Development strategies and the exports of textiles and apparel: a comparative analysis of South Korea and India

Abstract

In the post World War II era, a group of east Asian exporters achieved rapid economic growth through the exports of labor-intensive manufactures, among which textiles and apparel were the most prominent. Previous research has sought to explain the determinants of international textile and apparel trade through the theory of comparative advantage.

The aim of this research was to examine the textile and apparel export patterns and government intervention of South Korea and India, 1955-1985, through comparative historical analysis. The sectoral study proceeded under the premise that a prime determinant of export success is the nature of government intervention. The conceptual framework of the study was based on Liang's (1992) classification of trade regimes. The focus of the study was on the overall policy atmosphere in the two countries examined, which affected the development of the textile/apparel sectors and their trade patterns.

The procedure utilized followed the general framework of comparative analysis. The variables chosen were identified by the theory as relevant to policy analysis and were examined to determine whether they provided evidence to support the hypotheses. To judge the overall policy atmosphere of South Korea and India, the effects of various government incentives were analyzed. The study contained descriptions of policy measures and explanations of the reasoning governing their implementation. An evaluation of the effects of each policy, as well as the overall effect of the combined policies, was provided. For both countries, qualitative and quantitative variables associated with import protection and export promotion were analyzed.

The cross-country comparison revealed that both South Korea and India displayed high levels of government intervention in industry and trade as related to their textile/apparel sectors. The method of comparative analysis permitted an in-depth view of various individual policies affecting the textile/apparel sectors of both countries. An important finding was that the government intervention in South Korea fostered the growth of its textile/apparel exports, whereas Indian government intervention hampered the growth of Indian textile and apparel exports.

The analysis also showed that the South Korean policy package resulted in the textile/apparel industry emerging as the country's largest exporting sector in the late 1960s, a position it retained until the early 1980s. Meanwhile, the Indian policy package nearly stagnated textile/apparel exports from the 1950s onwards, and the country's share of the world market was taken over by South Korea, China, and Taiwan, among others.