Analysing Comparative Advantage and Competitiveness : An Application to Australia's Textile and Clothing Industries

Australia's comparative advantage and competitiveness in textile and clothing (TAC) industries are analysed, using Balassa's revealed comparative advantage index and Vollrath's measures of competitiveness. The analysis based on Balassa's indices shows that Australia has a strong comparative disadvantage in textiles and clothing as aggregate commodity groups, but there is comparative advantage in sub-categories of 'special textile products', 'floor coverage, tapestry etc', and 'fur clothing'. The analysis based on Vollrath's indices shows that Australia is not competitive in the world market with respect to aggregate commodity groups of textiles and clothing. Grubel-Loyd index of intra-industry trade was calculated for seven categories of textiles and two categories of clothing. The results show a rising trend in intra-industry trade in some of these categories of TAC products, implying that Australia increasingly exports and imports differentiated TAC products. Australian TAC industries may look to further promote exports of their products in the global market through increased product differentiation and improved quality and design