How Nobel Economics Can Impact the Textiles Sector
October 15, 2021 On Oct. 11, the Royal Swedish Academy of Sciences announced the Nobel Prize in Economics, recognizing the power of real-world data.
Professors David Card, Joshua Angrist and Guido Imbens were awarded the Economics prize for their work related to natural experiments involving empirical data in analyzing markets such as labor.
Natural experiments are those that happen due to policy interventions such as imposing minimum wage, tariffs, and other factors, and can serve as useful alternatives to randomized trials to analyze cause and effects such as the growth of industrial sectors. This field came to prominence in the early 1990s due to the efforts of economists Alan Krueger and David Card.
Sectors like textiles, agriculture, food service, and domestic service are labor intensive and can benefit from empirical and behavioral economics. Analyzing empirical data rather than theoretical modeling will be more ideal in suggesting changes to grow the sectors, as was the case of the Nobel winning work of this year’s laureates.
The textile sector is dependent on discretionary spending power, socio-economic conditions, and cultural preferences. Therefore, analysis of big data on the spending pattern will help the industry plan its growth, particularly now when raw material prices are high and the growing power crisis in China and India – which are major textile manufacturing hubs – continues to grow.
In recent years, the use of data and empirical modeling have been helpful in predicting the growth of the Indian technical textiles sector. In 2008, I predicted the growth of this industry to be in double digits based on GDF growth rate and per capita income in India compared with the United States. The work resulted in the report “India Rising: Opportunities in Nonwovens and Technical Textiles.”
The empirical modeling as advocated by this year’s Nobel work showcased the growth pattern of India’s technical textiles sector, which was later validated by actual data for the following years.
Interestingly, this year’s Nobel prizes in Medicine, Physics and Economics provide ample clues for the textile and allied sectors in terms of planning and developing new products such as sustainable and green textiles.
The textiles sector will benefit from the gathering of reliable data and undertaking credible analysis such as price, consumer trends, and manufacturing costs with and without policy interventions to chart its next course.
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