Weaving a Competitive Edge: 20 Years of RCA Insights into Asia's Textile Exports

Abstract

Based on the Balassa Index during the past 20 years, this paper examines how competitive textile exports from Pakistan, India, China, and Bangladesh have been using the Revealed Comparative Advantage (RCA) technique developed upon. The article looks at how structural features, policy impacts, and trade patterns shape national competitiveness in the global textile sector.

The study examines trade statistics from the World Bank broken down into smaller bits as well as from the International Trade Center (ITC). It next examines RCA trends in man-made fibers, cotton textiles, apparel, and specialty woven fabrics. China boasts a strong and consistent RCA, according the results. India and Bangladesh have expanded somewhat dramatically in apparel and specialist woven linens since 2010. Pakistan used to be more competitive in cotton goods, structural inefficiencies, increasing energy prices, and lower export quality have rendered the nation less competitive. RCA is largely shaped by cost of manufacturing, especially labor and energy, spending on research and development, tax policies, foreign direct investment (FDI), and changes in the economy as a whole, including inflation and currency fluctuations mostly.

The report attributes Pakistan's deteriorating RCA mostly on high energy costs, insufficient research and development spending, unfair taxes, and a low competitive index. China rules instead since it boasts better laws backing businesses, economies of scale, and technologies. To boost exports, India and Bangladesh have applied rules and strategies meant to make their employees more efficient. The paper claims that if Pakistan wants to become more competitive in the textile industry, its policies have to change. Among these changes should be promotion of new ideas, tax reform, energy cost control, and investment in research and development. Solving these structural problems will help Pakistan's position in the world and long-term exporting capabilities to be enhanced.