The Development Pattern of the Global Textile Industry and Trade: Part I: Evidence from Textile Exports of the EC, the Far East, and Emerging Textile Exporting Countries in the 1980s

Abstract

This paper attempts to explain the changing pattern of international textile trade based on theoretical perspectives of the developmental stages of the global textile industry and trade. Nations' economic development, industrialization, and their changing resource endowments have led to differences in their comparative cost advantage of specializing in different textile products, which have contributed to (a) capital-abundant northern developed regions' greater specialization in producing and exporting capital-intensive goods of upstream textile sectors and intra-industry trade with declining leadership in the world textile trade and (b) labor-abundant southern developing regions' greater specialization in relatively labor-intensive goods of downstream textile sectors and inter-industry trade with growing leadership in the world textile trade. The latter part of this paper attempts to obtain empirical support by conducting Constant Market Share (CMS) analyses of textile exports of the EC, the Far East, and Emerging Textile Exporting countries in the 1980s. CMS results show that EC exports lost their price competitiveness, which may explain the slowest growth and declining world market share of the region's exports, being outdistanced by the price-competitive, fast-growing Far East exports. Insufficient and outmoded production systems and infrastructure led to relatively limited export performance of Emerging Textile Exporting countries during the decade. This paper concludes with the limitations of capital-intensive EC production systems in competing with relatively labor-intensive production systems of the Far East and the gradual transfer of leadership in price competitiveness and world textile trade from the EC to the Far East in the 1980s. Towards the end of the 1980s, however, Far East exports showed weakening price competitiveness, probably due to rising labor costs and developed regions' protectionism.