The Impact of Social, Economic Variables and Logistics Performance on Asian Apparel Exporting Countries

Endowed with abundant supply of raw materials and low labor cost Asian countries have become the world’s largest exporters of apparel products for the past few decades. In 2007, the value of Asian suppliers’ total apparel exports to the world amounted to US$ 165 billion which represented 52% of the world’s total apparel exports. The gravity trade model is utilized with an exploration at the aggregate level. Analyzing the data for fourteen exporting countries and their sixteen importing partners from 2000 to 2007, the country-specific, economic, social factors, in additional to logistics performance are analyzed statistically to identify the major determinants that have influenced the apparel trading of Asian countries to the EU-15, and American markets. Taking the robustness advantage of the gravity model, the analytical results indicate strong support for the model with parameters including GDP, per capita GDP, population size, female employment, value added factors and logistics performance. All these show statistically significance and positive effects. In contrast, distance, real exchange rates and wages have negative impacts on apparel trading. An important finding is that new variables, namely exporting countries’ logistics performance can derive competitive advantage, otherwise, it erects a trade barrier in its own right in apparel exports.