Revealed Comparative Advantage of Carpets and Textile Floor Covering Industry in Pakistan, India and China

1. IntroductionThe global trade pattern has been changed in the pursuance of trade liberalization policies in the form of removal of tariff and non-tariff barriers, reduction in quotas and technological advancement on the part of world economies. South Asian economies such as China and India are seeking a favorable position from the trade composition perspective in the international markets. These countries possess comparative advantage in textile sector and show a noteworthy growth in changing trade patterns across the world. Pakistan has a great potential to stand out in this sector in the region as a prospective and overwhelming proportion of labor force is engaged in this sector. It is expected that export-led growth strategy cause a significant boost in production, employment and the productivity of labor along with the improvements in overall economic status but the political and socio-economic conditions in addition to primitive types of technology use may hinder the way to rapid progress.Pakistan's current export structure requires structural transformation and changes in its export diversification and prototype specialization. The industrial sector in Pakistan has been playing a pivotal role in the national economy in terms of its share in GDP, exports, employment, foreign exchange earnings, investment and its contribution to the value added industry. China is one of the world's largest textiles exporters, accounting for one third of the global textile trade volume. Although the prolonged anti-dumping investigations hit the country's textile export, still textile industry in China has remained a key pillar of development in the country. It has played a vital role in proliferation of various sectors of the economy. Due to its large contribution in the economic growth, Chinese government has remained very much focused to upgrade this sector. India, another major exporter of textile goods is selfreliant and independent with lots of versatility and diversification in textile sector. Apart from providing one of the basic necessities of life i.e. cloth, the textile industry contributes about 14 % to the country's industrial output and about 17 % to export earnings. This sector stands at second in the provision of jobs to people after agricultural sector.There is continuing debate and emerging concern about the position of these countries in the world market and the resulting edge of China for intensified competition in the labor-intensive manufactured goods. This signifies the importance of the structure of comparative advantage in selected countries; China, India and Pakistan and to find out the extent of competition among these countries in the market of selected subsector i.e., textile.This study focuses on one of the important sub-sector of textile industry i.e. Carpets and other textile floor Coverings (under the category of code 57 as per Harmonized System of classification, HS). The carpet industry plays a fundamental role in determining the export bearing of Pakistan. There has been an ever increasing demand for carpets and floor coverings both in Pakistan and around the globe. Carpets have always been a valuable asset since ages and therefore remained in vogue. This was gradually commercialized in Pakistan because of the development of export market. Commercialization gave new dimensions to this industry and it started expanding in rural areas due to the availability of cheap labor. This is one of the sectors that grew tremendously during 1970s and 80s. Among the value added goods it remained on the top of the list (Awan and Khan, 1992). This sector started getting a set back after the issue of child labor raised by international organizations. As majority of the carpet weavers in Pakistan were estimated to be children less than 15 years of age. Although, data on the Pakistan labor force and child labor is vulnerable. Nevertheless, there is little doubt that child labor has assumed massive proportions in Pakistan. …