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What Explains the International Location of the Clothing Industry?

Author

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  • Tengstam, Sven

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

The clothing sector has been a driver of diversification and growth for countries that have graduated into middle income. Using a partial adjustment panel data model, this study tries to explain the international location of clothing production based on a combination of variables suggested by the Heckscher-Ohlin theory and by New Economic Geography theory. Our Blundell-Bond system estimator results show that closeness to intermediates such as low-cost labor and textile production has a positive effect on clothing production. Factor endowment and closeness to the world market have inversed U-shaped effects. This is expected, because above a certain level several other sectors benefit even more from closeness and factor endowments, driving resources away from the clothing industry.

Suggested Citation

  • Tengstam, Sven, 2008. "What Explains the International Location of the Clothing Industry?," Working Papers in Economics 290, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0290
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    File URL: http://hdl.handle.net/2077/9580
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    More about this item

    Keywords

    Clothing Industry; New Economic Geography; Comparative Advantages; Industrial Agglomeration.;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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