Sunday, July 16, 2017

Rwanda opting for national production and not importation of leftovers

This is an interesting article about Rwanda and other East African countries' attempts to limit the importation of secondhand clothes from the US.  In many developing countries much of their clothing comes from this source, imports of secondhand stuff from the States.  Whatever Goodwill or other, for-profit thrift shops can't sell in the US, and whatever you put in those weird bins in parking lots with a picture of the Earth or something on them, get vacuum-sealed into massive bales and sent in shipping containers to the Third World.  There is an entire economic sector in these countries based on these bales of used clothes.  There are stores in the big cities that wholesale the bales, then there are smaller operators that buy the bales from the wholesalers and take them back to their retail boutiques in the city or in the provincial villages, where they open the bales, sort the clothes (there's everything from wedding dresses to Little League uniforms to women's work pumps), and sell them to the locals.  So you can see that there is a whole value chain, with different levels of operators, built up around this trade.  A similar "value chain" exists in many countries around imported used cars, or even imported junkers for parts.  In many countries there is no longer much domestic production of clothes, because the secondhand imports provide most of the clothes for the populace, and the few wealthier people buy expensive imported brand names new.

By limiting or banning these imports of used clothes, what Rwanda is trying to do is to upgrade from an economy based on import and consumption of the throwaways of the world economy, to an economy based on domestic production for an internal market and even for export.  I'm sure many economists would label this a misled type of import substitution, but every developed country that I know of got that way in large part by taking active measures to upgrade from lower-value to higher-value products for export, and replacing imports of high-value, finished products with imports of raw materials and other low-value products.  In this case a purist might then insist that Rwanda should keep importing used clothes for its local consumption (a low-value import) and produce high-value finished apparel for export.  But I imagine that it's hard to jump-start an economy without first focusing on the domestic market, especially for something as basic as apparel, which can represent a big part of a family's basket of purchases.  So I wish Rwanda and the other countries luck.  Yeah, US rag exporters might take a hit, but I'm sure they can recover and move into other, more productive sectors.  In the long run, it behooves the US to have a world of more advanced, prosperous economies that we can trade with, as opposed to a bunch of basketcase countries consuming our garbage and benefiting only a few US exporters of said garbage.

No comments:

Post a Comment