Economic, Social, and Policy Determinants of EU-5 and American Apparel Imports: A Gravity Model Analysis

Both EU and USA are dominant apparel importers in the world. In 2006, the value of world’s apparel exports to them amounted to US$ 212 billion, which represented 80% of the world’s total apperel exports. Specifically, the apparel imports of the top five members of EU; namely, Germany, United Kingdom, France, Italy, and Spain, amounted to US$ 91 billion, accounting for 71% of the regoin’s total apperel imports. Using data from 1990 to 2006, this article investigates the country-specific factors that have impact on the apparel imports of EU-5 as well as USA, and their top five apperel suppliers. Panel data estimation approach is utilized with an exploration at the aggregate level. The results indicate strong support for the model with determinants including GDP, population growth rates, female employment, value added factors, and common membership. All these have positive effects. In contrast, distance, real exchange rates, and wages have negative influence on the expenditure patterns of EU-5 and USA consumers.