identify the causal effect on exports in response to previous policy changes. Both methods have their own advantages and disadvantages and, hence, provide complementary evidence. Third, we exploit the relatively recent market access liberalization for African exports to the EU, through the expansion of the various GSP schemes, and to the United States, following the implementation of AGOA. Our estimates will quantify the magnitude of the export elasticity with respect to full or partial trade liberalization and the extent to which these elasticities vary across product categories. Fourth, we summarize the remaining market barriers for textile and apparel exports that African countries face on EU and US markets. Together with the estimated elasticities this will provide a sense of how much potential for output growth through further market access liberalization remains.

The remainder of the paper is organized as follows. In Section 2 we provide some supporting evidence on the initial industrialization potential of textiles and apparel exports and the relative performance of sub-Saharan Africa. In Section 3, we provide an overview of the two market access liberalization episodes that we exploit to estimate the potential export response. In Section 4 we describe our empirical framework and the logic behind the identification, followed by a description of the data in Section 5. In Section 6 we discuss the estimation results and in the concluding Section 7 we address a few caveats, and we draw implications for the remaining growth potential through the removal of remaining trade barriers.

# **2. Focus on textile and apparel industry**

One reason it is interesting to focus on the benefits of improved market access in textile and apparel is that the many aspects of the value chain of this industry has already been investigated through case studies. Starting with Gereffi (1999), many authors in the GVC literature have mapped the role of suppliers in developing countries in the global textile industry and the barriers they face to integration in the global production network. That work draws mostly on case studies and is supplemented by firm surveys in several countries.

The web site www.globalvaluechains.org is a depository for work on GVCs and it contains 74 studies focusing specifically on African countries and 220 studies on the textile and apparel industries. Twelve studies are exactly at the intersection of textiles & apparel industry in Africa and there are three more studies that investigate the footwear & leather industries in Africa. The evidence in Gibbon (2003) illustrates how detailed information from specific industries in a few countries can supplement the type of cross-country evidence that we will present here.

A second reason for our interest in studying GVCs in textiles and apparel is that this industry is a common entry point into the global manufacturing industry for less developed countries (Vogel 1991). Developing countries often have a comparative advantage in laborintensive, light manufacturing of which textile is a prime example. This was true historically, but is still supported by current data. In Figure 1, we show the average GDP per capita across all exporters for different product categories. Importantly, we use each country’s export market share in global trade for the product category as weight. When most exports of a particular commodity originate from relatively poor countries, the product category will show a low average GDP per capita. This approach was used by Hausmann, Hwang and Rodrik (2007) to construct their widely-used PRODY measure of product quality.

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