Impact of Involvement in the Garment Industry - Assignment Example

The government and entrepreneurs in developing countries have really seen this as an income opportunity and more so, a stepping stone to the international market arena. The increasing development in this industry is due to the availability of a cheap workforce, ready market, and easy transportation due to its negligible weight (TAYLOR, 2009).

Developing countries have maximized their raw materials and there has been a dramatic increase in production which now accounts for about 70% of the world's export of clothing. However, the garment industry is not left far behind as it accounts for about 3.2% of the world’s manufacturing export (TAYLOR, 2009).  Developing countries’ involvement in global trade, especially in the garment industry has both positive and negative impacts.

One of the positive impacts is the fact that this industry has increased the level of employment reducing unemployment in developing countries, which has been one of the major epidemics. For example, in Bangladesh, about 1.5 million workers are absorbed in these industries which is about 65% of the total workforce (Hoque, 2005).  In Morocco, about 40% of the total human resources are also absorbed into this industry. The second advantage is the increased level of foreign exchange or export earnings. These increased earnings are very vital in any developing country since it is a source of revenue through which the government injects into development projects so as to improve the living standards of its citizens (TAYLOR, 2009).  In Bangladesh, this industry contributes to about 75% of the country’s total export earnings. In Mauritius, it is about 64%, while in Sri Lanka it is about 50%, and in Tunisia, it is about 40%. Next is that it has some considerable total added value of merchandise exports. This is evident in countries such as Bangladesh which is about 55%, Turkey being 28%, while in Morocco and Pakistan it is 20% (TAYLOR, 2009).

On the other hand, linearization of trade has disadvantages in all industrial sectors, the garment industry being inclusive. First is that these developing countries have removed all the trade barriers which may later lead to structural unemployment in the short run (Hoque, 2005). Such an event has a lot of impact on a huge number of workers, their families, and more so on the local economies. Affected workers rarely get employment opportunities in the already grown industries. Second is that involvement in global trade in the garment industry may lead to increased domestic economic instability from international trade cycles since economies become dependent on global markets. Due to these, employees, businesses, and consumers are highly vulnerable to the declines in the economies of their trading partners. For instance, the United States depression leads to a reduction in demand for Australian Exports, consequently leading to reduced export income.

The involvement of developing countries in global trade means that their market is open to investors from all over the world. These countries face a challenge in the setting up of their own garment industries due to the fact that their environment is already very competitive (Hoque, 2005).  In addition, global trade can lead to increased pollution and other environmental problems as companies in the garment industries compete with other companies operating under weaker environmental legislation in developing countries (Custers, 2012).