The rise and demise of textiles and clothing in economic development: the case of Japan

Abstract

In recent decades, producers of textiles and in advanced industrial economies were the first large group of manufacturers who went into a decline as a result of import competition from newly indus­trializing economies. This occurred primarily because many processes in textile and clothing production tend to be intensive in the use of unskilled labor and so, as unskilled labor becomes relatively scarce in the advanced economies, comparative advantage gradually moves to countries Jess well endowed with physical and human capital per worker. However, onJy a subset of countries with low capital-labor ratios are Likely to become exporters of labor-intensive manufactures. That subset is limited to newly industrializing economies which are also poorly endowed with natural resources per worker and hence characterized by low real wages for labor that is attracted from primary production to industry as industrial capital expands. The dominance of East Asia's resource-poor, rapidly growing economies in satisfying the growing demand for imports of textiles and clothing by advanced industrial countries certainly supports this theory.