Light Manufacturing in Zambia: Job Creation and Prosperity in a Resource-Based Economy by Hinh T. Dinh; Praveen Kumar; Anna Morris; Fahrettin Yagci; Kathleen Fitzgerald

Author:Hinh T. Dinh; Praveen Kumar; Anna Morris; Fahrettin Yagci; Kathleen Fitzgerald
Language: eng
Format: epub
Publisher: The World Bank

The Main Constraints on Competitiveness

Taking polo shirts as an indicator of production costs in the wider apparel sector, we find that the costs of producing apparel are higher in Zambia than in China (approximately $4.60 per shirt compared with $4.07). There are several reasons for the difference in production costs between well-managed firms in the two countries (figure 5.2). Zambia has a labor cost advantage because wages in Zambia are about 50 percent less than wages in China. This would represent a 5 percent overall cost advantage except that the advantage is nearly canceled out by the lower labor efficiency in Zambia.6 Ultimately, the higher trade logistics and input costs and the slightly higher overhead and financing costs in Zambia raise the total cost per polo shirt 13 percent above the corresponding cost in China.

Figure 5.2 The Cost to Produce a Polo Shirt, Zambia Relative to China

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