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Asia's Race to Capture Post-MFA Markets: A Snapshot of Labor Standards, Compliance, and Impacts on Competitiveness

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  • Yana van der Meulen Rodgers
  • Gunseli Berik

Abstract

Labor regulations designed to protect workers, promote workplace equality, and improve working conditions achieve social objectives and affect international competitiveness. Considering these dual outcomes has taken on added urgency as Asian economies adjust to an increase in global competition in textiles and clothing following the end of the Multi-Fiber Agreement, with large projected gains for China and potential losses for other Asian producers. Countries that stand to lose from the MFA phase-out face China’s low cost and high quality production. This paper shows that China’s competitive threat lies in its extremely poor compliance record with its own and international labor standards. Yet empirical evidence generally supports the argument that the costs of raising and enforcing labor standards are offset by dynamic efficiency gains and macroeconomic effects. This evidence supports the case for Asian economies to pursue the “high road” in their race to capture post-MFA markets in textiles and clothing.

Suggested Citation

  • Yana van der Meulen Rodgers & Gunseli Berik, 2006. "Asia's Race to Capture Post-MFA Markets: A Snapshot of Labor Standards, Compliance, and Impacts on Competitiveness," Working Paper Series, Department of Economics, University of Utah 2006_02, University of Utah, Department of Economics.
  • Handle: RePEc:uta:papers:2006_02
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    Cited by:

    1. Rene Ofreneo, 2012. "Philippine Garments in the Post-MFA Era: Seeking Protection via Free Trade?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(3), pages 83-102, October.
    2. Bala Ramasamy & Matthew Yeung, 2008. "Does China have a competitive advantage in the low-end garment industry? A case study approach," STUDIES IN TRADE AND INVESTMENT,in: Unveiling Protectionism: Regional Responses to Remaining Barriers in the Textiles and Clothing Trade United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    3. Sak Sambath & Ryuta Ray Kato, 2009. "Future Prospects of the Garment Industry of Cambodia," Working Papers EMS_2009_12, Research Institute, International University of Japan.

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    Keywords

    Post-MFA; Asian Markets; Labor Standards;

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