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to new end markets. More targeted policies at the industry level will also be necessary, including marketing, promotional, and networking initiatives. Sixth, regional integration is crucial to improve the competitiveness of LIC clothing producers in the post-quota and post-crisis world. Regional integration could play a central role in reducing lead times and costs, capturing more value added in the region, and diversifying end markets. Buyers increasingly prefer one stop shopping locations where they can source a variety of T&C products, and lead times and flexibility have become key sourcing criteria. In this context, different complementary advantages in regions could be leveraged and economies of scale, vertical integration, and horizontal specialization could be promoted by regional coordination and integration. The most important challenge to increased intraregional trade and investment are intraregional trade barriers, which remain high in most developing countries. Despite regional integration efforts in SSA, Southeast and South Asia, tariff and nontariff barriers on T&C products are still comparatively high and T&C products are often found on sensitive lists. Improvements in intraregional transport, logistics, and customs facilities are also central to reduce costs and lead times of regional trade. Intraregional trade must also be actively promoted. A regional program that supports intraregional trade by facilitating partnerships between textile mills, clothing factories, and regional buyers to increase regional sourcing and production networks would be very useful. The ASEAN Competitiveness Enhancement Project (ACE) is a promising example in this regard. Seventh, building locally embedded clothing industries is crucial for upgrading and for using the sector as a basis for export diversification and industrial development. FDI has been central in the development of export clothing sectors in most late-industrializing countries, but eventually local involvement, skills, linkages, and spillovers have increased. Such developments are largely absent in many LICs today (for instance in SSA or Cambodia), which limits upgrading possibilities and challenges the sustainability of the sector. Increasing local involvement, both at the owners and management level, is crucial for extending the impact of the clothing industry beyond its immediate employment-creation effect and using it to foster industrial development via local linkages and technology and knowledge spillovers. Other developing countries (for instance Bangladesh and Mauritius) have been successful in developing locally embedded industries. Besides the time of integration, local skills and entrepreneurship, the structure of local business systems, and government support policies are central to explain different developments in LICs. There are no straightforward policy recommendations for developing local entrepreneurship. However, certain internal conditions and policies are at least preconditions for local entrepreneurial activities: (i) access to low-cost and long-term finance as well as to insurance facilities to leverage certain risks; (ii) access to education and specific skill training in areas such as management, merchandising and sales, and technical and design/fashion capabilities; (iii) support in establishing relationships with foreign investors, buyers, and input suppliers; (vi) access to at least the same (or higher) incentives for local and foreign investment with regard to duty-free imports, infrastructure, fees for public services, access to land and factory shells, and tax holidays; and (v) incentives to hire locals at the management level. These policy recommendations are challenging but crucial to sustain and increase competitiveness of LIC clothing producers and to secure a sustainable impact of clothing exports on export diversification, industrial development, and economic growth. In the