Forecasting Cotton Demand in China and India

China and India, which account for approximately one-third of the world’s population, have seen dramatic increases in per-capita incomes. Macroeconomic projections call for economic growth to continue for the foreseeable future. Increasing income levels will spur additional purchases of textile and apparel products. This paper will explore the demand-income relationships in both countries by estimating income elasticities using various measures of retail consumption and alternate functional forms. The implications of future demand growth will also be investigated, particularly as it relates to global demand, net trade and prices.