What Explains the International Location of the Clothing Industry?

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What Explains the International Location of the Clothing Industry?

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

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Sven Tengstam

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.

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Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 290.

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Length: 38 pages
Date of creation: 21 Feb 2008
Date of revision:
Handle: RePEc:hhs:gunwpe:0290

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Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
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
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R30 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-02-23 (All new papers)
NEP-DEV-2008-02-23 (Development)
NEP-INT-2008-02-23 (International Trade)
NEP-URE-2008-02-23 (Urban & Real Estate Economics)

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