If you want to read your very first book about international trade, I recommend you an award winning one - The Travels of a T-Shirt in the Global Economy by Pietra Rivoli.
Rivoli takes the life of a T-shirt as a clue to introduce the global trade in the textile industry. It has been widely acclaimed by both the popular press and the academic community as a path-breaking study of globalization.
Competitive US cotton industry
For 200 years, the United States has undisputedly maintained the title of the global leader in cotton cultivation. (The total output in recent years is lower than that of China and India though). How can the U.S. cotton industry be so competitive? In an economy dominated by advanced technology and service industries, how does cotton cultivation, a traditional labor-intensive industry from the "downstream part of the value chain", continue to prosper and develop?
The U.S. government's support for the cotton industry has always been a source of controversy. Since 1995, American manufacturers have received an average of US$2.1 billion in substantial subsidies each year. These subsidies account for an average of 50% of the actual value of the crop. It even exceeds the total GDP of some poor African countries.
Subsidies are of great benefit for these cotton growers for sure, but it does not come from nowhere. Compared to other industries, the cotton industry is obviously “noisier”. How to navigate freely in the bureaucracy, as well as how to influence Washington has become a prerequisite for survival. The extent to which the cotton industry speaks with one voice can explain its political influence. The cotton coalition successfully rigs the rules in various ways to protect their industry even though they do not have the best T-shirts at the best price.
Early cotton farming in the United States is synonymous with the history of slavery. As the then biggest public policy, it provided stable and cheap labor for farmers. Even it is banned afterward, other long-term public policies that for example Texas implements also protect cotton farmers from various risks, including price risk, labor market risk, credit risk, and weather risk.
Subsidies and public policies are vital for the U.S. cotton industry, but their success is due to multiple reasons. Rivoli found that in cotton-growing states like Taxes, farmers, markets, governments, and scientific research institutions are good at collaborating and innovating.
A virtuous circle of producing, learning, research, and capital has been created. Especially after the cotton production in the United States has entered the era of fully mechanized and genetically modified (GM) technology, the cotton industry is no longer a traditional labor-intensive model, but a brand-new economic model.
By 2007, nearly 90 percent of U.S. cotton acreage was planted with GM seed. U.S. cotton farmers' incomes have likely increased by at least $1 billion as the result of GM technology, primarily through lower costs and higher yields.
Next Stop: China
In China, the raw cotton was spun into yarn and knit into fabric and ultimately turned into a T-shirt. Just like in the United Kingdom, New England, Japan, Hong Kong, South Korea, and Taiwan, the rise of the textile industry has affected the economic development of these regions and thus the urbanization process and industrial structure.
It is always the same story.
At the beginning of the 20th century, girls from the southern states entered the factory at the age of 7 and had to work more than 60 hours a week. Japan's leadership in the cotton textile field was based on low labor costs and harsh working conditions too.
Most of the early textile workers came from poor families in rural areas. Compared to agricultural work, factory work is considered a "good job” for them. Many women working in factories could gain independence from their families. Young workers often go to “night school” after work to study English or computer. Escaping from the village, they view it as the chance to change their life.
Rivoli criticized those who call for stop bottom line competition. “These radicals from rich countries should know that it was such competition that create their wealth”. However, this does not mean that we should accept everything. The market alone cannot protect workers. She believes that throughout history, it is the workers themselves who fight for the principle of equal treatment and raise the minimum income
standard, which has greatly improved their working condition.
Old clothes go to get new life
The richer the United States becomes, the larger the old clothes supply market becomes. The old clothes that Americans throw away form the backbone of a vibrant global old clothes industry. To succeed in this industry, companies have to develop important selection technology. It has to quickly sort a large truck of the clothes, and then ship warm clothes to Ukraine, ship T-shirts to Africa, ship jeans to Japan, and deliver high-end clothes to the store in the East Village of Manhattan.
From the U.S. to Africa, these clothes go through a journey from the richest country in the world to the poorest country. In 2008, the price of an old T-shirt in good condition was sold 25 cents/piece in Africa. Some experts believe that old clothes hinder the development of poor countries because most rich countries went through the development of the textile industry, while others oppose the idea.
From Rivoli’s observation, old clothes is not the major block of African textile industry. On the opposite, the trade in the used clothes is run by ordinary people rather than by the elite. It involves importers, end customers, drivers, tinkers, and middlemen rather than corrupt African governments. This transaction allows ordinary people not only to wear better clothes, but also to participate in the commodity trade.
On the other hand, old clothes have a fancy name in developed countries – vintage. For example, the Japanese prefer high-end and quirky things. A pair of suitable old jeans from Levis or a pair of old sneakers from Nike can sell for thousands of dollars in Tokyo. They also like Disney. A good Mickey Mouse T-shirt can easily be sold at 10 times the price of a regular T-shirt.
From the Texas cotton fields, through manufacturing in China, to consumers in the U.S. and to Africa’s used clothing market, the T-shirt has ended its life. Rivoli uses a simple, everyday T-shirt as a lens through which to explore the business, economic, moral, and political complexities of globalization in a historical context. Everyone who is interested in international trade should read this book first.
