Sunday, April 03, 2005

Nostalgia and textile markets

Two stories this week talk about the prospects of El Salvador's foreign trade in two different areas of its economy. The Chicago Tribune carries a story about the hopes of small Salvadoran businesses that they will be able to export Salvadoran favorite foods like pupusas and horchata to their fellow countrymen now living in the United States. Such exports of the tastes of home are referred to as the "nostalgia market."

Salvadoran officials say that merely negotiating [CAFTA] opened trade channels that created opportunities. Some small businesses have already begun shipping corn tamales, pineapple-flavored semita pies and special black-clay pottery to the U.S., some of which are being sold in mainstream stores.

"The important thing is all these opportunities, not only for the large corporations, but little businesses too," said Yolanda Mayora de Gavidia, El Salvador's economy minister. "We have to have a clear vision about where are these products and niches through which we can compete in the market."

Hopes for the nostalgia market also fit nicely with a growing realization among Salvadorans that they need an alternative path to development that is not so dependent on textile assembly-for-export factories, cash sent home by immigrants and the traditional coffee crop.

The article notes, however, that there are practical obstacles for the small Salvadoran company hoping to develop an export business, even with the lowering of trade barriers. And one has to wonder whether US-based businesses could just as easily exploit this market, if it is so profitable.

The second article, from the New York Times, provides another assessment of how China is causing a dramatic loss of jobs in the textile maquiladora factories in El Salvador. The article makes the point that dollarization in El Salvador has made the country even less competitive in this sector:
So far, however, the end of the 1974 Multi-Fiber Agreement [which eliminated most quotas on textile exports from China] has hit hardest in El Salvador. Part of the reason, industry experts said, was that four years ago, this country adopted the dollar as its official currency, giving it no room to allow for a devaluation to keep exports competitive. As a result, it has the highest labor and transportation costs in the region.

Hiring days put a human face on the unfolding drama. Long employment lines were filled mostly with ragamuffin mothers who had not finished grade school. These were not new applicants, but seamstresses with years of experience, who spoke as if they had been hit by some storm that no one told them was coming.

Can the "nostalgia market" provide a job boost to offset the loss of textile jobs? It seems unlikely.

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