Oriental Weavers : A Case Study

Egypt has always been considered as one of the Middle East and North African countries which functions based on comparative advantage in terms of its natural resource base and critical geographic location. The textiles industry in Egypt has historically shown considerable economic value-added due to an efficient input base of Egyptian long-staple cotton and supply chain linkages across the industry. However, industry development recently has shown a reverse trend in declining productivity, over-employment, outdated technologies, and highly fragmented supply chain. The Egyptian rugs sub-industry is not an exception to its parent's performance. This paper examines the Egyptian carpets and rugs sub-industry within an industrial development perspective using historical, competitive, and cost-benefit evaluations. It questions the major pillars upon which the theory of comparative advantage is founded based on results in economic performance, and adopts the new competitive advantage approach of industry competitiveness. Oriental Weavers is taken as a case study within the Egyptian carpets and rugs sub-industry and is dissected in terms of financial profitability and economic value-added using cost-benefit valuation. The paper concludes with high financial profitability and low economic value-added. It provides a timeline of recommended solutions for industry competitiveness. Policies and regimes should be formulated to establish more technical institutions related to textiles sector generally and more specifically towards labor productivity in the carpets and rugs sub-industry. Intra-industry linkages are also examined. Moreover, it is not seen that relaxed government intervention will solve the problem at the present time