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Effects Of Phasing Out Of Mfa Quotas On Indian Garment Exports, 1992-2003

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Author Info
NARAYANAN, G. Badri ()

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Abstract

We examine the impact of phasing out of MFA quotas on Indian garment exports as an example of competitive labour-intensive sector in an emerging market economy that has been recently facing removal of export restraints. We employ three different methodologies using a monthly data from 1992:11 to 2003:9: Perron’s (1989) methodology of testing for unit roots in the presence of trend break, split-sample test of trend-break hypothesis and intervention analysis. The major conclusion is that the WTO’s decision to phase out the MFA quotas has had a positive impact on the Indian Garment Exports. Perron’s trend break hypothesis does support this as a cause for change in intercept, while the split-sample analysis shows that there has been a structural transformation in terms of introduction of trend-stationarity in place of difference–stationarity. Intervention analysis shows that this effect has been positive, significant and long-lasting. This analysis implies that Indian apparel sector may benefit from the phasing out of MFA quotas.

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Article provided by Euro-American Association of Economic Development in its journal Regional and Sectoral Economic Studies.

Volume (Year): 8 (2008)
Issue (Month): 1 ()
Pages: 71-88
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Handle: RePEc:eaa:eerese:v:8:y2008:i:8_4

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Related research
Keywords: Country and Industry Studies of Trade; Economic Integration; Time Series Models;

Find related papers by JEL classification:
C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
F1 - International Economics - - Trade

References listed on IDEAS
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  1. G. Badri Narayanan, 2006. "Effects of trade liberalization on firm profits and social welfare: the role of technology," Applied Economics Letters, Taylor and Francis Journals, vol. 13(1), pages 63-66, January. [Downloadable!] (restricted)
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