Abstract
Introduction
Literature Review
Theoretical Framework
Background of the Textile and Apparel Sector of Pakistan
Empirical Strategies
Empirical Findings
Conclusion
References
Abstract
This study investigates the impact of globalization (defined as phasing-out of the multifiber arrangements [MFA]/agreement on textile and clothing [ATC]) on working conditions of textile and apparel workers in general and female workers in particular in Pakistan. We found that the impact of the elimination of the MFA/ATC on workers of the textile and apparel sector is negative and statistically insignificant. The working conditions of workers in the textile and apparel sector are not different relative to other sectors. The working conditions of females deteriorated as a result of the phasing out of the MFA/ ATC in relation to the male working environment and compared with other industries. Our findings are robust in the sense that the direction of the impact remains the same and statistically significant even after performing sensitivity analysis. We also controlled for provincial heterogeneity, and the results showed minor correction in magnitude but remain negative and statistically significant. We also addressed treatment selection bias by performing propensity score analysis and found similar results.
Introduction
Globalization (or increasing global economic integration) is defined as a reduction in barriers to international flows (i.e., investment, trade, and migration) and a rise in international trade, investment, and migration across borders. These international flows affect workers directly and indirectly in both developed and developing economies. While a chunk of international trade and investment is between developed nations, globalization has expanded drastically in many developing nations. The merchandise trade to gross domestic product (GDP) ratio increased substantially in low- and middle-income economies between 1990 and 2003 based on the World Developed Indicators (WDI) database. Even some economies witnessed big changes in the ratio of trade in goods to their GDP. The world scenario of the textile and apparel trade changed considerably during the agreement on textile and clothing (ATC) and after elimination of the multifiber arrangements (MFA/ ATC). The performance of Asian economies changed significantly after the elimination of the MFA/ATC. The MFA/ ATC’s termination resulted in a dramatic redistribution of the provision of the world apparel production (Lopez-Acevedo & Robertson, 2012; Staritz, 2011). The impact of globalization on working conditions is inconclusive in existing empirical research and only a few studies systematically evaluate this impact either within or across nations (Brown, 2009). However, there is support for the proposition that those workers from industries with small wages and adverse non-monetary environment move to industries with comparatively higher wages and better nonmonetary working environment due to globalization (Jayasuriya, 2008). In reality, how trade liberalization affects working conditions also depends on the existing scenario of the economy. The impact of trade openness varies across industrial units, industries, and economies. The impact of globalization depends on the measure that is used for it, as different measures of globalization have different effects on the economy. Trade theories forecast that free trade will boost the nation’s working environment indirectly by raising its per capita income.