The Role of Price and cost Competitiveness in Apparel Exports, post MFA: A Review

Global outsourcing, technical change, and falling barriers to trade worldwide have transformed the structure of production and global competition in the textile and apparel industry. This sector has experienced intense fragmentation in the last two decades,much of which was driven by the Multifibre Arrangement (MFA). This review shows that post-MFA, firms today face altered conditions of competition that are pushing them to compete on the basis of factors other than price and cost competitiveness. The paper also argues that the attribution of China’s remarkable export performance in textiles and apparel to its low unit costs and large scales of production is, in part, a misreading of the China story.