Textile and Apparel Firms in Turkey and Bulgaria: Exports, Local Upgrading and Dependency
Textile and Apparel Firms in Turkey and Bulgaria: Exports, Local Upgrading and Dependency

Summary/Abstract: How should we study and how should we explain industrial and firm upgrading in the host economy? This article builds on these questions by focusing on the textile and apparel industry and firms in Turkey and Bulgaria between 1991 and 2005, and it relies on interviews; quantitative analysis of value added of exports; and results from a survey of 106 firms, complemented by Global Value Chain (GVC) analysis, and secondary research. The authors find that Turkey retains higher value added for the local economy compared to Bulgaria at the end period, although the exports of these two neighboring economies were predominantly concentrated in down-market niches at the beginning of the research period. The firm-level analysis, which is based on evaluation of a set of dependency and upgrading indicators, demonstrates that firms in Turkey are in a better position compared to firms in Bulgaria. The results show higher upgrading of the former compared to the latter at the product, process, functional and organizational level. Moreover, firms in Bulgaria are far more dependent on foreign buyers, concentration in the top export market, foreign supplies and trade agents, than firms in Turkey. The authors conclude that internationalization affects negatively firms in Turkey and Bulgaria, which are in a position of lock-in into low-value added segments of the GVC, and lock-out is difficult unless state and business actors have a shared interest in helping the local firms. Further research is recommended on the institutional component of the GVC’s analytical framework that could be employed in other countries, sectors and market regions, using a complementary methodology – application of quantitative and qualitative tools to study local upgrading.

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