Assessing Competitiveness In Moldova's Economy - Economic Growth

More documents

Recommendations

Info

Development Alternatives, Inc. / BIZPRO Moldova Moldova Competitiveness Assessment Figure 12: Walnuts to the EU — Moldova and its competitors There is currently interest in expanding production by establishing new formal plantations. In addition, some initiatives seek to add value. One investor has established a plant for producing glazed walnuts for exports. Other possibilities include the production of pharmaceutical products using the shells and, eventually, even the production of walnut oil. Textiles and Apparel Overview LIGHT INDUSTRY The structure of Moldova’s textile and apparel cluster in many respects exemplifies the notion of the “two Moldovas,” one largely stuck in the past, the other seeking to compete more aggressively in global markets. The larger companies are shells of the Soviet-era behemoths, built to meet the needs of the USSR as a whole. The collapse of the Soviet Union all but annihilated their markets and severed their economic linkages. Constantly teetering on the brink of bankruptcy, they often survive only by gearing up for production when orders come in, and closing down once the production run is completed. That business model shifts much of the risk to the workers, who continue to depend on these temporary jobs, given the overall economic situation that offers few alternatives. July 2004 • Draft Page 21
Development Alternatives, Inc. / BIZPRO Moldova Moldova Competitiveness Assessment However, the restructuring of the sector has created a number of medium-sized companies, often in the form of joint ventures with partners from EU countries. The owners and managers of these enterprises are adapting to evolving market architectures, taking steps to upgrade their activities beyond pure processing services. With these growing capabilities, Moldova’s apparel sector represents competitive potential; yet structural problems may block its realization. In 2003, Moldova exported some US$167.6 million of textiles and apparel; textiles accounted for US$38.4 million of the total, and apparel for the remaining US$129.2 million. Roughly 70 percent of apparel exports go to the EU, and the United States accounts for almost all of the remainder. For textiles, the EU’s share in total exports is about 60 percent of textiles, with much of the remainder going to Russia and other CIS countries. Textile exports to the EU consist primarily of household items, such as bed linens, almost exclusively produced in Transnistria. Apparel exports are mostly CM (cut and make) processing—or tolling—services for foreign partners; current estimates put the local value-added in total exports at around 35 percent. However, several firms have upgraded to include design, and to move into private-label production. Competitive Advantages Moldova would appear to have a competitive advantage on three dimensions, with workers in effect paying the price for the first two. First, because of excess capacity and low labor costs, Moldova’s apparel industry offers an attractive combination of productivity and cost. One method used in the apparel industry is to standardize the value of different pieces of apparel in terms of the time required for production. As a recent study conducted under the auspices of the World Bank’s Moldova Trade Diagnostic Study puts it: “International buyers normally know exactly how many standard minutes their products contain.” 4 Applying these standard minutes to labor costs makes it possible to adjust for productivity differences. On that score, Moldova’s apparel industry outperforms its key competitors, including China. Figure 13 shows a comparison of the cost per standard minute in the apparel industry for selected countries. 4 Heiki Mattila, Case study: Textiles and apparel, Moldova Trade Diagnostic Study, November 2003; p. 11. July 2004 • Draft Page 22
Page 1 and 2: Assessing Competitiveness In Moldov
Page 3 and 4: Development Alternatives, Inc. / BI
Page 27: Development Alternatives, Inc. / BI
Page 37 and 38: Development Alternatives, Inc. Mold
Page 79 and 80:
Development Alternatives, Inc. Mold
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117:
show all

Assessing Competitiveness In Moldova's Economy - Economic Growth

Create successful ePaper yourself

Delete template?

Save as template?