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Trade and Technology: The Ricardian Model - Faculty

Trade and Technology: The Ricardian Model - Faculty

Trade:

Trade: Application II International Commercial Policy The Ricardian Model U.S. textile and apparel industries face intense import competition, especially from Asia and Latin America. Employment in this industry in the U.S. fell from about 1.5 million people in 1990 to less than 1 million in 1999. An example of this import competition can be seen from one U.S. apparel manufacturer, Burlington Industries, which announced in 1999 that it would reduce production capacity by 25% due to increased imports from Asia. 40


Trade: Application II (cont.) International Commercial Policy The Ricardian Model Burlington closed seven plants and laid off 2,900 people, about 17% of its domestic workforce. After the layoffs, Burlington employed 17,400 people in the U.S. With sales of $1.6 billion, sales per employee were therefore $92,000 in 1999. This was exactly the average for all U.S. apparel producers in 1999. The textile industry, producing the fabric and material inputs for apparel, was even more productive with annual sales per employee of $140,000 in the U.S. in 1999. 41


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