• Liberalisation and textiles

Liberalisation and textiles

The paper analyses the distributional impact of trade liberalisation on the cotton and textile sectors in Tanzania. Specifically, the study investigates the effects of increased exposure to international trade on workers who are at the bottom of a production process.

The case study looks at the impact of international trade as a combined outcome of three forces:

• the structural effects such as trade barriers, infrastructure, and institutional factors
• the labour demand effects
• the labour supply effects.

The study finds that:

• the cotton and textile sector has become less labour intensive
• labour insecurities have grown as employers have increased their preference to short-term contract and casual labour
• new jobs in the informal sector have been created partly as a result of cheap textile imports
• wage employment in the cotton and textile processing industries has not been rewarding as wages have remained rather constant
• the incomes received by cotton farmers have not improved
• farmers have been receiving fairer prices of their cotton, despite the fact that they still lack adequate information about world cotton price movements
• complimentary policies on infrastructural development, fiscal support, credit markets development, and human capacity building are important if trade has to produce better results on poverty reduction in the sector.

The study recommends three areas for policy intervention in order for the cotton and textile sector to benefit from international trade:

• human and physical capital formation
• strengthening of regulatory institutions
• effective implementation of existing policies.

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