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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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    1. Cable, Vincent, 1987. "Textiles and Clothing in a New Round of Trade Negotiations," World Bank Economic Review, World Bank Group, 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.
    3. Dawkins, Christina & Srinivasan, T.N. & Whalley, John, 2001. "Calibration," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 58, pages 3653-3703 Elsevier.
    4. 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 339-350, August.
    5. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-1051, September.
    6. Carl B. Hamilton, 1988. "Restrictiveness and International Transmission of the "New" Protectionism," NBER Chapters,in: Issues in US-EC Trade Relations, pages 201-230 National Bureau of Economic Research, Inc.
    7. Glenn Jenkins, 1985. "Costs And Consequences Of The New Protectionism: The Case Of Canada’S Clothing Sector," Development Discussion Papers 1985-04, JDI Executive Programs.
    8. John Whalley, 1984. "Trade Liberalization among Major World Trading Areas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262231204, March.
    9. 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. 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. De Santis, Roberto A., 1997. "Why exporting countries agree voluntary export restraints: The oligopolistic power of the foreign supplier," Kiel Working Papers 841, Kiel Institute for the World Economy (IfW).
    4. 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. 0(Issue 1), pages 1-26.
    5. 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.
    6. 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.
    7. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, International Agricultural Trade Research Consortium.
    8. Peter Walkenhorst, 2004. "Liberalising Trade in Textiles and Clothing: A Survey of Quantitative Studies," International Trade 0401007, University Library of Munich, Germany.
    9. 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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