International Competition, Domestic Industrial Crisis, and the Strategies of Firms

Abstract

It has been argued that competitive firm strategies were indeed possible during the rise of the MFA accord, despite the competition from low-wage producers of textile and clothing products. This chapter will analyse the causes of the crisis in those advanced countries where the firms, despite the potential, failed to adapt. Thus the political economy of liberalisation began to work its way on the sector, the ‘feedback effect’ giving rise to defensive sectoral strategies aimed at adjusting the scope of international competition to the limits of the politically possible, rather than adjustment of the strategies of firms to the limits of the competitively successful. The state was permeated by particularistic interests which sought to structure the market in their own image.