Whither African Manufacturing?
In a nutshell, the column argues that used clothing donated from western countries has limited the emergence of garment manufacturing in Africa, thereby stunting that continentâ€™s industrial development.
Reynolds emphasizes this research as an example of the unintended consequences of ostensibly benevolent interventions. However, there are other possible implications.
If one accepts the facts as presented, then African countries would be better off if they had levied a countervailing tariff on imports of used clothing. This conclusion runs contrary to the free-market philosophy that Reynolds normally champions.
I wonder whether garment manufacturing is a viable economic strategy for Africa. Several small Asian countries used it as a path to more sophisticated industrial development. They succeeded partly because the Multi Fibre Arrangement restricted clothing exports from China to the western world until 2005. Today, prospective garment manufacturers in Africa would have to contend with unrestrained Chinese competition in western markets.
More generally, a strategy of export-led growth depends on other countries running trade deficits. An increasing US trade deficit over the past three decades enabled many smaller economies to expand by running trade surpluses. With the US trade deficit likely to shrink, the rest of the world will have to rely less on exports and more on domestic sources of economic growth.