Fashion and Economics

1. Fashion and Economics

2. Globalization and Fashion • Globalization – the increasing integration of the world economy. • countries no longer limited by their own borders. • technological advances – has helped improved worldwide communication systems, such as the internet.

3. Global Competition • Globalization has created increased competition between countries in the manufacturing sector of fashion. • labor is a major component of cost production. • countries with lower wages have an advantage over countries with higher wages.

4. Balance of Trade • Imports – goods that come into a country from foreign sources or goods that a country buys from other countries. • U.S. is the largest consumer market of apparel goods in the world.

5. Balance of Trade • Exports – goods that a country sends to a foreign source or goods that a country sells to other countries. • Balance of Trade – the relationship between a country’s imports and exports, and how it affects the economic health of a country.

6. Balance of Trade • Trade deficit – occurs when a country imports more goods than it exports. • Trade surplus – occurs when a country sells more goods to other countries than it buys.

7. Trade Agreements and Restrictions • Free Trade – exists when a government allows products to move freely across its borders. • U.S. had formed many trade agreements to improve the flow of goods with its trading partners.

8. NAFTA • North American Free Trade Agreement (NAFTA) – between the U.S. Mexico, and Canada is an example of a free-trade agreement. • Goal: to enable all countries to experience free trade by eliminating or reducing tariffs, or fees, for trading goods. • to resolve conflicts, international agreements restrict the quantities of textiles and apparel traded.

9. WTO • World Trade Organization (WTO) – an international organization that promotes and enforces trade laws and regulations. • formed in 1995, currently has 145 member countries from around the world • agreements reduce barriers to trade

10. International Fashions • Technology has increased communication around the world. • Many companies place their orders over the internet. Example: A garment in a boutique on Rodeo Drive in Beverly Hills • Produced in China with fabric from India and buttons from Bali • Designed by a designer in France • Modeled on the runways in Milan, Italy, and Paris, France. • Purchased by a customer in New York City to wear at a trendy party.

11. Impact on Domestic Economy • American Textile Manufacturers Institute (ATMI) – states that the U.S. consumers spend $275 billion every year on apparel. • 3 billion slacks or pants • 5.7 billion shirts or blouses • 370 million sweaters

12. Supply and Demand The law of Supply and Demand affects pricing in the fashion industry. • The relationship of these factors results in the prices people are willing to pay for various products producers are willing to make.

13. Supply and Demand • supply - the quantity of a product offered for sale at all possible prices. • demand – the consumer’s willingness and ability to buy and/or use products. • surplus – supply exceeds demand • shortage - demand exceeds supply • equilibrium – supply equals demand

14. Profit • Profit – the money a business makes after all costs and expenses are paid. • this is the motivation to do business.

15. Employment in the Fashion Industry • Apparel businesses in the U.S. employ over 1.3 million • The textile industry is one of the largest segments on the manufacturing industry. • Trade quotas – restrictions on the amount of a particular good or service that a country is allowed to sell or trade.