From the first Industrial Development Strategy in 2002-03 onwards, the EPRDF government in Ethiopia identified apparel as a priority sector. The Industrial Strategy was part of a broader shift in government policy in 2001 towards an approach that recognized the need for active industrial policy to get the country out of its ‘low productivity trap’, which markets could not do on their own. The late Prime Minister Meles Zenawi was the intellectual driver behind this approach and the selection of the apparel sector, because he knew that the sector historically had been a first step in industrialization. But the actual industrial policies implemented the apparel sector have not been top down and state-led. This paper argues that there is a difference between the kinds of industrial policies used to promote export sectors, where private investments is dominant, and those targeting domestic market sectors, where party-owned firms play a large role. It describes the how the government’s industrial policies first incentivized local investors and tried to support their development and later shifted to attracting foreign investment in apparel-specific industrial parks, including government and private owned industrial parks. In its aim to make Ethiopia the manufacturing hub of Africa, the TPLF ruling party (or factions of it) has courted global buyers and their transnational supplier firms to invest in Ethiopia. The sector has now become an example of foreign direct investment-led industrialization, which may be a factor shaping the TPLF party’s response to recent political tensions with concessions regarding political reforms.