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Estimating the Impact of WTO and Domestic Reforms on the Indian Cotton and Textile Sectors: a General‐Equilibrium Approach

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  • Aziz Elbehri
  • Thomas Hertel
  • Will Martin

Abstract

The agreement to abolish the quotas on textiles and clothing introduced under the Multi‐fiber Arrangement (MFA) will create a new and much more competitive world market for India's exports of textiles and clothing. India's inefficient and costly policies, such as cotton export quotas, the hank yarn obligation, and the restrictive policies on foreign investment that have held back productivity in the Indian apparel sector, will impose serious costs. The authors consider the implications of reforming these policies in an open trading environment using a multiregion, applied general‐equilibrium model. They find that the costs of these policies to India increase substantially following abolition of the MFA; the benefits to India from domestic reforms are considerably enhanced when there is global free trade in textiles and apparel.

Suggested Citation

  • Aziz Elbehri & Thomas Hertel & Will Martin, 2003. "Estimating the Impact of WTO and Domestic Reforms on the Indian Cotton and Textile Sectors: a General‐Equilibrium Approach," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 343-359, August.
    • Handle: RePEc:bla:rdevec:v:7:y:2003:i:3:p:343-359
    DOI: 10.1111/1467-9361.00195
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    References listed on IDEAS

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    1. Arndt, Channing, 1996. "An Introduction To Systematic Sensitivity Analysis Via Gaussian Quadrature," Technical Papers 28709, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Bach, Christian Friis & Ken Pearson, 1996. "Implementing Quotas in GTAP Using GEMPACK or How to Linearize an Inequality," GTAP Technical Papers 307, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Anderson, Kym & Dimaranan, Betina & Hertel, Thomas W & Martin, Will, 1997. "Economic Growth and Policy Reform in the APEC Region: Trade and Welfare Implications by 2005," CEPR Discussion Papers 1605, C.E.P.R. Discussion Papers.
    4. Christian Friis Bach & Betina Dimaranan & Thomas W. Hertel & Will Martin, 2000. "Market Growth, Structural Change, and the Gains from the Uruguay Round," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 295-310, May.
    5. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
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    Cited by:

    1. Nordås, Hildegunn Kyvik, 2004. "The global textile and clothing industry post the agreement on textiles and clothing," WTO Discussion Papers 5, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Mausumi Kar, 2012. "National and Global Aspects of India’s Textiles and Apparel Industry and Trade: An Overview," South Asian Journal of Macroeconomics and Public Finance, , vol. 1(1), pages 81-133, June.
    3. Kym Anderson & Ernesto Valenzuela & Lee Ann Jackson, 2007. "Recent and Prospective Adoption of Genetically Modified Cotton: A Global CGE Analysis of Economic Impacts," Centre for International Economic Studies Working Papers 2007-07, University of Adelaide, Centre for International Economic Studies.
    4. McDonald, Scott & Robinson, Sherman & Thierfelder, Karen, 2006. "Impact of switching production to bioenergy crops: The switchgrass example," Energy Economics, Elsevier, vol. 28(2), pages 243-265, March.
    5. Kym Anderson & Ernesto Valenzuela & Lee Ann Jackson, 2008. "Recent and Prospective Adoption of Genetically Modified Cotton: A Global Computable General Equilibrium Analysis of Economic Impacts," Economic Development and Cultural Change, University of Chicago Press, vol. 56(2), pages 265-296, January.
    6. Peter Walkenhorst, 2004. "Liberalising Trade in Textiles and Clothing: A Survey of Quantitative Studies," International Trade 0401007, University Library of Munich, Germany.
    7. Anup Kumar Bhandari, 2021. "Withdrawal of the multifibre agreement and Indian textile industry: Concerns, efforts, and achievements," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1397-1436, August.
    8. Kyvik Nord°as, Hildegunn., 2005. "Labour implications of the textiles and clothing quota phase-out," ILO Working Papers 993744523402676, International Labour Organization.
    9. Kathuria, Sanjay & Martin, Will & Bhardwaj, Anjali, 2001. "Implications for South Asian countries for abolishing the Multifibre Arrangement," Policy Research Working Paper Series 2721, The World Bank.
    10. repec:ilo:ilowps:374452 is not listed on IDEAS
    11. International Monetary Fund, 2005. "Crouching Tiger, Hidden Dragon: What Are the Consequences of China’s WTO Entry for India’s Trade?," IMF Working Papers 2005/101, International Monetary Fund.
    12. Cerra, Valerie & Rivera, Sandra A. & Saxena, Sweta Chaman, 2004. "Crouching Tiger, Hidden Dragon: What are the Consequences of China’s WTO Entry for India’s Trade?," Conference papers 331297, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Harrison, Jill W. & Horridge, J. Mark & Pearson, Ken, 2005. "Using GEMPACK Subroutines in your Fortran Programs," Conference papers 331348, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Aziz ELBEHRI, 2010. "MFA Quota Removal and Global Textile and Cotton Trade: Estimating Quota Trade Restrictiveness and Quantifying Post-MFA Trade Patterns," EcoMod2004 330600048, EcoMod.
    15. Faraz Lakhani & Anwar Ali shah G. Syed & Naveed Shaikh & Faiz. Shaikh, 2012. "Impact of WTO Reforms on Trade Agreements on Cotton and Clothing in Pakistan," Modern Applied Science, Canadian Center of Science and Education, vol. 6(12), pages 1-27, December.
    16. Badri Narayanan G. & Vasundhara Rungta, 2014. "Export Subsidy Reforms and Productivity Improvements: The Case of the Indian Textile and Clothing Sector," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 8(3), pages 327-352, August.
    17. Arief Anshory Yusuf, 2004. "Poverty and Environmental Degradation: Searching for Theoretical Linkages," Working Papers in Economics and Development Studies (WoPEDS) 200403, Department of Economics, Padjadjaran University, revised Oct 2004.

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