1 comparative advantage and competitiveness analysis for japans synthetic fibre export k.f. au and...
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Comparative Advantage and Comparative Advantage and Competitiveness Analysis for Competitiveness Analysis for Japan’s Synthetic Fibre ExportJapan’s Synthetic Fibre Export
K.F. AU K.F. AU and M.C. WONG and M.C. WONG Institute of Textiles and ClothingInstitute of Textiles and Clothing
The Hong Kong Polytechnic UniversityThe Hong Kong Polytechnic University
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Presentation OutlinePresentation Outline
I. Introduction
II. Overview of Japan’s synthetic fibre industry
III. Revealed Comparative Advantage (RCA)
IV. Revealed Competitiveness (RC) concepts
V. Empirical Analysis of RCA in Japan’s synthetic fibres export
VI. Japan’s Comparative Advantage and Competitiveness of synthetic fibre exports
VII. Conclusion
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1. Introduction 1. Introduction In 2004 :In 2004 :
An increase of 6.7 % in world textile fibre consumption
At 67.4 Mn tons
Per capita fibre consumption: 10.5 kg/capita
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1. Introduction1. Introduction 2004: World synthetic fibres consumption: 38
Mn tons (56.3%)
Synthetic fibre consumption
38Mn tons
Natural fibre consumption
24 Mn tons
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1. Introduction1. Introduction
Synthetic textile fibres
Artificial petrochemical products created by chemical synthesis process
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1. Introduction1. IntroductionMost important and popularly-used synthetic fibres
Relative Importance of Textile Fibres Polyester Polyester (25%)(25%) Nylon Nylon (12%)(12%) Polypropylene Polypropylene (12%)(12%) AcrylicAcrylic (6%)(6%)
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1. Introduction1. Introduction
FIGURE 1: WORLD CONSUMPTION OF MAJOR TEXTILE FIBRES (MN TONS)Source: Complied from Fiber Organon, various issues.
Note: Natural Fibres include cotton, wool and silk
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5
10
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1982 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Wor
ld F
ibre
s C
onsu
mpt
ion
(mn
tons
)
Manmade Synthet ic Fibres Natural Fibres Manmade Celluosic Fibres
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Assured growth in world synthetic fibre consumption
1. Introduction1. Introduction
Increasing world population
Surging economic growth in 1990s and new millennium
Increasing scope of substitution for natural fibres
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1. Introduction1. Introduction Synthetic fibre production:
Capital-intensive manufacturing activity Dominated by developed countries since
the early 1970s e.g. Germany, Italy, France, UK, US and Japan etc. losing shares to low-cost Asian regions From 1980 to 2003, world share dropped from 94% to 34%
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1. Introduction1. Introduction
JAPAN : ExceptionJAPAN : Exception
No similar declining trend
As world’s top-3 exporter
World share of synthetic fibre exports maintained around 14 % from 1990 to 2004
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2. Overview of Japan’s synthetic fibre 2. Overview of Japan’s synthetic fibre industryindustry
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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Wor
ld S
hare
Japan Germany UK France Italy
FIGURE 2: WORLD SHARE OF SYNTHETIC FIBRE EXPORTS OF SELECTED COUNTRIES, 1990-2004Source: Data complied from International Trade Statistics Yearbook, various issues.
