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Internal Quota Allocation Schemes and the Costs of the MFA

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  • Irene Trela
  • John Whalley

Abstract

This paper suggests that schemes used within developing countries to allocate textile export quota among domestic producers typically have more severe negative effects on developing country economic performance than the MFA export quotas themselves. We summarize allocation schemes in 17 countries, highlighting common 'lock-in' and 'rent dissipation' effects of such schemes. We then use a global general equilibrium model to evaluate the effects of MFA removal with and without these additional effects. Results indicate that estimates of gains to developing countries from an MFA removal are larger and by significant orders of magnitude (we suggest a factor of 8) when internal quota allocation schemes are also included. Removing the negative effects of quota allocation schemes thus seems to clearly dominate traditional access benefits to developing countries from MFA removal.

Suggested Citation

  • Irene Trela & John Whalley, 1991. "Internal Quota Allocation Schemes and the Costs of the MFA," NBER Working Papers 3627, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3627
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    References listed on IDEAS

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    1. Cable, Vincent, 1987. "Textiles and Clothing in a New Round of Trade Negotiations," The World Bank Economic Review, World Bank, vol. 1(4), pages 619-646, September.
    2. Trela, I. & Whalley, J., 1989. "Unravelling The Threads Of The Mfa," Papers 448, Stockholm - International Economic Studies.
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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. Spencer, Barbara J., 1997. "Quota licenses for imported capital equipment: Could bureaucrats ever do better than the market?," Journal of International Economics, Elsevier, vol. 43(1-2), pages 1-27, August.
    3. Roberto A. De Santis, 2003. "Why exporting countries agree to voluntary export restraints: the oligopolistic power of the foreign supplier," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(3), pages 247-263, August.
    4. McDonald, Scott & Sonmez, Yontem & Perraton, Jonathan, 2006. "Labour Migration and Remittances: Some Implications of Turkish Workers in Germany," Conference papers 331524, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Anderson, Kym & Dimaranan, Betina V. & Hertel, Thomas W. & Martin, William J., 1997. "Asia-Pacific food markets and trade in 2005: a global, economy-wide perspective," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(1), pages 1-26.
    6. Daqing Yao & John Whalley, 2015. "Assessing the Effects of the MFA/ATC from US and World Trade Data after Its Removal," NBER Working Papers 21299, National Bureau of Economic Research, Inc.
    7. Shumei Gao & Jihe Song, 2004. "Quota Use under VERs: A theoretical framework and some evidence on MFA quota use," Working Papers E03, Department of Economics, School of Management and Languages, Heriot Watt University.
    8. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, International Agricultural Trade Research Consortium.
    9. Peter Walkenhorst, 2004. "Liberalising Trade in Textiles and Clothing: A Survey of Quantitative Studies," International Trade 0401007, University Library of Munich, Germany.
    10. Tamara Todorova & Georgi Kalchev, 2015. "The Protective Effect of an Import Quota," Foreign Trade Review, , vol. 50(2), pages 85-98, May.
    11. Skully, David W., 2001. "Economics of Tariff-Rate Quota Administration," Technical Bulletins 184332, United States Department of Agriculture, Economic Research Service.

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