An empirical investigation of the determinants and shifting patterns of US apparel imports using a gravity model framework

Abstract

PurposeThis study aims to quantitatively identify the impact of major economic and political factors on the US apparel imports from its 15 major trading partners between 1995 and 2006.Design/methodology/approachOrdinary‐least‐square (OLS) regression under a gravity model framework was utilized to construct the analysis. The determinants of US apparel imports were determined and their significance and direction of change over the period were quantified.FindingsFirst, the growths of GDP and population both in the USA and within its trading partners have been drivers of US apparel import growth, while greater geographic distance between a trading partner and the USA significantly impedes its exports to the USA. Second, the positive impact on the US apparel imports from the supplying country's infrastructure development, literacy rate and its language commonality with the USA shows that these factors are pivotal to being a competitive US apparel supplier. Finally, preferential market access is proven to be crucial for suppliers to increase apparel exports to the USA.Research limitations/implicationsIn future work, the impact of these factors on disaggregated apparel categories could be investigated. Some emerging issues such as non‐tariff barriers could be exploited.Practical implicationsThe findings reveal that the US apparel sourcing decisions are made on the basis of many different costs, not only labour cost, but also economic condition, government policy, infrastructure, transport time and cost, language/culture commonality etc.Originality/valueThe study provides a springboard for empirically analyzing the US apparel imports under a gravity model framework. The conclusions are drawn based on solid quantitative evidence.