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Export Quota Allocations, Export Earnings, and Market Diversification

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  • Bark, Taeho
  • de Melo, Jaime

Abstract

Non-tariff barriers (NTBs) present a growing threat to a liberal world-trading system and slow the reallocation of production of mature industries from developed to developing countries. Among NTBs, voluntary export restraints (VERs) are proliferating and constitute a major element of the"new protectionism". It has been repeatedly observed that export markets which are not currently part of the VER agreement often follow suit and enter into a VER agreement. Exporting countries may then wish to prepare themselves for this eventuality by actively promoting export diversification towards non-restricted countries as a precautionary measure against future restrictions. Section II of this paper briefly describes how export diversification is typically achieved. In Section III, a simple model is set up that analyzes the implications of the two tier quota allocation rule. Section IV briefly examines alternative instruments and motivations for achieving export diversification. Implications are also drawn for policy actions by nonrestricted countries and the suggestion made that the recent increase in anti-dumping cases may be linked to this two-tier quota allocation practice.
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Suggested Citation

  • Bark, Taeho & de Melo, Jaime, 1988. "Export Quota Allocations, Export Earnings, and Market Diversification," The World Bank Economic Review, World Bank, vol. 2(3), pages 341-348, September.
    • Handle: RePEc:oup:wbecrv:v:2:y:1988:i:3:p:341-48
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    References listed on IDEAS

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    1. Bhagwati, Jagdish N. & Srinivasan, T. N., 1976. "Optimal trade policy and compensation under endogenous uncertainty: The phenomenon of market disruption," Journal of International Economics, Elsevier, vol. 6(4), pages 317-336, November.
    2. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    3. Taeho Bark & Jaime Melo, 1987. "Export mix adjustment to the imposition of VERs: Alternative license allocation schemes," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 123(4), pages 668-678, December.
    4. McCulloch, Rachel & Johnson, Harry G, 1973. "A Note on Proportionally Distributed Quotas," American Economic Review, American Economic Association, vol. 63(4), pages 726-732, September.
    5. Aw, Bee Yan & Roberts, Mark J., 1986. "Measuring quality change in quota-constrained import markets: The Case of U.S. Footwear," Journal of International Economics, Elsevier, vol. 21(1-2), pages 45-60, August.
    6. Bhagwati, Jagdish N & Srinivasan, T N, 1980. "Revenue Seeking: A Generalization of the Theory of Tariffs," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1069-1087, December.
    7. Falvey, Rodney E, 1979. "The Composition of Trade within Import-restricted Product Categories," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1105-1114, October.
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    Cited by:

    1. Robert C. Feenstra, 1992. "How Costly Is Protectionism?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 159-178, Summer.
    2. Riccardo Faini & Jaime Melo & Wendy Takacs, 1995. "A Primer on the MFA Maze," The World Economy, Wiley Blackwell, vol. 18(1), pages 113-135, January.
    3. Takacs, Wendy E., 1991. "Domestic purchase requirements for import license allocations in Mali," Policy Research Working Paper Series 569, The World Bank.
    4. de Melo, Jaime & Winters, L Alan, 1990. "Voluntary Export Restraints and Resource Allocation in Exporting Countries," The World Bank Economic Review, World Bank, vol. 4(2), pages 209-233, May.
    5. Jun Lee & Miguel I. Gómez, 2013. "Impacts of the End of the Coffee Export Quota System on International-to-Retail Price Transmission," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 343-362, June.
    6. De Melo, Jaime & Winters, L. Alan, 1989. "Price and quality effects of VERs - revisited : a case study of Korean footwear exports," Policy Research Working Paper Series 216, The World Bank.

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