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World Development Vol. 39, No. 12, pp. 2119–2131, 2011
� 2011 Elsevier Ltd. All rights reserved.
0305-750X/$ - see front matter
www.elsevier.com/locate/worlddev
doi:10.1016/j.worlddev.2011.04.016
Local Means in Value Chain Ends: Dynamics of Product
and Social Upgrading in Apparel Manufacturing
in Guatemala and Colombia
SETH PIPKIN *

Massachusetts Institute of Technology, Cambridge, USA
Summary. — This paper contributes to existing discussions of
global value chains (GVC) and industrial upgrading by
examining obser-
vations from eight months of field research in Guatemala and
Colombia, where upgrading firms have their own nationally
distinct form
of labor relations, despite producing the same products for the
same overseas buyers. Analysis of these observations leads to
the con-
clusion that labor relations show significant leeway in relation
to upgrading outcomes, and that local history merits more
attention as a
driver of management strategy. The paper concludes with a
discussion of relevant theory and implications for future
research.
� 2011 Elsevier Ltd. All rights reserved.
Key words — global value chains, industrial upgrading, apparel
manufacturing, Guatemala, Colombia, Latin America
* I would like to thank first and foremost Judith Tendler, Hugo
Beteta, the
MIT Program on Human Rights and Justice, and the Institute for
Work
and Employment Research (IWER) for allowing me to work in
the field
and develop this project. Thanks are also due to Michael Piore,
Richard
Locke, Susan Silbey, Suzanne Berger, Andrew Schrank, David
Weil,

Alberto Fuentes, Regina Abrami, Ben Rissing, Matthew
Amengual, Salo
Coslovsky, Roberto Pires, participants in the IWER seminar at
MIT
Sloan, as well as the anonymous reviewers from World
Development for all
of their feedback and help. For all of the support received in
this work,
responsibility for errors is solely my own. Final revision
accepted: March
1, 2011.
1. INTRODUCTION
Policy paradigms for development have reached a cross-
roads. The power of financial globalization to ‘eclipse’ the
power of nation-states has been both asserted and questioned
(Berger, 2000; Evans, 1997), while the Washington Consensus
seems to have fully fallen out of favor (Held, 2005; Kucszynski
& Williamson, 2003; Rodrik, 2006). The search for alternative
models is palpable. Such a project may not be accomplishable
in a stroke, or even in total, but whatever research is under-
taken on development today seems to carry the burden of con-
tributing to a timely, perhaps as yet unknown theoretical
paradigm to how to create growth in the developing world.
One literature that grapples with, despite predating, the
transition out of the Washington Consensus is known as the
global value chains (GVC) approach. This literature has exam-
ined development on the micro- and meso-level of firm inter-
actions in production processes distributed across regions
and nations. Its focus has generally been on the distribution
of power among firms within ‘value chains’ of international-

ized production and how these exchanges impact the develop-
mental outcomes of global capitalist competition, especially in
manufacturing. The GVC literature also describes a process of
‘upgrading’ by which firms participate in higher-value por-
tions of the overall value chain structure. This paper attempts
to build on that literature in two ways: first, by adding nuance
to its central concept of ‘upgrading’ and second, by showing
how this increased scope for variation may be driven by local
politics and institutions.
The case for such conceptual elaboration will be made with
the use of field data collected by the author on apparel export-
ers in Guatemala and Colombia. This data set, which com-
prises fourteen successful ‘upgraded’ firms (seven in each
country), constitutes a sample representative of the most ad-
vanced apparel exporters in Guatemala and Colombia. While
these firms often produced the same goods for the same gen-
eral pool of largely American buyers, they nevertheless
achieved their enhanced competitiveness by increasing value
added 1 through industrial relations systems that varied signif-
icantly on the national level. In Guatemala, upgraders made
paternalistic investments in the production workforce beyond
2119
all minimum standards to enhance their firms’ ability to turn
out garments of very subtle design both quickly and in quan-
tity. In Colombia, the same goal was reached by combining
Taylorist production floor management with departments of
specially hired fashion designers. Whether one works on the
production floor in one system or the other implies signifi-
cantly different impacts, both in terms of skill and distribu-
tions of firm-level surplus. Three main factors—foreign trade
relations, timing of the apparel export sector’s emergence
within the context of development agendas, and differing na-
tional patterns of socialization of business elites—show dis-
tinct promise in accounting for the observed variation. This
leads to the suggestion that future research on the develop-

mental impacts of value chain upgrading must take into thor-
ough consideration local appropriations of market signals,
particularly in terms of how the attention, priorities, and,
therefore, efforts of managers are trained by locally idiosyn-
cratic institutional influences.
To tell this story, a review of the GVC literature will clarify
how the findings of this paper suggest ‘room to maneuver’ in
the relationship between a product’s value-added and working
conditions, as well as how such variability relates in these cases
to local history. After this, section three consists of a brief
overview of the global dynamics of apparel commodity chains,
with attention to Guatemala and Colombia’s capabilities and
niches within that larger field. Section four details the different
forms of upgrading observed through fieldwork in both coun-
tries, with a focus on cases of individual firms and the partic-
http://dx.doi.org/10.1016/j.worlddev.2011.04.016
2120 WORLD DEVELOPMENT
ular practices that are constitutive of their ‘upgrading.’ In sec-
tion five, differences in historical and institutional variables in
the two countries will be discussed to illustrate why local his-
tory seems to relate more closely to firms’ choices than do the
standard explanations of the value chain literature. The final
section will consider theoretical as well as practical implica-
tions of this research.
2. GLOBAL VALUE CHAINS—RECENT FINDINGS
AND THEORETICAL CONSTRAINTS
Having proliferated now for nearly 20 years, work in the
global value chains literature applies a flip-side version of Wal-
lerstein’s world systems analysis to case studies of the various
paths along which commodities travel on their route from raw
materials to point of consumption (Bair, 2005; Wallerstein,

1995). That is, following from the prompts of world systems
analysis, it focuses on the distribution of power between firms
on the same ‘commodity’ or ‘value chain,’ usually at the level
of local ‘clusters’ of industrial production, which roughly par-
allels the French concept of the filiére (Raikes, Jensen, & Pon-
te, 2000). The ‘flipping’ occurs when, instead of placing
developing countries in a largely agency-less scenario of the
world system’s imposed core-periphery economic hierarchy,
GVC authors conceptualize these global production chains
as spaces in which actors can savvily jockey for position to
achieve varying degrees of success in ‘moving up,’ or as the lit-
erature puts it, ‘upgrading.’ The overall GVC literature has
been ably summarized elsewhere (e.g., Bair, 2005; Humphrey
& Schmitz, 2002; Ponte, 2002), but it is worth noting how
the approach boils down to a few key elements of analysis.
First, insofar as the GVC literature tackles the phenomenon
of globalized production, a key analytical insight is that this
“new” division of labor creates new imbalances, risks and
opportunities for firms and their employees. As such, this lit-
erature presumes that there will be various power asymmetries
along the value chain, with the most important and com-
monly-cited being the dynamic of the “buyer-driven” chain.
According to Gereffi, in a ‘buyer-driven’ value chain, 2 buyers
as lead firms will “undertake the functional integration and
coordination of internationally dispersed activities” (Gereffi,
1999 p. 41), 3 leading to the conclusion that the key to upgrad-
ing is for non-lead firms in developing countries to actively
pursue “different kinds of buyer-seller links” (ibid. p.40) whose
variety will ostensibly lead to a higher accumulation of firm
capacities and thereby competitiveness.
In this general context of asymmetry, “governance” emerges
as another concept of primary importance. It is invoked in
various ways to describe the rules by which Gereffi’s “integra-
tion and coordination” take place. Gibbon, Bair, and Ponte

