Department of Economics

This paper serves as an exploratory study of the global apparel manufacturing industry during the time of the phaseout of the Multifiber Arrangement system of quotas. Underlying the analysis is the goal of identifying a causal relationship between increased international competition and country-level investment in product, process, and supply-chain upgrading. To examine this association, I focus on trade data in the years shortly before and after the MFA quotas were phased out- after which countries could export free from many of the limitations in place before. The resulting surplus of clothing and textile production worldwide provides an ideal environment to study the effects of increased competition on the apparel industries in different countries. Previous literature has linked competition to upgrading; however, this paper takes a novel approach by measuring competition in relation to the shifting trade dynamics at the time of the MFA phaseout. Also, this paper departs from previous studies by examining imports of new capital equipment as one of its measure of upgrading. Country-level data on imports of clothing and textile manufacturing machinery shows that countries invested more in process upgrading after increases in competition from 2001-2007; however, neither measure of product nor supply chain upgrading had as significant of a relationship to changing levels of competition.