Trade Liberalization and Market Competitiveness of the Colombian Apparel Industry

The liberalization of Colombia's economy, accelerated by former President Cesar Gaviria's apertura (opening) process in 1990, has achieved a number of far-reaching reforms that have positively impacted the sector. Using the apparel industry as a case study, the authors determine the degree to which Colombia has pursued (public policy facilitation) versus (market forces alone) strategies of economic adjustment and liberalization. In addition, they analyze the political and economic variables that have shaped Colombia's global competitiveness in textiles and apparel. The symbiotic dynamism among macro and microeconomic reforms, liberalization, and the compelling forces of globalization are altering the content, shape, and pace of Latin American development and the region's extraregional relationships. Given the great significance of the first Summit of the Americas in 1994 and the agreement to forge a Free Trade Area of the Americas (FTAA) by 2005, trade (implying finance, investment, and commerce as well) has emerged as the centerpiece for economic development and advancement in the Americas. This article presents and analyzes the intersection of the above-mentioned developments, as illustrated within one country Colombia -- and within one industry in that country -- the apparel industry -- in order to illuminate how both selected public policy choices and external factors impact economic competitiveness. The authors also seek to determine, using the apparel industry example, the degree to which Colombia has pursued a versus a strategy of economic adjustment and liberalization (Wise 1999). The competitive approach actively utilizes a range of public policies to facilitate adjustment and correct for any failures or shortcomings of the market (for example, the strategy used in Chile), whereas the standard strategy assigns the task of economic adjustment to market forces alone (for example, the case of Argentina). The article also documents the strategic and managerial response of the apparel industry to local, regional and global change. Trade Liberalization. Prior to the 1980s, market economies with minimal state intervention and liberal democracies were the exception and not the rule worldwide. In the 1980s, the process of transnationalization and increasing interdependence, along with the revival of liberal (orthodox) capitalism, created the opportunity and the necessity to establish liberal economic regimes -- not only in the advanced industrial nations but also in those countries where democratization had not been a prerequisite for economic growth and stability. Through the 1990s, an outward-oriented model of expanded in the Western Hemisphere, as cited above. Essentially, Latin American policymakers have relied on one of two models of economic and development. As Carol Wise (1999) points out, the first is a standard approach (mentioned previously in the cases of Mexico, Argentina, and Peru), whereby market forces direct the adjustment and competitive liberalization policies are implemented. The second is a competitive approach (as taken in Chile), in which countries use public policy in the process of adjustment -- for example, tax and credit incentives for smaller trading companies, export promotion, and job training programs. By exerting a leading role, the state actively establishes a developmental model for institutionalizing the liberalization process. Regional and subregional integration in the Western Hemisphere have increased, widened, and deepened during the last two decades. In the mid-1980s, Argentina and Brazil initiated negotiations for what would become the Southern Common Market (Mercado Comun del Sur -- MERCOSUR) Agreement that came into effect in 1995. In 1994, Canada, Mexico, and the United States created the North American Free Trade Agreement (NAFTA), the world's largest free area; members of the Andean Group solidified their trading arrangements; and, in subsequent years, more than two dozen bilateral and multilateral accords have proliferated throughout the Western Hemisphere. …

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