(2008) established a typology of approaches to governance,
labeling Gereffi’s earlier approach to buyer-driven chains a
“driving” approach. A second category, called “coordinating,”
stems from the work of Gereffi et al. (2005), which employed
transaction cost economics to focus on upgrading as a phe-
nomenon best understood through the lens of commodity
characteristics and a dyadic level of analysis. The third cate-
gory offered is a “normalization” approach, in which the the-
oretical lenses of French Conventionalism (Boltanski &
Thévenot, 2006), an approach to analyzing how mental mod-
els of justification govern economic decisions, as well as Fou-
cault’s approach to power via “governmentality” as a set of
hegemonic assumptions (Foucault, Burchell, Gordon, & Mill-
er, 1991), are seen as the key perspectives on upgrading as an
outcome primarily of dominant discourses of scientific exper-
tise, “best practices” and international standards. This distinc-
tion is pertinent to this paper particularly insofar as norms and
conventions appear to have quite a bit to do with the observed
differences in approaches to upgrading, albeit while illustrating
how a given GVC governance structure may in fact permit
multiple “invoked models of practice” (Gibbon & Ponte,
2008) among its suppliers, provided the lead firm’s logistical
needs are met.
The processes of “buyer succession” and establishing gover-
nance rules are key to the desired outcome from which GVC
draws its main claim to relevance to practitioners of economic
development: “upgrading.” Perhaps because of an inherent
difficulty in combining market measures with broader con-
cepts of power, upgrading is generally viewed as the most vex-
ing concept in the literature (see e.g., Dussel Peters, 2008;
Morrison et al., 2008). It has been defined by Gereffi as a
mix of profitability and capital-/skill-intensity (Gereffi,
1999), by Humphrey and Schmitz as movements or changes
in something like a “5 W’s” of the commodity (process, prod-
uct, function, multi-chain) (Humphrey & Schmitz, 2002), and

by a variety of others as simply unit price (Gereffi & Kor-
zeniewicz, 1994; Schrank, 2004). Given the ambiguity and lack
of consensus in the literature, I will offer a sample of firms that
qualify in ways most repeatedly delineated by the literature
(non-basic goods, enhanced logistical capacity) as having ‘up-
graded.’
Regardless of the mechanism at play, GVC research is fre-
quently constrained by the assumption that to upgrade, sup-
pliers without market power must learn directly from their
advanced-country buyers. This tendency appears frequently
in the individual case studies that populate the GVC literature.
Whether in light manufactures and agricultural exports in La-
tin America and East Asia (Bair & Gereffi, 2001; Gereffi, 1999;
Giuliani, Pietrobelli, & Rabellotti, 2005), or surgical instru-
ments in Pakistan (Nadvi & Halder, 2005), the key variable
is often the lead firm’s guiding hand in upgrading possibilities
for developing-country suppliers. Thus even surprising cases
of local collective action and innovation tend to appear as
reactive, filling in voids left by capricious foreign buyers, as
was apparently the case of the Sinos Valley footwear cluster
in Brazil (Bazan & Navas-Aleman, 2004).
The literature is not without examples of local contingencies
complicating what might be called “buyer/product determin-
ism.” A variety of recent publications have made mention of
local historical legacies and institutions as influencing upgrad-
ing outcomes (Gellert, 2003; Neidik & Gereffi, 2006; Pickles
et al., 2006; Rothstein, 2005; Thomsen, 2007). In each case,
a locally unique array of interests and resources led to devel-
opmental outcomes not predictable by the buyer- or seller-dri-
ven tendencies of the particular commodities being produced.
Yet these examples have yet to seriously impact the theoretical
model of GVC, and reviews of the literature reveal a need for
further examination (Bair, 2005, 2008).

Concomitant with the tendency to conflate the back-and-
forth of communicating and responding to buyer demand
with all value chain activity is the tendency to leave firm-le-
vel outcomes and developmental impacts (in terms of im-
pacts on workers) undifferentiated. Yet past research
shows that it is not enough to characterize the choice of
firms as one between one where workers and employers
win and a low road where both lose (Knauss, 1998). Usu-
ally, if these issues are mentioned at all, they are noted as
a lacuna in the GVC approach (Plankey Videla, 2005). This
marks a second contribution of this paper: to contribute to
the project of observing differential distributions of benefits
from value chains (Kaplinsky, 2001) by connecting workplace
LOCAL MEANS IN VALUE CHAIN ENDS 2121
results to firm learning as a process embedded in local institu-
tional and political history.
Of special note in the advancement of the above themes in
relation to apparel are works by Lane and Probert (2009), Te-
wari (2008), and Gibbon and Ponte (2009). These works show
in a very detailed manner the importance of national and local
institutions and development paradigms in structuring firms’
approaches to a given GVC governance system. This paper
aims to contribute to the shared project of these works by
focusing not only on national influences on value chain com-
petition, but more specifically, on cases where the outcomes
as regards buyers are controlled for but nonetheless the inter-
nal production organizations diverge substantially.
3. THE APPAREL COMMODITY CHAIN
(a) Characteristics salient to a development research agenda
The apparel sector warrants continued development re-

search for at least two main reasons, increasing diffusion and
local capacity building in developmental state-private sector
relations. Regarding diffusion, apparel is an industry where
less-developed nations’ portion of supply continues to grow.
Since its early outsourcing after World War II (Rosen,
2002), apparel imports to the United States have ballooned
to account for 60% of all domestic consumption (WTO,
2001) while continuing to expand into ever more sophisticated
product niches (Tokatli, 2008). Cautioning against some opti-
mists are observations that Latin American firms especially
are considered to be a different story from the East Asian
“full-package” and “Original Brand Manufacturer (OBM)”
firms (Gereffi, 1999), having been cited as exhibiting a “false
competitiveness” due to their reliance on trade benefits and
quotas, not to mention geographic proximity to the US
(Abernathy, Volpe, & Weil, 2006; Mortimore, 2003). Nonethe-
less, even many critics of apparel as an ostensible “develop-
ment driver” recognize it as a site for potentially important
state capacity-building (Amsden, 1994; Schrank, 2004), mak-
ing any variations observed in the building of local know-
how within Latin America especially important.
(b) Regional performance and the positions of Guatemala and
Colombia
Guatemala and Colombia’s apparel exporters have come
from different pasts to relatively similar positions as exporters
to the United States. In terms of size, Guatemala exports sig-
nificantly more clothing to the United States, where almost
100% of all of its apparel exports are destined. As of July
2008, Guatemala’s apparel export sector comprised approxi-
mately 114 firms and 68,444 workers (VESTEX, 2007). In
Colombia, because firms commonly practice a mix of domestic
and export production, perhaps one-third of its 80,000 apparel
workers are producing output for the US, which is still Colom-
bia’s largest single export market (though insurgent demand

