The Role of Technology in the Philippine's Textile Industry

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By: Janina Mae Almirez
Industrial Analysis
International Master of Business Administration
Chung Yuan Christian University
November 15, 2012

ABSTRACT

The rise of globalization has shifted the manufacturers of textile and apparel to many different parts of the world in search for cheaper labor and maximization of profits. Trade liberalization also means that the world can be your market, and that everyone can be your competitor. We examine the current state of the Philippine textile industry in this context, and the role that technology plays in an industry that is struggling to survive in the face of stifling competition. The Philippines textile industry has suffered steady decline in the past several decades despite starting out strong in its early stages. This study aims to explore the potential for growth of the Philippine’s textile industry given a boost in more advanced technology and innovation. The author focuses on technology because this is the one thing that other countries have already adopted, and with which the Philippines has still yet to fully embrace, partly due to lack of funding and government support. This study will look at the Philippine textile industry’s production output from the year 2000-2010, and aims to establish a relationship between the production volume and the number of patents awarded to innovators within the Philippines, which will be used as a measure of the country’s technological advancement. This research used regression analysis and utilized the Auto Correlation and Ordinary Least Squares Method. The findings show that the patents data may not be a reliable measure of technological advancement, as the results did not support the theoretical framework that production is positively correlated to technological input. The lack of statistical evidence supporting the expected positive relationship between these variables may also be due to the prevalence of other more significant factors including trade policies, government support or lack thereof, and market forces both from within the country and the global market. If this dying industry is to be resuscitated, it is important to still consider boosting technology through research and development, and importation of machineries and technological expertise which will lead to higher production capabilities.

KEYWORDS: Philippines, textile industry, garments, apparel, technology, innovation, synthetic fiber, patents, fabric technology

INTRODUCTION

The textile industry is an age-old industry which makes up an integral part of any economy, whether it is being produced locally or being imported, not only because of its economic relevance, but also because of its social significance in providing one of the basic needs of society, that is, clothing. This is as important to our society as providing food and shelter. The textile industry also plays a vital role in most country’s journey towards industrialization. It is widely known that the Industrial Revolution in Europe, North America, and Japan was made possible by the rise of several key industries, the first of which is the textile industry. Other less developed countries wanting to follow in the footsteps of these industrialized nations know that giving importance to essential industries such as this could become a launching pad for their own economic growth. Due to its labor-intensive nature, textile and apparel firms from developed countries like Europe and North America has transferred its operations to less-developed countries in Southeast Asia in pursuit of cheaper labor markets. Southeast Asian countries have already begun to benefit from the globalization of the world’s textile and garments industry, making them the recipient of outsourced job opportunities encouraged by their cheap wages. One would come to expect that the Philippines has a very strategic position in the advent of globalization as it is in the heart of Southeast Asia, has rich natural resources...
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