Impediments to promoting backward linkages from the garment industry in Sri Lanka

The slow growth of backward linkages from the garment industries (export-or iented) in developing countries and the policy merits of promoting these li nkages have considerable contemporary relevance. Backward linkages are usef ul particularly for a garment industry to reduce the lead time and remain c ompetitive in the international market. Local suppliers to the garment indu stry cannot function however unless conditions exist which allow them to be competitive. Furthermore, in a world where multinational garment-buying fi rms are dominant, a large import dependence in the garment industry does no t necessarily imply that there are many opportunities to create local suppl ies and thereby create backward linkages. These factors are shown from the Sri Lankan attempts to promote backward linkages from the garment industry. It is argued that formation of backward linkages in the garment industry t hat operate in an open economy such as Sri Lanka is a natural outcome of in dustrial deepening and therefore will be time dependent. It is noted that e ven with less backward linkages, the garment industry in Sri Lanka has cont ributed significantly to foreign exchange earnings and employment creation in the country. (C) 1999 Elsevier Science Ltd. All rights reserved.