has brought Venezuela to approximately the same portion of
exports in recent years) (ASCOLTEX, 2006; DANE, 2005).
For both countries, apparel alone is an important component
of manufacturing and GDP: in Guatemala, it accounts for
approximately 20% of its manufacturing activity and approx-
imately 2.5% of GDP (BANGUAT, 2006; UN, 2010), while in
Colombia, it represents approximately 10% of manufacturing
GDP and 1.6% of national GDP (Proexport, 2008).
In terms of the legal structure and ownership of producers
in each country, Guatemala has had an in-bond tariff law
(Decreto 29–89) in place since 1989, which allows producers
to import inputs and export assembled products without tar-
iffs. Colombia has free trade zone rules and other related laws
to facilitate similar light manufacturing activities (USITC,
2004). The primary difference between the two has been Gua-
temala’s inclusion in preferential trade agreements with the
US, a key factor whose impact will be discussed further be-
low.
In Guatemala, a little less than 60% of apparel exporters are
Korean-owned and operated (VESTEX, 2010). No such pat-
tern exists in Colombia, where the legacy of this sector is far
more domestically rooted. There is a vast literature on the
importance of capital origins for development outcomes, par-
ticularly on the tendency toward enclave economies (Amsden,
2001; Dos Santos, 1970 ch.5, Gallagher & Zarsky, 2007), and
certainly such effects are to be observed in Guatemala, partic-
ularly insofar as the country’s early closures after the end of
the MFA quotas had even a higher proportion of Korean
firms than was represented in the overall population (VES-
TEX, 2005a); however, as will be discussed further below,
the influence of Korean-owned maquiladoras has also been a
significant resource in the learning processes of the most
high-performing firms in the sector, some of which have in
turn influenced many of the Korean firms themselves. As such,

their influence has not been fully typical of the enclave model.
In terms of context for labor relations and unions, the coun-
tries are considered by many as consistently two of the most
highly labor-repressive states in the western hemisphere
(ITUC, 2009). Since a period of “annihilation” largely at the
hands of Guatemalan business elites and elements of the mil-
itary in the late 1970s and early 1980s, Guatemalan unions
have had extreme difficulties in developing coherent ap-
proaches to organizing or workplace standards (Levenson-
Estrada, 1994, p. 173, Fuentes, 1998). The Colombian policy
scene, meanwhile, focuses far more of its labor policy toward
“flexibilization” than strengthening unions, with little appar-
ent change effected on this by the country’s efforts toward a
free trade agreement with the United States (Lopez, 2009).
And while the preferential trade relations that Guatemala
has had with the US have provided an outlet for transnational
activism in support of improved labor standards (Frundt,
1998), the impacts of these outside pressures on labor condi-
tions in Guatemala have been spotty, ephemeral, and highly
dependent upon how domestic interest groups contest reform
and enforcement issues (Fuentes, 2007). In sum, as regards im-
pulses driving the observed upgrading, and in particular, so-
cial upgrading above minimum labor standards, little of it
derives in any immediate way from national labor enforce-
ment, unions, or transnational activism.
Regarding what goods are exported and level of specializa-
tion, the two countries are fairly similar. Tables 1A–1D illus-
trate several important trends: first, in Guatemala, an increase
in the value of goods exported to the US, as well as a hugely
expanding apparel production base overall. By 2004, 4 Guate-
mala’s highest-value item in its top five exports was men’s and
boys’ cotton trousers, breeches, and shorts, a category largely
comprised by denim jeans. Colombia shows both similarities
and differences: its apparel sector in 1989 was much more

diversified than Guatemala’s, and to a degree remained so in
2004 (though both countries consolidated more towards their
top export categories). Like Guatemala, Colombia has become
a major exporter of casual pants and shirts for both genders to
the United States, though Colombia has carved out a deeper
niche in higher-fashion items such as men’s suits and women’s
underwear and swimwear, with suits in particular a long-term
specialty for Colombia (Morawetz, 1981). As we will see
Table 1A. Top 5 Guatemalan apparel exports to the US, 1989
Product category Value exported to US Rank
in Colombia’s
top exports
Rank as exporter
to US
Price per unita Percent total
value of apparel
exports to US
1. 348—W/G cotton trousers/slacks/shorts $28,637,452 1 13
$41.8 20.0
2. 347—M/B cotton trousers/breeches/shorts $23,154,763 4 12
$39.8 16.2
3. 340—M/B cotton shirts, not knit $11,729,009 5 21 $49.5 8.2
4. 359—Other cotton apparel
(e.g., vests, swimwear, ties, overalls)b
$ 6,139,824 32 12 $14.2 4.3
5. 339—W/G cotton knit shirts & blouses $ 4,823,937 3 33

$27.6 3.4
Total 52.1
a Units are 1 dozen unless otherwise indicated.
b 1 unit = 1 kg.
Table 1B. Top 5 Colombian apparel exports to the US, 1989
Product category Value exported to US Rank
in Guatemala’s
top exports
Rank as exporter
to US
Price per
unit
Percent
total value of
apparel exports to US
$67.6 15.2
2. 641—W/G man-made fabric not
knit shirts & blouses
$8,091,337 7 16 $98.5 5.1
3. 339—W/G cotton knit shirts & blouses $7,803,542 5 30 $29.2
5.0
$49.6 4.0
5. 340—M/B cotton shirts, not knit $6,204,803 3 27 $55.5 3.9

Total 33.2
Table 1C. Top 5 Guatemalan apparel exports to the US, 2004
Product category Value exported to US Rank in
Colombia’s
top exports
Rank as exporter
to US
Price per
unit
Percent
total value of
1. 339—W/G cotton knit shirts & blouses $729,630,106 12 1
$32.2 37.2
$62.4 12.7
3. 338—M/B cotton knit shirts $216,923,956 3 8 $35.3 11.1
$88.5 8.4
5. 648—W/G man-made fabric slacks/breeches/shorts
$119,439,699 20 5 $46.5 6.1
Total 75.5
Table 1D. Top 5 Colombian apparel exports to the US, 2004
Product category Value exported to US Rank in
Guatemala’s

top exports
Rank as exporter
to US
Price per
unit
Percent total value of
$82.1 19.5
2. 348—W/G cotton trousers/ slacks/shorts $87,934,302 1 25
$90.3 13.8
3. 338—M/B cotton knit shirts $39,321,330 3 30 $30.1 6.2
4. 433—M/B wool suit-type coats $33,138,539 33 4 $372.0 5.2
5. 352—Cotton underwear $32,862,782 26 22 $13.6 5.2
Total 49.9
below, these larger trends are mirrored in the population of
upgraded firms in this paper’s sample.
Given that the most important area in overlap for upgrad-
ers between the two countries was found to be bluejeans, the
reader can also refer to Figure 1 to see the comparability of
Guatemala and Colombia vis-à-vis international competitors.
These two countries clearly show a movement toward average
higher price per unit than their Latin American peers, an
interesting reversal given that Guatemala and Colombia were
well below this regional average in 1989. This high perfor-
mance, which is at most driven only in small part by local
sourcing of materials, 5 suggests that these countries have suc-
ceeded in carving out specialized product niches that many

