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Impact of the MFA phase-out on the world economy


  • Diao, Xinshen
  • Somwaru, Agapi


This study focuses on the possible impact of the MFA phase-out on the world economy. Starting from analyzing trends in world textile and apparel trade, the study found that the developing countries were a growing factor in world T&A trade in recent decades. Moreover, using trade data from 91 countries over 37 years, the study indicates a strong positive relationship between trade in textile and apparel and the standard of living. The study further focuses on the possible impacts of the MFA phase-out on the world T&A using an intertemporal, global general equilibrium model. The study found the the MFA phase-out would enlarge world trade of T&A and developing countries will further gain market share in world total exports. Even though the developing countries currently free from the MFA quota restraints may lose their market shares, as world T&A prices are lowered by improving the efficiency of world T&A trade post-MFA, consumers are better off by consuming cheap commodities.

Suggested Citation

  • Diao, Xinshen & Somwaru, Agapi, 2001. "Impact of the MFA phase-out on the world economy," TMD discussion papers 79, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:tmddps:79

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    References listed on IDEAS

    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    2. Frank A. Cowell, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 521-531.
    3. Adelman, Irma, 1984. "Beyond export-led growth," World Development, Elsevier, vol. 12(9), pages 937-949, September.
    4. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    5. Robinson, Sherman, 1989. "Multisectoral models," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 18, pages 885-947 Elsevier.
    6. Adelman, Irma, 1984. "Beyond export-led growth," CUDARE Working Paper Series 309, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
    7. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    8. Lofgren, Hans & El-Said, Moataz, 2001. "Food subsidies in Egypt: reform options, distribution and welfare," Food Policy, Elsevier, vol. 26(1), pages 65-83, February.
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    Cited by:

    1. Abraham, Vinoj & Sasikumar, S.K., 2010. "Labour Cost and Export Behaviour of Firms in Indian Textile and Clothing Industry," MPRA Paper 22784, University Library of Munich, Germany.
    2. Hudson, Darren & Ethridge, Don E. & Mutuc, Maria Erlinda M., 2011. "Lessons Learned from the Phase-out of the MFA: Moving from Managed Distortion to Managed Distortion," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization, Agricultural and Development Economics Division, vol. 12(1).
    3. Jean-Raphael Chaponniere & Jean-Pierre Cling & Mohamed Ali Marouani, 2004. "Les conséquences pour les pays en développement de la suppression des quotas dans le textile habillement : le cas de la Tunisie," Working Papers DT/2004/16, DIAL (Développement, Institutions et Mondialisation), revised Dec 2004.
    4. Irene Brambilla & Amit K. Khandelwal & Peter K. Schott, 2010. "China's Experience under the Multi-Fiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC)," NBER Chapters,in: China's Growing Role in World Trade, pages 345-387 National Bureau of Economic Research, Inc.
    5. Andriamananjara, Soamiely & Balistreri, Edward J. & Ross, Martin T., 2006. "State-level equity and the demise of the Agreement on Textiles and Clothing," The North American Journal of Economics and Finance, Elsevier, vol. 17(1), pages 17-33, March.
    6. Nabil Annabi & H. Khondker Bazlul & Selim Raihan & John Cockburn & Bernard Decaluwe, 2005. "Implications of WTO Agreements and Domestic Trade Policy Reforms for Poverty in Bangladesh: Short vs. Long Run," Working Papers MPIA 2005-02, PEP-MPIA.
    7. Khondker, Bazlul H. & Raihan, Selim, 2004. "Welfare and Poverty Impacts of Policy Reforms in Bangladesh: A General Equilibrium Approach," Centre on Regulation and Competition (CRC) Working papers 30588, University of Manchester, Institute for Development Policy and Management (IDPM).
    8. Peter Walkenhorst, 2004. "Liberalising Trade in Textiles and Clothing: A Survey of Quantitative Studies," International Trade 0401007, EconWPA.


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