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Labour Cost and Export Behaviour of Firms in Indian Textile and Clothing Industry

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  • Abraham, Vinoj
  • Sasikumar, S.K.

Abstract

The implementation of the Agreement on Textile and Clothing (ATC) of the World Trade Organization (WTO) renders both threats and opportunities to India’s Textile and Clothing (T&C) industry in the wake of liberal international trade in the sector. Firms acquire greater international competitiveness through various cost cutting and efficiency enhancing strategies. The question we try to ponder on is, what route does Indian firms take to join the international export market in T&C. Empirical analysis, using Tobit estimation techniques, supported the view that increasing the share of low cost labour was an important route through which export performance of the Indian firms in T&C was enhanced. Further, the use of this means to perform better in the international market aggravated in the period after the implementation of the ATC. On the other hand, capital and technology based factors did not have any perceptive effect on the export performance of Indian firms in the international market. This endorses the view that the Indian T&C firms by and large utilized the low road to competitiveness, rather than the other. Also the importance of the import intensity in export performance suggests that Indian T&C is increasingly getting integrated within the global value chain.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22784.

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Date of creation: 16 Mar 2010
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Handle: RePEc:pra:mprapa:22784

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Keywords: Export performance; Textile and clothing industry; Labour cost; Tobit Model; Agreement on Textile and Clothing;

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  1. Diao, Xinshen & Somwaru, Agapi, 2001. "Impact of the MFA phase-out on the world economy," TMD discussion papers, International Food Policy Research Institute (IFPRI) 79, International Food Policy Research Institute (IFPRI).
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  6. Montobbio, Fabio & Rampa, Francesco, 2005. "The impact of technology and structural change on export performance in nine developing countries," World Development, Elsevier, Elsevier, vol. 33(4), pages 527-547, April.
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Cited by:
  1. Shabbir, Safia & Iqbal, Javed & Hameed, Saima, 2013. "Risk Premium, Interest Rate Differential, and Subsidized Lending in Pakistan," MPRA Paper 48250, University Library of Munich, Germany.

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