regional competitors have not, reaching a level that resembles
more the higher-on-the-chain Asian producers. Figure 1 also
gives an example of how the repeal of the MFA in 2005 deliv-
ered a shock to apparel prices, one that Guatemala and
Colombia’s more specialized manufacturers have apparently
managed to escape (though there have been impacts in
volume).
Figure 1. Mens and boys cotton trousers, breeches and shorts
exported to the US, nominal US dollars. Source: OTEXA.
Both Guatemala and Colombia are in similar respects ‘high
achievers’ for their region; what they lack in volume output
they both make up for in unexpectedly high unit prices, often
on the exact same products. The discussion below of data
gathered in the field shows that this has been achieved in each
country through very different means. The remaining ques-
tion, then, is what variables other than the good produced
and factors specific to the lead firm on the chain might account
for the different means by which firms have been observed to
upgrade.
4. EMPIRICAL OBSERVATIONS OF DIFFERENCES IN
UPGRADING
(a) Methods
The material described in the cases here originates from
fieldwork performed by the author in 2005–06 in Guatemala,
and 2007 in Colombia. Five months were spent in Guatemala
across three visits, resulting in 68 interviews of 46 different
individuals performed almost entirely in and around the cap-
ital city, where over 90% of Guatemalan apparel export man-
ufacturers are located (VESTEX, 2007). This work was

originally intended to serve as a standalone project, but the
opportunity to study the same industry in Colombia emerged
as an extension. Fieldwork in Colombia replicated the meth-
ods utilized in Guatemala. In Colombia, observations were de-
rived from 25 unique interviews performed over the summer of
2007, all taking place either in Bogotá or Medellı́n, Colom-
bia’s two biggest cities, as well as its biggest sites for apparel
and textile production. Interviews were semi-structured, usu-
ally lasting from one to three hours. Respondents outside of
firms included academics, employees of government ministries
(including Ministries of Labor and Trade), employees of
NGOs, USAID and the US State Department, union leaders,
manufacturing workers, and directors and employees of busi-
ness and trade associations. In Colombia, 9 of the 25 intervie-
wees were not managers or employees of manufacturing firms,
whereas in Guatemala, these various outsiders numbered 28
out of 46. Within firms, interviewees were usually either Gen-
eral Managers or Directors of Production, but also sometimes
included Directors of Human Resources and other upper-level
management. General topics included basic factory character-
istics (products, sources of capital, market niches), the dynam-
ics of factory operations (including workforce characteristics),
competitive and logistical challenges, and relationships with
clients, suppliers, and governmental/other institutional actors.
Firms interviewed in both countries were reached in one of
two ways: by referral from multiple interviewees who could ex-
plain why the firm was an example of upgrading, or by ran-
dom phone call or meeting at a trade show, where the
author attempted to attain a better sense of ‘median’ and
sometimes smaller, more marginal firms in the sector. This al-
lowed for a sample showing wide variation across producers
from most to least advanced, while using principles of statisti-
cally nonrepresentative stratified sampling (Trost, 1986) to get
as deep as possible into variation among upgraders as the
most advanced segment of the population.

In this paper, the cases of upgraders are all firms who have
performed “product upgrading” in the sense of having moved
past producing apparel basics. The forms of product upgrad-
ing observed were often related to special finishes, washes and
dyeing processes applied to garments, especially special chem-
ical and manual processes applied to blue jeans (see Sec-
tion 4d). Other forms of product upgrading included the use
or even development of unique materials, such as wicking fab-
rics for athletic use, very detailed embroidery work or addi-
tional components (e.g., sequins) added to the basic
garment, or the capacity to customize the images or words
printed on a garment multiple times within one run of a gar-
ment order. Some of these product upgrades would come in
combinations, especially those involving washes/finishes/dyes
and embroidery/specially added components.
Furthermore, the upgraders discussed here demonstrate
“process upgrading” insofar as they all offer some form of
advanced efficiency or logistical management (whether in
terms of full-package production, specialized inventory, “quick
turnaround” or “rapid replenishment” systems, or a combina-
tion of these.) Insofar as “full package” involves a manufac-
turer taking responsibility for sourcing and inventorying all
components, as well as delivering to the buyer a finished
garment that is ready to sell (Gereffi, 1999), all of the
upgraders
in this sample, with the exception of the Colombian garment-
wash specialist Tecni-Lavados, qualify under that heading.
These systems were all discussed during interviews, and were
confirmed upon the researcher’s visit to the production floor.
Almost any of the output of any one firm in the overall two-

country sample (with the possible exception of lingerie and
men’s suits), stripped of any label of origin, could appear even
to one knowledgeable in apparel manufacturing to have come
from either country.
To capture issues of power, influence, and sources of learn-
ing, the interview process was used to capture firms’ reputa-
tion, as measured by the opinions of outsiders such as buyer
representatives/sourcing directors, employees of business asso-
ciations, local and international scholars and government
bureaucrats, and members of the local union, labor law,
and/or non-government organization (NGO) community.
Over the course of this research, if a preponderance of such
outsiders described a company as “world-class,” illustrated
how it is capable of competing with the most advanced Asian
exporters, and/or cited unique practices that set a given firm
apart from the general local population, this was considered
reputational evidence of upgrading. However, if a firm, upon
visit, did not show the basic product/process upgrading fea-
tures described above, then it was not included in the sample.
Thus, all of the upgraders in this sample produce beyond ba-
sics, have established specialized logistical efficiencies, and
have been described by outsiders with little or no incentive
for promoting the company as showing extra-ordinary capa-
bilities as compared with the local field of producers.
In contrast to these traits, a non-upgrading firm would (a)
produce only basic goods such as regular, cotton, unadorned
tshirts, (b) require sourcing from a buyer (as opposed to oper-
ating full-package), and (c) not display any significant func-
tional or efficiency-related innovations, whether in logistical
management or worker voice on the floor. There was strong
consensus across all interviewees from all professional fields
who the top ‘upgraders’ in the country were. In terms of inter-
preting these findings, as Dion (1998) notes, these comparative
observations are an appropriate dataset for the induction of

necessary conditions for value chain upgrading: as such, the
lack of commonality in organizational strategies opens up fur-
ther room in the literature for inquiry on the organizational
antecedents of upgrading in garments. Furthermore, this paper
offers a second set of inductions based on the interviews’ data
on firm learning combined with secondary sources on related
historical and institutional factors. Following these two points,
the data offer a provocative null finding on upgrading choices
(i.e., different organizational techniques offering equivalent
market rewards), with induction of possible factors most influ-
ential in the attention, priorities, and know-how of managers—
namely, trade rules, local development priorities, and sites of
management education and socialization. Table 2 outlines the
salient observed characteristics of the fourteen upgraded firms
in Guatemala and Colombia. Names of companies have been
altered to preserve anonymity, which was required by internal
review board rules and requested by many participants.
(b) Upgrading firms in Guatemala
In Guatemala, the key tendency among upgraders was to
equate competitiveness with investments in the production
floor. It is important to emphasize that these were not direct
responses to requests from buyers—managers regularly de-
scribed processes of how they worked to stay ahead of de-
mand, and outsiders described firms’ organizational choices
that were unprecedented in the local sector. For their part,
buyers expressed satisfaction with the upgraded firms from
which they sourced, but had little immediate notion of a dis-
tinctly “Guatemalan” upgrading model.
The distinctiveness of this model was evident in a variety of
different areas, including healthcare, safety, and worker train-
ing. Regarding health, many Guatemalan companies offered a
surprisingly broad array of health services to workers without
extra charge. The most advanced example of this was Bluej-

