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The rise and sudden decline of North Carolina furniture making

Summary:
John Mullin in this new Richmond Fed research article: It happened so quickly. In just 10 years, between 1999 and 2009, North Carolina’s furniture manufacturing industry lost more than half of its jobs. The chief culprit was increased competition from lower-cost furniture imported from Asia — mostly China. The U.S.-China Bilateral WTO Agreement, signed in November 1999, had opened the door to Chinese imports by lowering U.S. tariff barriers and easing the way for China to join the World Trade Organization (WTO). At the time, proponents of the agreement predicted that it would have a relatively modest effect on U.S. manufacturing imports and jobs. Studies of the subsequent history, however, strongly suggest that these predictions were incorrect. Increased imports from China turned out

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John Mullin in this new Richmond Fed research article:

It happened so quickly. In just 10 years, between 1999 and 2009, North Carolina’s furniture manufacturing industry lost more than half of its jobs. The chief culprit was increased competition from lower-cost furniture imported from Asia — mostly China. The U.S.-China Bilateral WTO Agreement, signed in November 1999, had opened the door to Chinese imports by lowering U.S. tariff barriers and easing the way for China to join the World Trade Organization (WTO). At the time, proponents of the agreement predicted that it would have a relatively modest effect on U.S. manufacturing imports and jobs. Studies of the subsequent history, however, strongly suggest that these predictions were incorrect. Increased imports from China turned out to have a major effect on U.S. manufacturing jobs and a particularly devastating effect on furniture manufacturing in North Carolina.

One of the story’s wrinkles is that the influx of Chinese imports had not been initiated by Chinese industrialists but rather by the North Carolina industry’s own leaders, who had sought cost advantages that could put them ahead in what has historically been, and remains to this day, a highly competitive industry. Another wrinkle is that, by undercutting North Carolina’s furniture manufacturing base with Chinese imports, they were replicating a pattern that had played out during the 20th century, when the North Carolina industry successfully competed with the furniture manufacturing industries of New England and Michigan.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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