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Future Prospects of the Garment Industry of Cambodia

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Abstract

This paper examines the impact of the participation of Vietnam to WTO as well as of the abolition of restrictions on Chinese exports of textiles and clothing to the US and EU on the Cambodian Economy, by using a computable general equilibrium model. A seminal aspect of this paper is that this paper has succeeded in constructing a Cambodia specific computable general equilibrium model by using one of the first ever input-output tables of Cambodia with 35 different production sectors. One of our most striking simulation results is that the welfare loss would be about 905 million US dollars when either the amount of exports of apparel products from Cambodia or the amount of imports of textiles to Cambodia decreases by 30 percent caused by the participation of Vietnam to WTO as well as the abolition of restrictions on Chinese exports. Another striking result is that the government should reduce the production tax rate for the apparel sector by 68.1 percent in order to keep the welfare of Cambodia unchanged when exports of apparel products decreases by 30 percent. Our simulation results predict that the Cambodian economy has substantially been damaged by the participation of Vietnam to WTO as well as the abolition of restrictions on Chinese exports to EU and the US.

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File URL: http://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2009_12.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Research Institute, International University of Japan in its series Working Papers with number EMS_2009_12.

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Length: 78 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:iuj:wpaper:ems_2009_12

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Keywords: Cambodia; Computable General Equilibrium (CGE) Model; Garment Industry; WTO; Textile; Clothing; Apparel; China; Vietnam; Safeguard Restrictions; Multi-Fiber Arrangement (MFA);

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References

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  1. John Whalley, 2006. "The Post MFA Performance of Developing Asia," NBER Working Papers 12178, National Bureau of Economic Research, Inc.
  2. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521319867, October.
  3. Yamagata, Tatsufumi, 2006. "The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development," IDE Discussion Papers 62, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  4. Montfort Mlachila & Yongzheng Yang, 2004. "The End of Textiles Quotas: A Case Study of the Impact on Bangladesh," IMF Working Papers 04/108, International Monetary Fund.
  5. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335, янваÑ.
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Cited by:
  1. Pisey Khin & Ryuta Ray Kato, 2010. "The Impact of the Global Economic Crisis on Cambodia," Economics Bulletin, AccessEcon, vol. 30(3), pages 2346-2370.

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