eans Mundial, which hired dedicated full-time staff in order
to offer free eye care, gynecology, and social worker services
to all employees, as well as pediatric services to their children.
In the realm of workplace safety, companies such as Deporti-
vas have taken it upon themselves to custom-design safety
equipment such as fume hoods in an attempt to combine com-
fort, safety, and mechanical efficiency, leading to what one
prominent local labor NGO called a “culture of compliance,”
that is, an active desire to meet the spirit of the laws, as op-
posed to calculated evasions of sanction (Gunningham, Ka-
gan, & Thornton, 2003 Ch. 5). While such design
innovations are less common than health clinics and special-
ized education resources, they are yet another illustration of
the tendency of Guatemalan firms to view increased invest-
ments and innovations oriented toward the production floor
itself as a crucial aspect of competitiveness. Moreover, many
of these firms went extremely far in developing a ‘local culture’
intended to enhance workers’ enthusiasm. Examples of this in-
clude firm-supported soccer leagues, daily morning gospel mu-
sic sessions, and social spaces designed with worker input.
The specialized training and education went significantly
above basic on-the-job training. While many of the firms’
training resources were apparel-specific, many also were not.
Firms such as ChaquetaModa and Deportivas had made sig-
nificant investments in literacy and general education, with
Deportivas offering a form of high-school equivalency that is
also tied to promotion options that extend into management.
Beyond literacy, ChaquetaModa has come to offer classes in
human relations, mechanical skills, computer-based plotter
technology, first aid/workplace hazards, human resources,
environmental training, leadership, nutrition, reproductive
health, and recycling. In other cases, many training options
have been offered by the national garment exporters’ associa-
tion (VESTEX), which is discussed in Section 5c.

In contrast, in-house design was mostly absent in Guate-
mala. Only one firm, Bluejeans Mundial, had its own design
department. While the other firms generally did not have the
capacity to create original garment designs, many were con-
scious of the importance of design and collaborated with buy-
ers—for example, to suggest modifications to a design that
would make production cheaper without sacrificing quality.
This was a service offered by nearly all of the Guatemalan
firms, and managers frequently spoke of buyers making use
of their firms’ advice on design adjustments. For most Guate-
malan upgraders, it was clear that their path forward ran
through at least specialized design consulting, if not original
garment design itself.
(c) Upgrading firms in Colombia
In contrast to Guatemalan firms, Colombian firms seem to
have developed a niche for themselves where competitive
advantage stems primarily from capacity in garment design.
Table 2. Characteristics of upgrading Firms in Guatemala and
Colombia
Companya Country #Workers Age (years) Owner-ship
Product(s) Buyer(s)b Health Clinic &/or
Extra health benefits
Special-ized
Ed/Training
Physical
health/safety
improve-ments

In-house
design
Chaqueta-Moda GUA 950 9 USA Fashion winter jackets JC
Penney, Burlington,
Lord & Taylor, DKNY
+ + � �
Polo-Amala GUA 3,000 20 as an
exporter
GUA Polo shirts, tshirts,
infant clothing
Direct-order catalogs � � � �
Maxi Sports GUA 1,450 8 KOR t-shirts Wal-Mart, Target, K-
Mart
+ � + �
Bluejeans Mundial GUA 15,000 20 GUA Denim jeans Calvin
Klein, Old Navy/
Gap, Levi’s, The Limited
+ + + +
Hermanos de Fe GUA 420 18 GUA Denim jeans Dickies, Old
Navy,
Timberland, Target
+ + � �
Deportivas GUA 1,000 10 GUA Perform-ance athletic

wear
Nike, Rawlings, Under
Armour
� + + �
Moda Universal GUA 8,000 10 KOR t-shirts, shorts,
swimwear
Old Navy, K-Mart, Gap,
Wal-Mart
+ + + �
Caballeros COL 500 25 COL Suits, shirts, shorts Perry Ellis,
domestic
retail chains (e.g.,
Tennis)
� � � +
Tecni-Lavados COL 250 18 COL Laundry services, mostly
for denim
Domestic garment
exporters
� � � +c
DenimPais COL 3,800 14 COL Denim jeans Levi’s, Old Navy,
Ralph
Lauren, Hilfiger, Calvin
Klein

� � � +
Fiesta Jeans COL 1,400 35 COL Denim Jeans Levi’s, Gap � �
� �
Viajantes COL 290 25 COL Men’s shirts, polos,
underwear
Mostly Latin American
supermarket chains
� � � +
Moda Clasica COL 1,300 29 COL Suits, denim jeans Polo,
Oxford Industries � � � +
Intimoda COL 1,030 20 COL Under-wear, lingerie,
pajamas, t-shirts
Sarah Lee, Vanity Fair � � � +
Guatemala Total 5 5 4 1
Colombia Total 0 0 0 6
a All company names are fictionalized to maintain anonymity.
b Lists of buyers are not exhaustive and may have changed
since time of receiving information from the firm.
c For this firm the design process involves the creation of novel
washes/treatments for fabrics; these processes are intended to
lend unique esthetic characteristics to a garment.
L
O
C
A

L
M
E
A
N
S
IN
V
A
L
U
E
C
H
A
IN
E
N
D
S
2
1
2
5

Although the Colombians were also full-package producers,
these firms were a stark contrast to Guatemala’s in labor con-
trol, industrial relations, and human resources practices. In
Colombia, nearly all firms visited employed time-and-motion
studies to manage worker productivity; none visited or inter-
viewed displayed or made mention of any of the kinds of
above-government minimum training, services, or benefits ob-
served in Guatemala.
These Colombian Managers could cite only a few specific,
plausible outlets to responding to or getting ahead of the com-
petition: substituting capital for labor, pushing productivity
higher through time studies, and adding high value-added ser-
vices such as garment design in order to better attract (and at-
tract better) buyers. Absent was anything like the political and
discursive framework in Guatemala that growth in apparel
exporting was part of a social mission to move forward from
civil war into an East Asia-like path of development. Given
these differences, it is worth considering how equivalent va-
lue-chain outcomes can be achieved in this case.
(d) A note on market equifinality
One of the crucial components of competitiveness in jeans
production, particularly at the high end, is post-assembly
washing and finishing. It involves putting the jeans through
special operations, whether with chemicals or abrasive objects
such as pumice stones, and usually involves a great deal of ex-
tra handwork, for example, the application of Dremel tools,
sandpaper, sandblasting, and other popular “destruction”
methods intended to add an “authentic” quality to the gar-
ment. Such practices are common in both countries. Very
important to these processes is that they capture the subtlety

