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Estimating productivity and returns to scale in the US textile industry


  • Harri Ramcharran

    () (Associate Professor of Finance and International Business, Dept. of Finance, College of Business Administration, University of Akron, Akron, OH 44325, USA)


In light of the textile industry's growing foreign competition, trade deficit and job loss, we estimate its productivity and efficiency for the period 1975-93 utilizing a variable elasticity of substitution production function. The results indicate that, despite job losses, the industry adjusted by increasing labor productivity and maintaining fairly stable profits. This performance does not warrant protectionist policies. However, with an elasticity of factor substitution less than one and decreasing, the impact of factor price increases could result in higher apparel prices and preference for cheaper imports. Furthermore, with an elasticity of capital output rapidly decreasing, significant technological improvements will be required to improve competitiveness since textile production is capital intensive. Recently revised rules on trade liberalization could increase competition in the industry.

Suggested Citation

  • Harri Ramcharran, 2001. "Estimating productivity and returns to scale in the US textile industry," Empirical Economics, Springer, vol. 26(3), pages 515-524.
  • Handle: RePEc:spr:empeco:v:26:y:2001:i:3:p:515-524 Note: received: October 1999/Final version received: August 2000

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    References listed on IDEAS

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    Cited by:

    1. George Verikios, 2004. "A Model of the World Wool Market," Economics Discussion / Working Papers 04-24, The University of Western Australia, Department of Economics.
    2. Verikios, George, 2009. "Modelling the world wool market: A hybrid approach," Economic Modelling, Elsevier, vol. 26(2), pages 418-431, March.
    3. Coll Serrano, V. & Blasco Blasco, O.Mª., 2009. "Evolución de la eficiencia técnica de la industria textil española en el periodo 1995-2005. Análisis mediante un modelo frontera estocástica/Technical Efficiency In The Textile Industry Of Spain In Th," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 779(32á)-77, Diciembre.
    4. Lila J. Truett, "undated". "The Korean Textile Industry: Still Competitive, After All These Years?," Working Papers 0004, College of Business, University of Texas at San Antonio.
    5. Ramcharran, Harri, 2011. "The pharmaceutical industry of Puerto Rico: Ramifications of global competition," Journal of Policy Modeling, Elsevier, vol. 33(3), pages 395-406, May.

    More about this item


    textile · elasticity of factor substitution · protectionism;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes


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