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INTERNATIONAL BUSINESS PAGES

Apparel and Textile Sector

Guatemala, Honduras, El Salvador, Nicaragua, and Haiti

Executive Summary
Guatemala is a country with immense potential for economic growth, and that is why the USAID/Guatemala
Creating Economic Opportunities (CEO) Project supports this growth with strategies such as investment-pro-
motion strengthening. The USAID CEO Project becomes a strategic ally by enabling investments in economic
activities that generate employment and provide other elements to dynamize the economy, such as the transfer
of knowledge and technology. These economic activities include apparel and textiles, as a major exporting
sector in Guatemala (14% of total exports), constituting 8.9% of the Gross Domestic Product. The sector gener-
ates 180,000 direct and indirect jobs, 45% of which are performed by women. This sector shows immense
potential to attract new investments that can complement and contribute to further developing this industry in
the country, taking advantage of the “nearshoring” trend due to its proximity to the largest apparel import market
in the world, the United States.
In order to promote the country as a destination for investment by global companies in this sector, it is essential
to have a clear understanding of the characteristics of this industry in Guatemala and in the other countries that
are usually considered by those investors who are scouting locations to establish and/or expand their regional
operations, with the main objective of bringing production capabilities closer to the main export destination, the
United States. This comparative analysis contains information on five countries: Guatemala, Honduras, El
Salvador, Nicaragua, and Haiti, including information on their macroeconomic indicators, export figures for the
main industry categories, main operating costs in each country and a comparison of these indicators with
respect to Guatemala's competitive conditions. It also includes a brief description of the characteristics and
development of the apparel and textile industry in each country, the main incentives granted by the special
regimes and the existence of Free Trade Zones and their characteristics. An overview of the main lessons
learned from the development of each country's industry, as well as the advantages that the country offers to
investors, are also included. This information can be used to consolidate messages that promote the country's
advantages and to identify the advantages that other competing countries have, which may be of interest to
investors. The aim of this contribution to local stakeholders from the private and public sectors is to highlight the
country’s advantages and to improve the conditions showing competitiveness challenges for the sector in the
country. To complete the document, tables summarizing the comparative benchmarking indicators of all the
countries have been added.
This benchmarking study allows finding similarities in the development of the apparel sector, with a model
focusing on apparel exports that have the United States as their main destination, and the Central American
markets for textiles. All the countries have special regimes that have benefited the development of the sector,
hand in hand with the government’s promotion of public policies favorable to this industry as a strategy to
generate employment and economic growth. The differences become evident when considering the incidence
of social, economic and/or political factors that have leveraged or limited the development of this industry in
each country; the different way in which the benefits of the special regimes are applied, and the variances in
costs. None of them are substantially distinct factors, except that the Guatemala labor force is the most skilled in
the region, and this poses a greater challenge for the efforts to position the country as a destination for invest-
ment in this sector.
The study has a business approach to showcase the competitive advantages and distinctive factors of the value
chain that goes from raw materials to finished garments can be seen clearly in Guatemala, reflecting the
verticality of an integrated cluster. Thus, the investment-promotion strategy should focus on continuing to gen-
erate the industrialization process starting from the yarn (cotton and synthetics), which in turn responds to
market demand.

Guatemala (Association of the Apparel and Tex- ing 14.1% of the country's total ex-
tile Industry of Guatemala–VESTEX in ports. The main destination countries
The apparel and textile industry is im-
Spanish) under the Asociación de Ex- for these exports are: the United States
portant for the country’s economy. It
portadores de Guatemala (Guatema- (US), Central America, Mexico, and
accounts for 8.9% of the Gross Do-
lan Export Association– AGEXPORT Canada.
mestic Product and generates 180,000
in Spanish).
direct and indirect jobs, 46% of which Exports & Market Share of Apparel-
are performed by women, according to Apparel and textiles are the main ex- Textiles
the figures provided by the Asociación port products. In 2021, sector exports
de la Industria de Vestuario y Textiles amounted to US$1.9 billion, represent- According to data reported by Guate-

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