Archive for May 8th, 2013

Why India Slowed?

May 8, 2013

An interesting piece by Raghuram Rajan. Actually disappointing.

A clear article which shows why top econs should refrain from serving the govt. Instead of the econs influencing the govt., it is the govt. which influences the econs.

Ok so what are the reasons as per Dr Rajan:

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T-shirt’s journey to Market..

May 8, 2013

A nice write-up as part of Dallas Fed’s Globalization Institute Annual Report -2012.

It starts like those articles on i-pod/i-phone  where things are piled on from different places to make the final product, showing the power of globalization:

The life of a T-shirt—from its origins in a Lubbock, Texas, cotton field to its final days in a used-clothing store in Tanzania—aptly tells the story of globalization, comparative advantage, trade regimes, proximity to market and modern retailing. In the book The Travels of a T-Shirt in the Global Economy, Georgetown University economist Pietra Rivoli documents the roles of three countries on three continents (Chart 1): the United States, where the raw materials are produced; China, where cheap labor and flexible manufacturing practices are tailored to U.S. speedto-market demands; and Tanzania, an east African country, whose used-clothing industry imports extensively from the U.S. Along the way, cotton for the T-shirt is spun, woven, cut and stitched to U.S. specifications in China. Before the garment can travel from the factory, it is subject to trade policies (most formulated in Washington), which determine sourcing and the quantity allowed into the country. Once the T-shirt arrives in North America, a U.S. shopper becomes its first owner.

Years later, after a household spring cleaning, the now-faded garment is donated to charity, perhaps to the Salvation Army or Goodwill. It then starts another journey, this time across the Atlantic to used-clothing stores in parts of Africa and other developing nations. Here, a second consumer buys the T-shirt. The single garment provides a source of income to many during its lifespan (Rivoli 2009). The tale of this everyday item sheds light on the complexities of globalization, mapping the role of apparel and textiles in emergent economic development, global shifts in sourcing and the impact of trade policies.

However, the  paper shifts focus to textiles market from a historical perspective. It shows how most countries growth story begins from cotton/textiles:

Textiles and apparel were the starting point of world industrialization. Both industries are viewed as starter endeavors for development efforts. Because apparel and textiles are laborintensive, their manufacture has migrated from high-income countries to developing economies with relatively lower pay.

Nice bit..


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