Non-Linear Impact of Textile and Clothing Manufacturing on Economic Growth: The Case of Top-Asian Economies

Abstract

The potential contribution of the textile sector is not limited to the local economy but it also represents a country’s image in the global market. It carries the initial boom for most emerging nations in their journey towards improved economic growth. The present study employs Quantile on Quantile regression, which is a unique methodology and has the tendency to establish the relationship between variables that are non-linear in nature across various quantile distributions. Moreover, the method stated helps in explaining the asymmetric response in the quantiles of economic growth of the countries studied caused by the quantiles of the textile and clothing industry. The quarterly data ranges from 1990 to 2018, and findings therefrom endorse the presence of a positive relationship between TTC and economic growth in all Asian Countries studied. In addition to this, the direction of the relationships in the quantiles was also evaluated by Granger causality, which revealed the presence of bidirectional causal effects in all countries, excluding Japan, Pakistan and Turkey, where it was found as uni-directional. Lastly, based on the findings, the government and policy making institutions are recommended for the introduction of certain programs that will incentivize and provide subsidies to potential investors, thus relaxing the competition for new entrants in the TTC sector.