It's Not Just the Economy, Stupid! Trade Competitiveness in the 21st Century

How does a globally uncompetitive industry compete successfully in specific markets? What shapes the decisions of importers in these markets to purchase inputs from a more costly supplier? Current theories highlight the role of the market or firm strategy as possible explanations. It's Not Just the Economy, Stupid Trade Competitiveness in the 21st Century relies on 12 years of research of the US textile industry and the apparel industry throughout the Latin American and Caribbean regions to provide an alternative answer to these questions. The book argues that market factors and business strategies alone do not determine industry competitiveness and firm import behavior. Rather, special international trade programs and regulated trade agreements, which are commonly described as free trade agreements, make it possible for an industry that is less competitive in the global market to become highly competitive in specific markets. Furthermore, these same international trade programs and agreements create incentives for importers to purchase inputs from specific markets, including those with higher costs. For example, the US textile industry is less cost competitive than the same industry in a number of other countries, such as China. Although less expensive textile suppliers exist, some Latin American and Caribbean countries continue to import a majority of their textiles from the United States for use in their garment exports. The book shows that this particular trend results from special trade programs and regulated trade agreements. The findings presented here complement existing scholarship on international trade by focusing on the behavior of importers rather than exporters. Furthermore, whereas current studies explain how industries compete in the global market, the book shifts the emphasis toward industry competitiveness in specific markets.