Rent-sharing in the multi-fibre arrangement : evidence from U.S. - Hong Kong trade in apparel
AbstractThe Multi-Fibre Arrangement (MFA) restricts the access of developing country exporters to developed country markets. It is usually assumed that the exporting countries receive all of the economic rents that result from these import restrictions - making it unclear whether the developing countries gain or lose as a result of the MFA. Recent theoretical work on trade policy under imperfect competition casts doubt on whether exporting countries receive all of the quota rents arising from voluntary export restraints such as those applied by the MFA. Drawing on this theoretical literature, Erzan, Krishna, and Tan (1991) tested and rejected the hypothesis that MFA quota rents on exports from Hong Kong to the United States accrued in full to the Hong Kong exporters. The results in this paper build on that hypothesis-testing analysis and assess its implications for the returns to Hong Kong producers. Their results suggest that rent sharing is an extremely important feature of the market for apparel exports from Hong Kong. U.S. importers were estimated to receive rents that were about 62 percent of the landed price of the imports. The authors conclude that the total potential rents arising from the MFA were split unevenly between the U.S. and Hong Kong - with the U.S. share ranging from 47 percent for skirts to 94 percent for playsuits. If the results of this study are corroborated for other developing countries, the implications of the MFA for developing countries are considerably worse than has typically been assumed.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 1003.
Date of creation: 31 Oct 1992
Date of revision:
Economic Theory&Research; Access to Markets; Markets and Market Access; Health Economics&Finance; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT;
Find related papers by JEL classification:
- TF0 - - - - - -
- FUN - International Economics - - - - -
- OPE - Economic Development, Technological Change, and Growth - - - - -
- ADM - General Economics and Teaching - - - - -
- FEE - International Economics - - - - -
- INC - Health, Education, and Welfare - - - - -
- AND - General Economics and Teaching - - - - -
- EXP - Macroeconomics and Monetary Economics - - - - -
- ACC - General Economics and Teaching - - - - -
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Faini, R. & Melo, J. de & Takacs, W., 1992.
"A Primer on the MFA Maze,"
Research Papers by the Department of Economics, University of Geneva
92.15, Département des Sciences Économiques, Université de Genève.
- Irene Trela & John Whalley, 1988.
"Do Developing Countries Lose From the MFA?,"
NBER Working Papers
2618, National Bureau of Economic Research, Inc.
- Trela, I. & Whalley, J., 1988. "Do Developing Countries Lose From The Mfa?," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 8804c, University of Western Ontario, The Centre for the Study of International Economic Relations.
- Swan, Peter L, 1970. "Durability of Consumption Goods," American Economic Review, American Economic Association, vol. 60(5), pages 884-94, December.
- Hamilton, Carl, 1986. "An Assessment of Voluntary Restraints on Hong Kong Exports to Europe and the USA," Economica, London School of Economics and Political Science, vol. 53(211), pages 339-50, August.
- repec:fth:geneec:93.07 is not listed on IDEAS
- Goto, Junichi, 1989. "The Multifibre Arrangement and Its Effects on Developing Countries," World Bank Research Observer, World Bank Group, vol. 4(2), pages 203-27, July.
- Robert C. Feenstra, 1995.
"Estimating the Effects of Trade Policy,"
NBER Working Papers
5051, National Bureau of Economic Research, Inc.
- Robert Feenstra, 2004. "Estimating The Effects Of Trade Policy," Working Papers 9510, University of California, Davis, Department of Economics.
- Feenstra, R.C., 1995. "Estimating the Effects of Trade Policy," Papers 95-10, California Davis - Institute of Governmental Affairs.
- Feenstra, R.C., 1995. "Estimating the Effects of Trade Policy," Department of Economics 95-10, California Davis - Department of Economics.
- Jarvis, Lovell S., 2003. "How Brazil Transferred Billions To Foreign Coffee Importers: The International Coffee Agreement, Rent Seeking And Export Tax Rebates," Working Papers 11967, University of California, Davis, Department of Agricultural and Resource Economics.
- Bannister, Geoffrey J., 1993. "Rent-sharing in the multi-fibre arrangement : the case of Mexico," Policy Research Working Paper Series 1191, The World Bank.
- Jarvis, Lovell S., 2005. "The rise and decline of rent-seeking activity in the Brazilian coffee sector: Lessons from the imposition and removal of coffee export quotas," World Development, Elsevier, vol. 33(11), pages 1881-1903, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.