The U.S. furniture industry and its competitiveness in international markets

Mingyao Song, Purdue University

Abstract

The U.S. furniture manufacturing industry has a long history and developed clusters in many states. It has also played an important part in the world furniture market over decades. In this context, this thesis attempts to provide a quantitative and qualitative analysis of the current situation and international competitiveness of the U.S. furniture industry for the period 2000–2009. The general aim of this thesis is to present the background information including the strong presence of major economic entities in the global furniture industry and to analyze the U.S. furniture industry based on the economic theories of inter-industry and intra-industry trade. Data in this thesis was collected from secondary data sources. Collected data indicate that the global furniture industry had kept continuous growth through 2008, when it was impacted by the global financial crisis and started the downward trend. It also indicates that the U.S. furniture industry is in decline and losing global market. Indicators of U.S.'s furniture trade performance in terms of trade specialization index, export propensity, import penetration, and the ratio of exports to imports show that U.S. is a net-importer. This signifies a low degree of international trade competitiveness for U.S. furniture industry. The results of Balassa's revealed comparative advantage index and Vollrath's revealed competitive advantage indexes suggest that, among the furniture producing countries, U.S. does not have a comparative or competitive advantage in furniture. The standard Grubel-Lloyd index is used to examine the extent of intra-industry trade of U.S. and major world-furniture trading countries. The index is also applied to U.S.'s bilateral intra-industry trade in furniture with its major trading countries. The results indicate that the world furniture industry is more likely to be characterized by inter-industry trade, which is based on the significance of comparative advantage and factor endowments, rather than intra-industry trade. U.S. does not have a high level of intra-industry trade due to the fact that the values of U.S. furniture imports are very much higher than exports. The extent of bilateral intra-industry trade in furniture between U.S. and its major trading partners is also small except with Canada and Japan.

Degree

M.S.

Advisors

GAZO, Purdue University.

Subject Area

Forestry|Economics|Wood sciences

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