 Differing Impact of Liberalisation: The Case of Vertically Integrated Clothing FirmsZara Liaqat
The Pakistan Development Review, 2018, vol. 57, issue 3, 283-306 Abstract: This paper compares the productivity and other characteristics of vertically integrated and non-integrated firms to investigate whether efficiency gains associated with a given liberalisation episode vary across firms, depending on their organisation. A theoretical setting of vertical integration in the textile and clothing industry is developed, to reveal that trade expansion triggers a change in the relative factor cost of these two types of firms, and consequently, a change in product range produced by them. The results are further backed by using a sample of clothing firms in Pakistan for the years 1992-2010 to analyse the effect of the phasing out of U.S. textile and clothing quotas on firm-level efficiency. The empirical findings illustrate that an increase in the level of quotas brings about a significant growth in the mean productivity of vertically integrated clothing firms. The diminishing efficiency of non-integrated firms points to the lack of ability of these firms to benefit from tighter quality control, timely revision of production policies and guarantee of supplies. Keywords: Trade Liberalisation; Productivity; Vertical Integration; Firm Heterogeneity; Multi-Fibre Arrangement (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:57:y:2018:i:3:p:283-306 Access Statistics for this article More articles in The Pakistan Development Review from Pakistan Institute of Development Economics Contact information at EDIRC. |
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