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The End of the Multifibre Arrangement (MFA) and the Heterogeneous Performance of Quota-Constrained Countries

  • Gebreeyesus M.

    (UNU-MERIT)

On 1 January 2005, the international trade in textile and clothing was freed from the quota restrictions that had persisted for more than four decades. This study tests one of the predictions that countries effectively constrained by quotas in the major world markets will increase their exports at the expense of non-quota-constrained suppliers. The focus is on clothing imports of the two major markets, the US and EU-15. These markets are separately analysed as they constitute different lists of quota-constrained countries, QCCs. Unlike others, this study uses a relatively longer data set of post-quota years, which allows us to understand the medium-termadjustment process of exporters following quota removal. We find a large amount ofheterogeneity among the QCCs in their post-quota export performance. Only a few QCCs have benefited at the expense of not only the non-quota countries but also fellow QCCs. The estimates show that almost half of the QCCs were better off under the quota regime at least in terms of exports. The factors most likely to have influenced their heterogeneous performance are also examined.

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Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 035.

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Date of creation: 2013
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Handle: RePEc:unm:unumer:2013035
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  1. María Inés Terra, 2003. "Trade Liberalization in Latin American Countries and the Agreement on Textiles and Clothing in the WTO," Economie Internationale, CEPII research center, issue 94-95, pages 137-154.
  2. Wolfers, Justin, 2003. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," Research Papers 1819, Stanford University, Graduate School of Business.
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  8. 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 1105-14, October.
  9. Arvis, Jean-François & Duval, Yann & Shepherd, Ben & Utoktham,Chorthip, 2013. "Trade costs in the developing world : 1995 - 2010," Policy Research Working Paper Series 6309, The World Bank.
  10. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
  11. MacDonald, Stephen & Pan, Suwen & Somwaru, Agapi & Tuan, Francis C., 2004. "China'S Role In World Cotton And Textile Markets," 2004 Annual meeting, August 1-4, Denver, CO 20054, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  12. Jeffrey M. Wooldridge, 2005. "Fixed-Effects and Related Estimators for Correlated Random-Coefficient and Treatment-Effect Panel Data Models," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 385-390, May.
  13. Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-34, November.
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