Putting it to Work in Developing Countries - Nathan Associates

5 WIR 2004, p. 150, for a description of the wide array
of services exported by developing countries.
6 Ibid. pp. 95–96.
7 Ibid. pp. 29–31.
8 For a description of the impact of MFA’s closure on
Lesotho’s textile and apparel sector, see WIR 2006,
p.191. The U.S. dollar’s sharp depreciation coincided
with the end of the MFA regime also negatively effected
Lesotho’s textile and apparel enterprises. See Michael
Wines, “Dollar’s Fall Silences Africa’s Garment
Factories,” New York Times, March 12, 2005.
9 The power of China’s textile and apparel enterprises is
evidenced by the surge of Chinese textile and apparel
exports to the United States after the lifting of MFA—
a reported 46 percent increase in the first eight months
of 2005 before U.S. imposition of safeguard restrictions
to limit growth. See David Kay Johnson and Keith
Bradsher, “China and US Expected to Reach Deal on
Textiles,” New York Times, November 5, 2005.
10 Such considerations may explain some of the
changes in the stock of textile, clothing, and leather
industry FDI signaled earlier.
11 WIR 2006, p. 80.
12 In the post-quota world, tariffs will remain. But
while developed countries’ tariffs on textiles and apparel
are high, they are not prohibitive and provide only a
thin margin of preference for goods entering large,
developed-country markets such as the United States
under NAFTA and unilateral trade preferences (e.g.,
Andean Trade Preference and Drug Eradication Act,
and African Growth and Opportunity Act). These margins
that may be less significant than the production
cost advantages of large Asian suppliers. Moreover, special
qualifying rules for apparel under unilateral preferential
tariff arrangements often require the use of more
expensive U.S fabric, further eroding the attractiveness
of countries eligible for such preferences, unless they
meet or beat the production costs in nonbeneficiary
countries, or present other special advantages (e.g., justin-time
capability).
13 UNCTAD, TNC’s and the Removal of Textiles and
Clothing Quotas, UCTAD/ITE/IIA/2005/1, pp.20–25.
For a general look at the post-MFA transformation of
Africa’s apparel industry, see Broadman, Africa’s Silk
Road, China and India’s New Economic Frontier
(Advance Edition), Washington, DC: World Bank
(2006), pp. 149–151.
14 See Don Lee, “Even Chinese Companies are
Relocating to Cheaper Vietnam,” Los Angeles Times,
August 18, 2006.
15 See “New Policy Stresses Quality of Foreign
Investment,” China Daily, November 10, 2006 at
www.chinadaily.com.cn/bichina/2006-11/10/content_729989.htm;
and “China’s Economy—China
Wants Higher Quality Foreign Investment,” The
Economist, November 13, 2006.
16 Conclusion of a study by Morgan Stanley, cited in
“A Survey of Business in India,” The Economist, June 3,
2006, p. 14.
17 Ibid., pp. 15–16.
18 Clive Harris, “Private Participation in Infrastructure
in Developing Countries: Trends, Impacts, and Policy
Lessons,” World Bank Working Paper Number 5
(2003), pp. 6–15.
19 World Bank, Public–Private Infrastructure Advisory
Facility, “Private Activity in Infrastructure shows mixed
results in 2005” (September 2006).
20 Even in this bust period, private infrastructure
investments are reported to have continued to advance
in several low income countries—Cameroon, Togo,
Niger, Azerbaijan, and India—perhaps testimony to
how essential and adaptable these projects can be. See
Clive Harris, “Private participation in Infrastructure in
Developing Countries: Trends, Impacts, and Policy
Lessons,” World Bank Working Paper Number 5
(2003), pp. 8–9.
21 On the basis of a sample survey of 35 countries, the
World Bank estimated that South-South FDI amounted
to $48 million in 2003 (GDF 2006,111). UNC­
TAD reports $37 billion in 2003 FDI receipts in developing
and transitional economies from foreign
investors based in these same economies, excluding
FDI from offshore financial centers (WIR 2006,
117–118). Differences in how the World Bank and
UNCTAD classify economies may account for some of
the inconsistency.
22 The observations are based on WIR 2006, pp.
117–136.
23 Ibid. pp. 141–168.
24 Harry G. Broadman, Africa’s Silk Road, China and
India’s New Economic Frontier (Advance Edition),
Washington, DC: World Bank (2006), pp. 89–92.
25 GDF 2004, pp.81–82.
26 WIR 2006, pp. 198–199.
27 Vincent Palmade and Andrea Anayiotas, “FDI
Trends, Looking Beyond the Current Gloom in
Developing Countries” (September 2004) at
http://rru.worldbank.org/PublicPolicyJournal.
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