Thus, we observe that loss of employment in footwear has not been evenly distributed
amongst European countries. On the basis of the available data we find that those
countries which had the lowest levels of labour productivity in footwear at the start of
the period in 1970 experienced the sharpest falls in employment in footwear. In
addition, there is some indication that these countries have more widely adopted the
most recent technological advances that are relevant to the sector. We can, however, say
nothing about the direction of causality concerning these developments or the extent to
which the application of these technologies represents a response to more intense
international competition.
4.3 Quality Upgrading
We noted above that at the same time as import penetration ratios have increased so
have export to output ratios. This is not possible to reconcile with traditional trade
theory where products are assumed to be homogeneous wherever they are produced.
Clearly, with the magnitude of the wage differentials between the EU countries and the
developing countries, it is unlikely that EU producers could compete in the same market
segments. Thus, one response from EU producers to intense international competition
from low-wage countries would be to differentiate their product in terms of higher
quality and in terms of design and fashion. It is interesting to note that the success of
this response is likely to depend in part upon access conditions in other industrial
countries. The principal markets for high quality footwear will be the OECD countries.
Thus, in principal constraints upon exports of footwear to other OECD countries may
constrain adjustment to more intense competition from low-wage countries. Here the
role of regional integration may be important in the face of high barriers in other rich
country markets.
A recent survey of global buyers of footwear products (Schmitz and Knorringa (1999))
highlights the importance of innovative design in the ability of Italy to compete with
other countries who exhibit superiority in terms of price, such as China, India and
Brazil. This study also shows the importance of flexibility in meeting orders in
influencing buyers decisions. Italy’s leading position in the industry is maintained by
‘first, its innovative design capability, and second, its strong component industry’
((Schmitz and Knorringa (1999) p13) this is enhanced by fast response and high quality
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