American and other consumers seek when they buy already
worn-looking jeans. A minor change in the type of fading or
abrasion applied to jeans can act as a different signifier of sub-
culture for the wearer, and this very often factors into buying
decisions. In Guatemala, managers of one firm became very
animated describing the exacting esthetic demands of buyers,
who might require that “the whiskers [radial lines of fading
created on the front of the jeans] come alive,” or that fading
be applied to the front watch pocket of a pair of jeans to con-
vince others that the wearer is “a sex machine, he always keeps
a condom in his pocket.” (These paraphrases made by the
Guatemalan interviewees come from buyers who also com-
monly source from Colombian firms.)
It is within this difficult space for interpretation that we see
room for firms to establish different means of controlling and
investing in the production floor, as well as distributing skill
throughout the firm to meet the same product expectations.
These companies use fundamentally different organizational
routines to replicate what are extremely idiosyncratic and dif-
ficult-to-capture product attributes. There are at least two fac-
tors deciding whether a firm will establish itself in this product
niche. First is reputation: has the manufacturing firm estab-
lished credibility on the basis of its aggregate output capacity,
the sophistication of its previous work, and its demonstrated
ability to provide goods at-cost and on-time? This is funda-
mentally a question of track record as a supplier delivering or-
ders that may be extraordinarily demanding in terms of
quality, quantity, and time to delivery. Second, there is the is-
sue of samples: whether through original designs or otherwise,
this is the physical manifestation of a supplier’s know-how
that buyers can tangibly scrutinize before placing an order.
As interviews with brand and retail buyers in particular illus-
trated, the frontier of competition in these value chain seg-
ments—where Latin American producers create space to
stand in the competition with Asia—is not only quick turn-

around, but a set of capacities in fashion and marketing that
makes these firms start to look more like consultants in the
anticipation of future, possibly fleeting demand than mere
producers fulfilling orders. The remaining issue is what factors
can drive organizational variation such as that observed in
bluejeans producers across the two countries. Data from the
field point overwhelmingly to an array of factors in local his-
tory, and historical research deepens the plausibility of this
explanation.
5. ACCOUNTING FOR THE DIFFERENCES
In light of the state of the literature, the field observations
described above show that there are important gaps to be ex-
plored between the known mechanisms of value chain gover-
nance and the differences observed in the organization of
Guatemalan versus Colombian firms. Because buyers showed
satisfaction with firms from both countries, sometimes for
the same goods, it was necessary to look both across the inter-
views of various actors for accounts of firm learning, as well as
into the histories of these sectors in the context of national
development trajectories, to gain more leverage on what could
drive variation. The following three factors were induced as
the most compelling.
(a) Trade relations with the United States
Although the GVC literature tends to cast government into
a somewhat stereotypical role relegated to ‘background’ rules
such as quality, labor, or environmental standards and laws
(Humphrey & Schmitz, 2002), a strong exception to this re-
gards whether developing-country firms are producing for par-
ticular regional market segments, often under a preferential
trade agreement. In the research that has focused on this topic,
there is a strong consensus that regional trade agreements
tightly bind producers and block them out of the highest va-
lue-added segments of the value chain (Bair & Dussel Peters,

2006; Dussel Peters, 2008; Gibbon, 2003). While this paper
does not dispute the fact that preferential trade agreements
usually follow a logic far more to the benefit of firms in the
developed countries than those in the periphery (e.g., NAFTA
and CAFTA’s logic of helping American textile producers to
lower costs while tying their suppliers’ hands on the materials
they source), the case of Guatemala’s upgraded factories
shows clearly how these trade agreements can, perhaps even
in spite of their formal stipulations, serve as occasions for
working with limitations to produce success and innovation
in the value chain.
In the case of Guatemala, a now almost 30-year history of
preferential trade agreements with the US forced manufactur-
ers to focus on competitiveness as a shopfloor-based phenom-
enon. That is, in the case of Guatemala and other Caribbean
Basin Initiative (CBI) beneficiaries, tariff-free status from 1983
to 2000 allowed only the most basic assembly operations (lar-
gely sewing) to take place in the exporting country. Even after
2000, with the expansion of the CBI into the Caribbean Basin
Trade and Promotion Act (CBTPA), and extension of tariff-
free privileges to products where cut, make, trim, and finishing
operations were performed in Central America, firms’ main
source of differentiation was in how they managed production
workers. It was not until the enactment of CAFTA in 2005
that every aspect of the production process, from textiles for-
ward, could be performed in a Central American country 6
(Gelb, 2005; King & N., 2004; USTR, 2007; VESTEX,
2005). Colombian firms, lacking this flotation device offered
by the US to Guatemala and Central America, sought dry
ground at the top of the value chain and attempted to institu-

tionalize competitiveness through garment design, an activity
that was largely decoupled from the production floor.
This helps to account for the space of attention, but not the
practices that occupied that space. Managers of firms in Gua-
temala could have, as a community, applied their collective
genius to as-yet unheard-of innovations in a Taylorist direc-
tion. Similar to Cammett’s observations of business associa-
tion activity in Morocco and Tunisia (Cammett, 2005), the
same set of material interests can be pursued by different
means, depending on a group’s process of constructing the ide-
ational frame that they use to pursue these interests. The fol-
lowing factors are suggestive of differences on the “idea” part
of the equation.
(b) Timing and relationship of industry emergence to national
development priorities
In Colombia, the story of apparel and manufactures in gen-
eral dates much farther back, and shows much more continu-
ity than in Guatemala. While Colombia has had extensive
experience in the modern manufacture of apparel and tex-
tiles—to the point where textile companies, emerging early
in the 20th century, formed some of the largest and most mod-
ernizing corporations in the country (Montenegro, 2002)—
Guatemala hardly shifted its focus on agriculture and primary
product exports from colonial times into the late 20th century.
And although Colombia was itself a very coffee-dependent
country, its longstanding practice of import substitution
industrialization (ISI) has no comparable equivalent in Guate-
mala. Furthermore, while Colombia is popularly known as a
country of violence and upheaval, it was one of the most eco-
nomically stable Latin American countries after World War II,
and arguably the only major economy in the region to avoid
experiencing the 1980s as a ‘lost decade’ for economic growth
(Edwards, 2001). As such, Colombia did not have to undergo

market liberalization with the same urgency as its regional
counterparts during this period. Although national policy
had taken steps away from an import substitution model as
early as the 1960s (Bushnell, 1993, p. 235), Colombia’s charter
membership in the Andean Group 7 essentially bound it to a
set of highly protective policies that shunned foreign invest-
ment and encouraged domestic production over exports (Ber-
ry & Thoumi, 1977; Edwards, 2001). In the specific area of
apparel manufacturing for export to the US, Morawetz shows
that Colombia’s sector dates back at least to the late 1960s,
but was largely ignored as an object of policy, overshadowed
as it was by coffee and textiles (Morawetz, 1981). In essence,
for Colombia in the late 1980s and 1990s, apparel exporting
never represented a locus of significant economic or social
transformation—if anything, textiles and apparel were repre-
sentative of a stale economic growth paradigm.
To the extent that there was ever economic diversification in
modern Guatemala, it was mostly in “non-traditional” agri-
cultural exports such as fruit, winter vegetables, and ornamen-
tal plants (UNCTAD, 2010, p. 19). This trend, mixed with the
intensification of civil conflict in the late 1970s and early 1980s
(and its attendant repulsion of foreign capital), resulted in an
effective de-industrialization in the 1980s, though there had
not been very much industrial development to dismantle up
to that point. In the early-to-mid 1980s, the Guatemalan econ-
omy was hollowing out with several years of overall negative
GDP growth (BANGUAT, 2006), a 60% decrease in real pub-
lic investment (ibid.), overall exports decreasing by about 35%,
massive displacement of rural populations into the capital city,
and capital flight (Jonas, 1991).
The apparel export industry became a device for reversing
many of these negative trends. The ostensible goals of an ap-
parel export sector—for business and political elites, and even
for civil society groups who were nevertheless wary of other

