LAUSR

This article explores how firms in the textile and garment industry in Brazil are responding to trade liberalisation and the entry of multinational retailers into the Brazilian market. We analyse the competitive responses of local garment firms and, relatedly, how these responses are impacting on the industry's use of water. We show that the effects of trade liberalisation on the strategies of local firms and the use of natural resources are dependent upon the prior capacity of local actors to mobilise financial and human resources. In our case, contrary to the 'pollution havens' hypothesis, there is no indication that the regulatory framework has been downgraded to attract multinational companies (MNCs) or to help local firms cope with international competition. We claim that races to both the top and bottom are taking place as responses to the new competitive conditions.