ACE 387 Textiles and Apparel in the Global Economy

Chapter 5: Global textile complex

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Todays topics
Brief Historical Perspective Global Patterns of Development for the Textile Complex Textile and Apparel Stages of Development A Global Barometer of Development A Broad Perspective on Global Supply and Demand

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Brief Historical Perspective (1)

The textile sector played a vital role in industrialization efforts.
T&A sectors are significant components of changing global economy. Historical prospective of global shift in T&A - Early 20th century - Mid 20th century - Late 20th century
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Brief Historical Perspective (2)

Early 20th century
Significant changes in where production would occur began during this era. Textile production increased 90% from 1900 to 1937, Britain had 70% textile trade in 1900 1920-1950s: Japan's economic development relied heavily on textile production to lead industrialization process. By 1933, Japan was primary exporter of cotton textile products in the world. Parallel pattern to how U.S. and Britain had developed industrially.

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Brief Historical Perspective (3) Mid 20th century

WWII destroyed most of Japan and much of Europe U.S. and Britain T&A industry expanded rapidly after war. Began to regard trade surplus as normal. Supported Japan's efforts to rebuild its industry and economy. 1950s Japan was very competitive again. Japan role model for other developing countries, esp. in Asia. In 1955 textiles imports only 2% of market but the developed countries become concerned.
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Brief Historical Perspective (4)

Late 20th century
Competition for market access grew more intense. Textile consumption in major markets slowed. Textile producers in developed countries began to demand protection Against threat of cheaper imports - policies to secure markets for domestic producers
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Mainstream/ Modernization Theory

Development and growth were closely tied to capital formation. Most influential representative: Walt W. Rostow: The Stages of Economic Growth: A Non-Communist Manifesto (1960). 1. Traditional Society 2. Pre-conditions for take off 3. Take-Off 4. The Drive to Maturity 5. The Age of Mass Consumption
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Structural Theories of Development

Focus on examining relationships among zones in the world.
Dependency Theory World Systems theory
Development gap seen as a product of modern history. These differences support the idea that developing countries must pursue strategies other than trying to imitate the developed countries.

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Question
Q: Think about Japan's economic development in 1920s-1940s: would you say what happened then supported the M/M theorists or structural theorists?? Why? A: M/M Theory Imitation or at least following a developed pattern.

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Question
Q: Why does the textile complex provide an easy entry for new producer nations to enter world economy? A: Limited capital and technology are required. These are in short supply in developing countries. Apparel production particularly is labor intensive and cheap labor is usually what developing countries have

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Global Patterns of Development for the Textile Complex

Stages of Development (Toyne, 1984) 1. Embryonic stage 2. Early apparel export 3. More advanced production of fabric & apparel 4. "Golden Age" 5. Full maturity 6. Significant decline

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Stages of Development in Textile Complex (1)

1. Embryonic stage In poorest and least developed countries. Cottage industries for domestic consumption. Simple fabrics: Hand produced, natural fibers. May export some natural fibers. E.g. some African countries.

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Stages of Development in Textile Complex (2)

2.

Early export of apparel:

Low wage labor for labor intensive operations. Sold to markets in other countries. May be assembly of component parts from other countries; Ethnic clothes (market according to fashion in developed countries - 1960's); Extensive hand work. Uneven quality. E.g. Nepal, Bangladesh, Sri Lanka, ASEAN, etc.
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Stages of Development in Textile Complex (3)

3. More advanced production of fabric & apparel:

Improvement in volume, quality, sophistication May develop own fiber production, including manufactured fibers. Increased production of intermediate inputs (made in own country). Increased investment from developed countries; Better infrastructure, government stability, etc. More contracting, more advice on marketing, management, etc. E.g. Advanced ASEAN members, China
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Stages of Development in Textile Complex (4)

4. Golden Age
Increasingly large, sophistical t/a industries. Trade surpluses. Manufactured fiber production more advanced; These countries begin to invest in other countries. (Korea, Taiwan just as advanced countries once invested in them.) Some countries may start to shift away from textiles to other industries.
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Stages of Development in Textile Complex (5)

5.

Full maturity

Output may increase, but employment begins to go down, especially in apparel sector (why?) Production of manufactured fibers, relatively complex mill products. Production more capital intensive. More extensive use of offshore production and contracting. Example: U.S., Japan, Italy ??
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Stages of Development in Textile Complex (6)

6. Significant decline

Number of firms and employment levels go down significantly. Trade deficits. More offshore production. Decline occurs at different rates depending on government policies in Particular countries. Role of government important. Example: UK, Germany, France, Belgium
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Question
Q: Regarding global patterns of development more specifically, the stages of development described do you think these support the M/M theories of the structural theories? Why? A: M/M Theory Following a developed pattern.

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Question
Q: What is different about these stages than what the US and Britain went through in their industrial development? A: Investment from outside In the early Industrialized process, US and Britain developed by having no outside investment.

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Textile and Apparel Stages of Development in Relation to Broader Development

T&A development generally parallel to the development stages of a nation Particularly in less-developed areas
1. Developing Stages 2. Developed stages
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Developing Stages (1)

Early Development Process of country
Model does convey some of the optimism of the mainstream/modernization approach. T&A production in most countries does go through at least some of these stages. Based on structural theory, T&A production often first attempt toward industrialization in 3rd world periphery. Profits go to core countries.

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Developing Stages (2)

1. 2. 3. 4. 5. Country begins producing its own component parts Production at more advance level Technical capabilities increase More local ownership Movement to other, more profitable industries A large number of nation at various stages of development

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Developed Stages

Difficulty in competing in the domestic market Changes make industry more competitive
Assembly in low-wage countries Investments made in technology to reduce labor costs and improve productivity More protectionist policy

Result??

Makes industry in other countries become more competitive These would have otherwise (without investment) been much slower to develop

(figure 5-7)

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Textile Complex A Global Barometer of Development

Some countries have had the capacities for certain kinds of textile and apparel production, whereas they may have had limited production capabilities in more advanced processes. (figure 5-8) Developed nations (i.e. US, Canada, Japan) T&A in full-maturity stage Developing nations (i.e. China, Mexico, India) T&A industries lead the economy A profile of the textile sector in an LDC give a fairly accurate reading of that country's overall economic development.
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Question
Q: Are you willing to consider the concept that patterns of development in textile complex reflect broader economic & industrial status in regions or nations? A: Dickerson makes the following observations: Manufactured fiber only able to be provided when country has reached a certain level of development: technology, capital inputs, infrastructures, other factors associated with development. Textile complex typically one of earliest sectors to "mature" in a country.
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Question
Q: What characteristics of the textile complex account for many of the global shifts that affect both developed and developing countries? A: Dickerson makes the following observations: 1. Serves basic human needs 2. Labor intense 3. Easy entry because of low capital and technology requirements

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Question
Q: What is the effect, in general on Textile and Apparel Stages of Development to the global economy? A: Dickersons claim: Increasingly interlinked, more dependent and what happens in one country will have effects all over the world esp. in countries very different in economic development.

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A Broad Perspective on Global Supply and Demand Number of T/A producer nations has increased and is increasing Many earlier developing nations have become much more productive These 2 factors have led to enormous global capacity to supply consumers. Actually a global overcapacity. Global supply exceeds demand. Extremely competitive global market condition
Developed countries depend on their home markets for growth. Developing countries depend on exports for growth.

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