3448866__Textiles_NAFTA_BILL_OF_1993_

3448866__Textiles_NAFTA_BILL_OF_1993_ - NAFTA Bill of 1993...

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NAFTA Bill of 1993 1 Running head: THE DECLINE OF TEXTILES IN THE US DUE TO THE NAFTA The Decline of Textiles in the US due to the NAFTA Bill of 1993 [Author’s Name] [Institution’s Name]
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NAFTA Bill of 1993 2 The Decline of Textiles in the US due to the NAFTA Bill of 1993 Textile manufacturing companies are agents of change in the American economy: they are the largest source of technology creation, transfer, and diffusion; their activities tie countries together in terms of production, trade, and investment flows; and they dominate most industries at the national and international levels. Over the last twenty years American Textile manufacturing units have changed their strategies for investment and production, shifting from simple stand-alone strategies (whereby the parent firm set up miniature replicas of itself, designed to serve local markets) to simple integration strategies (shifting labor-intensive stages of production to developing countries, e.g. subcontracting, using export- processing zones). More recently, these enterprises have begun to develop complex or deep integration strategies (rationalizing production on a regional or worldwide basis, integrating textile manufacturing companies across locations, placing greater reliance on created assets such as work-force quality and organizational innovations). An important causal factor in the development of complex integration strategies has been regional integration. When two or more countries move to set up a free trade area (FTA), eliminating trade barriers on intra-FTA trade, the change in
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NAFTA Bill of 1993 3 policy rules affects the textile manufacturing companies' plant location choices. For example, if tariff barriers had induced earlier defensive, tariff-jumping foreign direct investment (FDI) in order to access a local market, the removal of the barriers could lead to plant closures or rationalizations. Given the type of regional integration (which barriers are eliminated and how fast, the degree of harmonization), ceteris paribus , we argue that the location effects will vary depending on the motivations behind the plant location decision (the value-adding activity) and the nature of the firm (insider, outsider, domestic). Between 1994 and 1995 more than 0.9 million jobs were lost
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This note was uploaded on 11/29/2010 for the course MANAGEMENT EM-14793 taught by Professor Lindaryaan during the Spring '08 term at Windsor.

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3448866__Textiles_NAFTA_BILL_OF_1993_ - NAFTA Bill of 1993...

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