possible effects—were domestic capital diversification, attrac-
tion of foreign investment, and the integration and employ-
ment of the new urban poor who had been displaced from
the countryside (AVANCSO, 1994). Time and again, intervie-
wees from inside and outside of the companies spoke of the
purpose of business and competition in terms of a narrative
of recovery, growth, and rejuvenation from their Civil War.
Managers cited these as reasons why they experimented in cre-
ating health clinics, or their choice in extensive education ef-
forts as a means of heightening the logistical efficacy of the
firm. Observers from the US State Department and local labor
law community pointed to a generational divide wherein busi-
ness managers who took the reins after the tumult of the late
70s/early 80s adopted different goals from their predecessors—
that is, rather than completely follow Guatemala’s tradition of
an agrarian economy of such inequality as to practically guar-
antee class conflict (Brockett, 1998), they sought a model by
which mutual gains for the elites and masses could be found.
Observers and factory managers in Colombia, in contrast,
had virtually no larger social imperative coloring their stories
of how they compete.
Finally, Guatemala’s export-oriented model, in combination
with its preferential access to the US market, facilitated the
preponderance of Korean investment observed there. The
Korean influence on Guatemalan maquilas has been rather
complex: for example, during field research, inspectors from
the Ministry of Labor observed that some of these firms, in
the early years of Guatemala’s maquiladora experience, were
among the worst offenders on labor issues. Yet these same
inspectors, along with members of NGOs and the labor law
community, all observed that these firms had been socialized
by their business peers and government institutions into a
more “Guatemalan” style of management, sometimes eventu-
ally becoming model compliers with the labor code. Further-
more, many of the high-performance techniques—for

example, bundling and cell-based floor models, or advanced
functions of quality control and fabric dyeing—were absorbed
by Guatemalan-owned firms from their Korean peers. This
happened through hiring Korean managers, or at times,
through contact at the nexus point of the local business asso-
ciation (VESTEX). As such, the implications for Korean own-
ership extend beyond the logic of Korean HQs reserving the
highest value-added functions for themselves and triangulat-
ing production between Guatemala and other locales. Rather,
both Korean and Guatemalan firms based in Guatemala
hybridized each other’s styles and tools to a surprising degree,
something that would not have likely happened had Guate-
mala introduced its apparel export strategy under a protected
model like Colombia’s.
(c) Education and socialization of national business elites
During field research, interviewees discussed two important
streams of training and education that have specifically im-
pacted business elites’ approaches to upgrading. First, there
is education and work experience abroad. Based on the
firms surveyed in this research, it was far more common for
managers in Guatemala to have either spent time working in
or to have originally come from another country. Of upgrad-
ing firms interviewed in Guatemala, nearly all managers of
nationally-owned firms 8 had studied or worked in the US at
some point; three other firms had managers from other coun-
tries (South Korea and the Philippines). In Colombia, all of
the firm managers were Colombian and described their profes-
sional backgrounds as taking place in-country.
When asked about their tinkerings and often novel work-

floor practices/HR policies, managers in Guatemala usually
cited their work experiences abroad. We see examples of this
in firms such as Deportivas, where the General Manager’s
engineering experience abroad prompted him to spend time
with workers on the line and apply his observations and work-
ers’ feedback to new, in-house inventory and software systems;
or one of the owners of Hermanos de Fe, whose time working
for a fashion company in Los Angeles influenced their early
and heavy investment in jeans washes, rare for a firm of their
size; or also the General Manager of ChaquetaModa, a Filip-
ina whose prior experience in industrial engineering informed
a custom approach to their modular production system, as
well as the firm’s prioritization of an almost unheard-of
amount of trainings for line operators.
Regarding prior education, in Colombia, where the domes-
tic higher education resources are much greater, 9 business
elites are more likely to move through their careers without
stepping outside of a local paradigm of thinking on business
competition and industrial relations. In Guatemala, where
more business owners seek their educations abroad, there is
an exposure to a wider variety of labor market structures,
forms of business competition, and paths to increasing pro-
ductivity.
These broader influences have in turn helped shape the sec-
ond stream of influence, that of business associations. Guate-
mala and Colombia have two very different industry
associations which focus on apparel exports—VESTEX in
Guatemala, and INEXMODA in Colombia. Because of its
origins as the national apparel export quota office under the
MFA, VESTEX by default had ties to all of the exporters in
the country. When it became clear in 1995 that the MFA
would come to an end, VESTEX decided to transform itself
into an organization that would support the industry as it
transitioned out of a quota-protected framework. As one of

the subcommissions of a national non-traditional exporters’
association (AGEXPRONT), it came to quickly outstrip the
dimensions of the larger organization, coordinating national
conferences and eventually hiring 19 full-time staff members,
in contrast to an average of one or two employees on other
AGEXPRONT subcommittees. This prominence has also
led to political influence, with former VESTEX administrators
receiving appointments as Ministers and Vice-Ministers in the
Presidential Cabinet, usually in the Ministry of the Economy.
One of the main outcomes of VESTEX’s organizational
transformation efforts was its full-package training programs,
which between the start of 1999 and the end of 2005 trained
employees from nearly 40 different firms in a 13-module course
covering such topics as risk analysis, costing, marketing, and
supply chain management. Its method for curriculum design
was based almost entirely on accumulating the knowledge of
local lead firms that were already full-package producers
(who are also its charter members, and whose managers sit
on the VESTEX board), as well as having many of them serve
as teachers in its training workshops. VESTEX’s model for
full-package training has been replicated to varying degrees
of intensity and success in other thematic areas, such as secu-
rity, computer plotting, and most recently, garment design.
More recently, VESTEX has transferred the implementation
of most of its courses to the national training institute (INTE-
CAP). Nonetheless, VESTEX’s model, which involves organi-
zational staff working on-site in factories, tends to be more
hands-on than that of INEXMODA, which largely serves as
a broker of demand information between foreign markets
and domestic firms. In focusing on international trade fairs
and the publication of fashion design manuals, INEXMODA
gave extra weight to the tendency in Colombia to focus on
fashion as the route to higher value added.
6. LOCAL MEANS IN VALUE CHAIN ENDS: RULES,
RESOURCES, AND IDEAS

