Services Contribution to Value Chains: case study of the Egyptian ready-made garments sector

This paper aims at highlighting the role of services in the Egyptian manufacturing sector, with a focus on the ready-made garments industry. By analysing services in the value chains of three case studies, this paper shows that inefficiencies in service provision have negatively affected the performance of the Egyptian Ready-Made Garments Industry. In a sector where profits are generated from a set of intangible services, weak local capabilities in R&D and design along with limited contact with direct buyers increase the cost of services, limit the sector’s potential to seize a larger portion of the value added and effectively integrate in global value chains. Inefficiencies in the provision of services provided by the government either totally or partially negatively impact the competitiveness of the sector in terms of lead time, price and meeting quality specifications. Companies located in the governorates further suffer from inadequate infrastructure, inflating the transportation costs. Companies’ strategies to deal with this inefficiency differ by company size. Smaller companies try to economize on the high cost of services by avoiding high cost items. The paper concludes with specific policy recommendations to turn the service sector from a shackle to a booster of the sector and the economy at large.