What Explains the International Location of Industry? -The Case of Clothing
Sven Tengstam ()
No 423, Working Papers in Economics from University of Gothenburg, Department of Economics
The clothing sector has been a driver of diversification and growth for countries that have graduated into middle income. Using a partial adjustment panel data model for 61 countries 1975-2000, we investigate the global international location of clothing production by using a combination of variables suggested by the Heckscher-Ohlin theory and the New Economic Geography (NEG) theory. Our Blundell-Bond system estimator results confirm that the NEG variables do help explain the location of the clothing industry, and point to that convergence is not as inevitable as sometimes assumed. We find that closeness to various intermediates such as low-cost labor and textile production has strong effects on output. Factor endowments and closeness to the world market have inverted U-shaped effects. This is expected since above a certain level several other sectors benefit even more from closeness and factor endowments, driving resources away from the clothing industry.
Keywords: global clothing industry; new economic geography; comparative advantages; industrial agglomeration (search for similar items in EconPapers)
JEL-codes: F12 F13 L13 L67 R12 R30 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-cse, nep-int and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:gunwpe:0423
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