The goals of the above exposition were: (1) to establish that
Guatemalan and Colombian apparel firms have developed
nationally distinct methods of upgrading in a context of mar-
ket equifinality or near-equifinality, and (2) to develop propos-
als regarding possible extra-chain influences on these
outcomes. These proposals refer to differences in local history,
and they suggest that the differences in outcome are strongly
tied to how rules do or do not fix managers’ attention to cer-
tain spaces, as well as what practices they are prepared to en-
act in those spaces.
In terms of future prospects for the Guatemalan and
Colombian apparel industries, a few points beyond the usual
caveat of unpredictability (especially given both the history
of the apparel industry and current volatility in global de-
mand) can be made: first, that Guatemala and Colombia, in
achieving similar value chain ends through different organiza-
tional means, have each developed a strong core of upgraders
who understand that they must anticipate the needs of their
buyers through logistically nimble and efficient delivery of
hard-to-replicate, complex garments. The upgraders in the
sample presented here are among the best-prepared firms to
take advantage of any future demand for these capacities.
Relative strength notwithstanding, there are important open
questions as to the long-term future growth trajectories of
these industries, and consequently, what lessons these cases
have for firm- and state-level capacity-building. Guatemala’s
industry seems to be settling into a smaller core of firms where
the low-cost, non-upgraded firms are disappearing. This could
call into question the overall visibility of Guatemala as a des-
tination for sourcing, apart from the immediate performance
of remaining suppliers. Furthermore, while the story of VES-
TEX holds intriguing possibilities for training firms, it is cur-
rently unclear what VESTEX members and their many friends

in government are learning from the past 20–30 years of appa-
rel manufacturing in Guatemala; many believe that the most
important policy issues facing the industry are keeping mini-
mum wage flat (Quiñones, 2008), which obviously does not
emphasize the kind of workfloor investments observed and
interpreted above. If VESTEX’s preoccupation with wages
prevails over a focus on sophisticated human resources and
training methods, then Guatemala could converge further
with Colombia, stratifying the production of value-added
within the firm and leaving the situation of floor workers clo-
ser to a generic global standard for apparel. However, if cor-
rect in its characterization and analysis, this paper suggests
another route: namely, further investment in resources and
techniques to build quality, skill, efficiency, and product
uniqueness into the basic work process through worker train-
ing, education and welfare, a la a high-performance work sys-
tems approach (Applebaum, Bailey, Berg, & Kallenberg, 2000;
Osterman, 1994). Certainly, given the extreme competitiveness
of wages globally, it stands to reason that VESTEX and its
members could benefit from seeking policy support on areas
other than this.
In contemporary research, we see strains in both political
science and sociology where the separate impulse of ideas
helps to explain outcomes in the political economy (Blyth,
2002; Boltanski & Thévenot, 2006; Hall, 1993; Somers,
1992). In a large cross-national, cross-industry survey of
firm-level competitive strategies, Berger also discusses the no-
tion of ‘dynamic legacies,’ which represent an accumulation of
local experiences, as producing surprising variety in competi-
tion under conditions of globalization (Berger, 2006). All of
these suggest a highly agency-oriented version of competition,
where experiences and ideas serve as markers in actors’ minds,

allowing them to creatively (and idiosyncratically) interpret
what their interests mean, and how they are best served.
This extension of the paper’s theoretical ambit into the
realm of ideas is rooted in the observation that the mate-
rial factors discussed above could have influenced outcomes
in many different directions. Granted, an empirical test
among Central American countries (who would have had
more similar histories in apparel manufacturing, as well
as trade relations with the US) would have enabled better
precision in terms of isolating the impacts of local political
and institutional factors. Nonetheless, the window offered
onto upgrading by producers of similar goods in countries
with somewhat more divergent industrial histories will
hopefully in its own way further the GVC literature’s
worthwhile efforts of articulating coherent alternatives to
The Washington Consensus’ laissez-faire approach to devel-
opment. In particular, the work detailed in this paper sug-
gests that future research assess contingency in upgrading
as co-produced by buyer demands, legal incentives, and
the interpretive backgrounds of local managers. For with-
out taking such considerations, much of the developmental
possibility of the value chain may remain invisible to the
observer.
NOTES
1. “Value-added” is usually more referred to in the literature at
a
conceptual level, rather than operationalized in empirical
observation
(Gereffi, Humphrey, & Sturgeon 2005; Kogut, 1985; Morrison,
Pietrobelli,
& Rabellotti, 2008). In this paper, as will be discussed further
below, value
added will be tracked by unit price, particularly for the close
analysis of
bluejeans, which involves similarly-sourced materials.

2. The notion of value chains as largely either ‘buyer-‘ or
‘producer-
driven’ rests largely on a distinction between industries as
either ‘labor-‘ or
‘capital-intensive.’ A buyer-driven chain would be labor-
intensive, mean-
ing that market entry for producers is relatively easy and
therefore tips
power in favor of buyers (Gereffi, 1999).
3. This is in contrast to a ‘producer-driven’ value chain, where
manufacturers, as opposed to branders/marketers/retailers, are
the coor-
dinators of internationalized production (Gereffi, 1999).
4. Although Guatemalan and Colombian apparel exports to the
US
decreased absolutely after 2004, the internal trends of value-
added and
specialization have largely continued. It would distract from the
purpose
of this paper to try to interpret data where there was extreme
volatility in
supply (post-2005) or demand (post-2008) patterns. The more
specific
year-by-year example of Men’s and Boys’ Trousers should help
illustrate
the distorting effects of the end of the MFA.
5. The minor role of local sourcing is borne out both by
interviews and
the available data; in terms of the upgrading firms, owners from
both
countries professed that their more expensive, high-value-added
products

required materials that local producers were not capable of
providing.
And although there is no way to discern in the available data the
uses
toward which imported vs. domestically-produced textiles are
being
applied, about half of all textiles used in Colombian domestic
garment
manufacturing are imported (ASCOLTEX, 2006). Furthermore,
based on
managers’ reports, it stands to reason that exporters use a higher
proportion of imported materials than those who produce for a
domestic
market that is generally less exacting in this regard. Similarly,
in
Guatemala, the most recent estimate from the local apparel and
textile
manufacturers’ association (VESTEX), stated that less than 5%
of all
sourcing materials used in apparel exports were from Guatemala
(Paz
Antolı́n, 2002).
6. CAFTA was ratified in the United States in 2005. In 2006, it
passed in
El Salvador, Honduras, Nicaragua, and Guatemala, in that order.
In
2007, the Dominican Republic and Costa Rica enacted the
agreement.
Panama chose instead to pursue a bilateral free trade agreement,
which
has yet to be completed. While the ‘yarn-forward’ rule is the
general
principle of CAFTA, there are certain exceptions where
materials can
originate from outside the CAFTA area, including pocket and

lining
materials, as well as elastics.
7. The Andean Group was a common market project founded in
1969
between Bolivia, Chile, Colombia, Ecuador, Peru, and later,
Venezuela.
The Group still exists, though without Chile and Peru as
members.
8. The managers of Bluejeans Mundial, Hermanos de fe, and
Deportivas.
9. In Colombia, as of 2005, the national population was just
under 45
million (World Bank 2008), and there were 276 institutions of
higher
education, 81 of which were public (Ministerio de Educacion,
2005). Just
under 840,000 students attended these schools (SNIES, 2005) In
Guate-
mala, the most recent data available dates from 1999, when
there were 9
institutions of higher education nationwide serving
approximately 152,000
students in a nation of just below 11 million (Funes, 2001;
World Bank,
2008).
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tor_e.htm
tor_e.htmLocal Means in Value Chain Ends: Dynamics of
Product and Social Upgrading in Apparel Manufacturing in
Guatemala and Colombia1 Introduction2 Global value chains—
recent findings and theoretical constraints3 The apparel
commodity chain(a) Characteristics salient to a development
research agenda(b) Regional performance and the positions of
Guatemala and Colombia4 Empirical observations of differences
in upgrading(a) Methods(b) Upgrading firms in Guatemala(c)
Upgrading firms in Colombia(d) A note on market equifinality5
Accounting for the differences(a) Trade relations with the
United States(b) Timing and relationship of industry emergence
to national development priorities(c) Education and
socialization of national business elites6 Local means in value
chain ends: rules, resources, and ideasReferences

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