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What Explains the International Location of Industry? -The Case of Clothing

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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 for 61 countries 1975-2000, we investigate the global international location of clothing production by using a combination of variables suggested by the Heckscher-Ohlin theory and the New Economic Geography (NEG) theory. Our Blundell-Bond system estimator results confirm that the NEG variables do help explain the location of the clothing industry, and point to that convergence is not as inevitable as sometimes assumed. We find that closeness to various intermediates such as low-cost labor and textile production has strong effects on output. Factor endowments and closeness to the world market have inverted U-shaped effects. This is expected since 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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File URL: http://hdl.handle.net/2077/21651
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 423.

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Length: 26 pages
Date of creation: 21 Dec 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0423

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Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: global clothing industry; new economic geography; comparative advantages; industrial agglomeration;

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