Japan:
• world’s leading synthetic fibre exporter
• maintains a steady and significant share, with an annual growth 2.8%
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2. Overview of Japan’s synthetic fibre 2. Overview of Japan’s synthetic fibre industryindustry
Shift from quantity to quality
Shift from commodity products to specialty and niche items
Focus on technical fibre innovations
Develop market opportunities for new applications
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3. Revealed Comparative Advantage (RCA)3. Revealed Comparative Advantage (RCA)
Balassa defined the concept of RCA as the ratio between:
(1) share of commodity exports from a certain country in commodity exports from all countries, and
(2) share of total manufactured goods exports from the country in total manufacturing merchandise exports from world
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3. Revealed Comparative Advantage 3. Revealed Comparative Advantage (RCA)(RCA)
In mathematical interpretation, RCA can be written as:
RCAij = (Xij / Xnj) / (Xir/Xnr)where, • RCAij = revealed comparative export advantage of country j in commodity i
• X = exports• i = commodity• j = country• n = rest of the commodities• r = rest of the world
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4. Revealed Competitiveness (RC)4. Revealed Competitiveness (RC)
More appropriate measuring index as supply and demand balances are embodied
Show clear distinctions between specific commodity and all other commodities, as well as between specific country and rest of the world
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4. Revealed Competitiveness (RC)4. Revealed Competitiveness (RC) In mathematical interpretation, RC can
be expressed as:
RCij = Ln(RXAij ) - Ln(RMAij) where, • RCij = Revealed competitiveness index of country
j in commodity i • RXAij = Relative export advantage of country j in
commodity i• RMAij =Relative import advantage of country j in
commodity i • Ln = Natural logarithm
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5. Empirical analysis of RCA in Japan’s 5. Empirical analysis of RCA in Japan’s synthetic fibres export synthetic fibres export
Based on: (1) Balassa’s RCA index
(2) Vollrath’s RC index
Similar economic background comparators include: Belgium, France, Germany, Ireland, Italy, Spain, UK and US
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5.1 RCA in synthetic fibre exports5.1 RCA in synthetic fibre exports
RCA > 1 have revealed comparative advantage
RCA < 1 having revealed comparative disadvantage
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5.1 RCA in synthetic fibre exports5.1 RCA in synthetic fibre exports
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5.1 RCA in synthetic fibre exports5.1 RCA in synthetic fibre exports Japan, Ireland and Spain:
Their RCA > 1Have revealed comparative advantage in synthetic fibre exports
Japan: only country shows “increasing” RCA RCA index increased significantly, from 1.35 in 1990 to 2.68 in 2004
Ireland and Spain:Their RCA indices demonstrated a downward trendLosing their revealed comparative advantage in synthetic fibre exports
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5.1 RCA in synthetic fibre exports5.1 RCA in synthetic fibre exports
Germany and Italy:Their RCA indices dropped below 1 Losing their revealed comparative advantage and exhibiting comparative disadvantage since 1990s
Belgium, France, UK and US:Their RCA indices < 1Have revealed comparative disadvantage in synthetic fibre exports
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5.2 RC in synthetic fibre exports5.2 RC in synthetic fibre exports
Positive RC country is competitive in commodity trade
Negative RC country is not competitive internationally in the specific trading commodity
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5.2 RC in synthetic fibre exports5.2 RC in synthetic fibre exports
Japan:
Most competitive synthetic fibre exporter
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6. Analysis of Japan’s Comparative Advantage and 6. Analysis of Japan’s Comparative Advantage and Competitiveness of synthetic fibre exportsCompetitiveness of synthetic fibre exports
Key factors for the success of Japan’s synthetic fibre industry: High technological level Innovative development Highly- educated scientists Abundant capital resources Large investment in R & D
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6. Analysis of Japan’s comparative advantage and 6. Analysis of Japan’s comparative advantage and competitiveness of synthetic fibre exportscompetitiveness of synthetic fibre exports
Japan has a comparatively higher R&D/GDP ratio
Higher potential to innovate new products or technology
Enhanced the RCA in her synthetic fibres export
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7. Conclusion7. Conclusion
(a) From Balassa’s RCA study: Increasing RCA trend in Japan synthetic
fibre exports Related with R&D/GDP ratio Able to produce hi-tech and niche
synthetic fibres
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7. Conclusion7. Conclusion
(b) From Vollrath’s RC study: Japan has the highest RC index among
the other studied countries Demonstrated export competitiveness in
synthetic fibre sector
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7. Conclusion7. ConclusionFuture Prospect of Japan Synthetic Fibre SectorFuture Prospect of Japan Synthetic Fibre Sector Face competitive challenges from other low cost
producing countries Continue her edge in synthetic fibre sector by
exerting more R&D efforts Focus on developing high-value added niche
products
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- End -
Thank You