Comparative Advantage of Textiles and Clothing: Evidence for Top Exporters in Eastern Europe

Abstract

The comparative advantage and intra-industry trade of five countries: Czech Republic, Hungary, Poland, Romania and Turkey, are analyzed in the global textile and clothing markets by employing Balassa’s revealed comparative advantage (RCA) index and intraindustry trade (IIT) index for the period 2002-2013. The results have revealed that while Turkey is the only one among the countries selected to have comparative advantage in the global textile market, Romania joins Turkey in this in the world’s clothing market. The comparative advantage of these two countries in the global clothing market presents a stronger declining trend compared to that in textiles, which is probably due to the entrance of cheap-labour eastern Asian countries into the global clothing market, as this market is more labor-intensive compared to textiles. Moreover, while a high intra-industry trade index is found in Czech Republic, Hungary and Poland, an inter-industry trade structure is observed in Romania for textiles and clothing. Turkey presents intra-industry specialisation in textiles, while possessing inter-industry trade structure in terms of clothing.