-2006 (millions US$) ................ - 166 -

TABLES

Table 1: Representative theoretical approaches to industrial diffusion ................................................................. - 49 -
Table 2: US & EU apparel chain governance structures ........................................................................................... - 68 -
Table 3: Shares of world trade in apparel subject to MFA and other restraints (%) ............................................ 102
Table 4: 13 Leading textile-apparel exporters: 1965-97 (shares of world trade and rankings) ......................... 119
Table 5: World apparel exports by top 10 countries in 2007 (millions US$) ...................................................... 121
Table 6: Imports of new & second-hand apparel, 1972-80 (000s KShs)................................................................ 130
Table 7: Apparel exports, 1979-80 ................................................................................................................................... 133
Table 8: Export statistics for Tee shirts, 1979-80 ....................................................................................................... 134
Table 9: Contribution of EPZ apparel firms to the EPZ programme, selected indicators, 1998-2005 .......... 148
Table 10: EPZ % contribution to manufacturing & national economy, selected indicators, 1997-2003 . - 149 -
Table 11: Apparel EPZ firm ownership, 2003 ........................................................................................................ - 154 -
Table 12: Apparel exports, Kenya to US, 2005-7, selected aspects .................................................................... - 173 -
Table 13: Folklore/hand loomed/handmade exports, Kenya to US, 1992-2007 .......................................... - 182 -
Table 14: Products experiencing < 1 % share upgrading, 1992-2001 & 2002-4 .......................................... - 185 -
Table 15: Products experiencing < 1 % share upgrading, 2002-4 & 2005-7 .................................................. - 187 -
- 10 -

Table 16: US customs duty rates for selected product categories ........................................................................ - 191 -
Table 17: Incidence of quotas and Kenyan apparel exports to US ...................................................................... - 191 -
Table 18: Stoppages of work caused by industrial disputes in Kenya, 1992-2005 ......................................... - 199 -
Table 19: Status of EPZ industrial relations cases, 2007 ...................................................................................... - 249 -

MAPS
Map 1: EPZs with apparel firms (2005) ...................................................................................................................... - 38 -