Trends in global production and trade

This report examines key trends in global production and trade in Textiles. Our focus is on the competitiveness of emerging economies (or 'low-cost countries', LCCs) as global source countries.

As to the composition of the Textile industry, we distinguish between (a) yarn, (b) fabrics, and (c) made-up articles.

The study is based on an analysis of cross-border trade flows. Flows of cross-border trade reflect the views of investors and traders on the ability of source countries to supply international markets.

Between 2002 and 2006, world exports of Textiles grew at an average annual rate of 7.1 percent.

With exports from emerging economies growing at a slightly higher rate (9.8 percent), their share of world exports increased from 52.1 percent in 2002 to 57.4 percent in 2006.

Chart 1B shows the importance and dynamics of LCCs as locations of global production by industry segment:

► In terms of world export share, LCCs are more or less equally important as sources of supply for yarn, fabrics and made-up articles.

► But since 2002, LCCs have gained more ground in made-up articles (8.8 percentage points) and yarn (6.2) than in and fabrics (4.6).

Asia is the leading low-cost source region in the Textile industry. However, since 2002, Asia's share of world low-cost exports has slightly declined, mainly to the benefit of the Middle East and Africa.

The geographical reach of a product's supply chain reflects the tradeoff of users between (a) accessing the most competitive source of supply worldwide, and (b) the benefits of proximity to end-product markets.

In this study, we measure the reach of supply chains by examining the extent  to which imports from LCCs cross regional borders (as reflected in the relative size of intra and extra-regional import flows).

The findings presented in Chart 2A suggest that the reach of supply chains in the export of Textiles from emerging economies increases with the degree of processing. While regional supply chains dominate in yarn, those for made-up articles are relatively globalised. Also, there is a trend towards an increased geographical reach of supply chains in all segments of the Textile industry.

Reflecting the competitiveness of Asia as a low-cost source region, importers of Textiles from the Americas and Europe rely to a much greater extent than those from Asia on global sources of low-cost supply (Chart 2B).

Chart 3A lists the ten leading low-cost source countries for Textiles. With a world export share of 23.8 percent in 2006, China is by far the leading source country, followed by Taiwan (5.2), South Korea (4.8), India (4.6), and Pakistan (3.7).

Since 2002, the share of the Top-5 source countries in world low-cost exports has remained stable at about 73 percent.

Between 2002 and 2006, China's share of world low-cost exports increased by no less than 10.4 percentage points to 41.5 percent in 2006.

As the leading low-cost exporter, China is well represented in all product areas. But, relative to other LCCs, China has a slight advantage in fabrics. Since 2002, it has gained some ground in yarns.

Between 2002 and 2006, Taiwan's share of world low-cost exports declined by 4.9 percentage points to 9.1 percent in 2006.

Relative to other LCCs, Taiwan's advantage in the Textile industry lies in the yarn and fabrics segments. Since 2002, Taiwan has strengthened its position in yarn.

Between 2002 and 2006, South Korea's share of world low-cost exports declined by 5.1 percentage points to 8.3 percent in 2006.

Relative to other LCCs, South Korea has an advantage in fabrics. Over time, the country has strengthened its position in this sector as well as in yarn.

Between 2002 and 2006, India's share of world low-cost exports remained at about 8 percent.

Relative to other LCCs, India has an advantage in yarn and, especially, made-up articles. Since 2002, India has lost some ground in both yarn and fabrics.

Between 2002 and 2006, Pakistan's share of world low-cost exports remained at about 8 percent.

Relative to other LCCs, Pakistan's advantage lies in yarn and, especially, made-up articles.

Emerging economies are the origin of about 60 percent of world Textile exports, with minor variations across product segments.

The geographical reach of supply chains in LCC exports varies significantly from one segment to another, increasing by and large with the degree of processing.

Based on our assessment of low-cost export flows between 2002 and 2006, we expect the following trends to shape global production and trade in Textiles in the short to medium term:

► The growing importance of low-cost countries as sources of global supply, in particular in made-up arcticles.

► A shift in the location of production to lower-cost emerging economies (e.g. China) at the expense of higher-cost ones (e.g. Taiwan and South Korea).

► A continued specialisation among source counries between yarn and fabrics on the one hand, and made-up articles on the other.

Emerging economies (LCCs) are defined to include the 35 leading exporters of manufactures with a GNI-per-capita below USD 15 000.

Textile yarn: Wool, cotton, man-made. Textile fabrics: Woven-cotton, wowen-man-made, knitted. Made-up articles: Embroidery etc, household linens, curtains, carpets, sacks.

Export growth is calculated as the compound annual rate of growth between 2002 and 2006.

Specialisation is calculated as an index (–1.00 to +1.00), measuring the weight of a given product segment in a country's exports. A positiv index value implies a competitive advantage over other LCCs in this product segment.

Updated: January 2008