The Textiles and Clothing (T&C) industrybears a significant role in international trade. The sector benefittedimmensely in recent times and globalization has offered great opportunities tothe entire value chain from fibre to fashion. The growth in trade and theresultant manufacturing activity in the producing countries generated largenumber of net business processes with tangible manufacturing activities andcontinuous new business formations with intangible activities like designing,branding, retailing and trading. Most of these economic activities are highlylabour intensive and thus it created direct and indirect employmentopportunities. This sector bolsters more positive distributional effect withintensified manufacturing activities in relatively low income countries. Thesector is very important for developing economies, accounting for a doubledigit (more than 10 per cent) of value addition in domestic economy and almost30 per cent of their total merchandise exports. The share of global T&C exportsin total merchandise exports during 2009 was 4.46 percent. The share in global merchandiseexports shows a decreasing pattern over time despite a positive growth rateever, except during crisis period of 2009. This is because T&C products arestill manufactured and traded for mass consumption in world with bottom level pricesamong all manufactured goods. In recent times, the pattern has not been linearas there has been a decrease of exports growth rates in 2005 and 2006 with aslight recovery in 2007.


The 2008 global economic crisis led to a marked decline indemand from developed countries which represent a significant share (around 80per cent share) in world imports of T&C products. The economic slowdownfollowing the crisis also affected this sector which experienced negativegrowth of 14 per cent in 2009. The large decrease in trade also had an impacton employment with a loss in jobs of approximately 20 per cent in developingcountries. Consumption through imports is highly concentrated in four mainregions: EU (27), the United States, Japan and Russia federation. At the onsetof the current recession, global T&C imports increased by 4.5 per centduring 2008. US imports declined during this period, but those of the EU-27, Japan and the Russian Federation grew. However, there was a decline in imports in all thesecountries during 2009 by more than 10 per cent.

 

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Theauthor is economist with Confederation of Indian Textile Industry (CITI)