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

  • Abraham, Vinoj
  • Sasikumar, S.K.

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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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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  1. Montobbio Fabio & Rampa Francesco, 2002. "The impact of technology and structural change on export performance on nine developing coutries," Economics and Quantitative Methods qf0219, Department of Economics, University of Insubria.
  2. Nordås, Hildegunn Kyvik, 2004. "The global textile and clothing industry post the agreement on textiles and clothing," WTO Discussion Papers 5, World Trade Organization (WTO), Economic Research and Statistics Division.
  3. Diao, Xinshen & Somwaru, Agapi, 2001. "Impact of the MFA phase-out on the world economy," TMD discussion papers 79, International Food Policy Research Institute (IFPRI).
  4. Brouwer, Erik & Kleinknecht, Alfred & Reijnen, Jeroen O N, 1993. "Employment Growth and Innovation at the Firm Level," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 153-59, May.
  5. Wakelin, Katharine, 1998. "Innovation and export behaviour at the firm level," Research Policy, Elsevier, vol. 26(7-8), pages 829-841, April.
  6. repec:dgr:tuecis:0201 is not listed on IDEAS
  7. Manoj Pant, 1993. "Export performance, Transnational Corporations and the Manufacturing Sector: A Case Study of India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 28(1), pages 41-54, January.
  8. Eric Ramstetter, 1999. "Trade Propensities and Foreign Ownership Shares in Indonesian Manufacturing," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(2), pages 43-66.
  9. repec:ner:tilbur:urn:nbn:nl:ui:12-5662246 is not listed on IDEAS
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