Used-Clothes Exports to the Third World: Economic Considerations

Abstract

Used clothes have to go somewhere, and commercial used clothes exports from industrial countries to LDCs have been growing rapidly, leading to public alarm. Used clothes have also been used as a form of commodity aid, similar to food aid. But used clothes are quite different from food, and deserve separate study. Both theoretical and empirical effects of commercial used clothes imports are examined, with somewhat ambiguous results: empirical studies show generally positive effects, while theory raises the possibility of significant damage. Subsidized deliveries targeted to those too poor to enter the market might reduce the risk of damage, but are more subject to neglect, theft and corruption. In addition, the cost of subsidies is generally greater than the welfare gain, and the cost of well-targeted subsidies would be greater still. The exception is catastrophe aid, in which supply would not exist without subsidized delivery.

JEL Classification: O19