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Effects Of Phasing Out Of Mfa Quotas On Indian Garment Exports, 1992-2003

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  • NARAYANAN, G. Badri

Abstract

We examine the impact of phasing out of MFA quotas on Indian garment exports as an example of competitive labour-intensive sector in an emerging market economy that has been recently facing removal of export restraints. We employ three different methodologies using a monthly data from 1992:11 to 2003:9: Perron’s (1989) methodology of testing for unit roots in the presence of trend break, split-sample test of trend-break hypothesis and intervention analysis. The major conclusion is that the WTO’s decision to phase out the MFA quotas has had a positive impact on the Indian Garment Exports. Perron’s trend break hypothesis does support this as a cause for change in intercept, while the split-sample analysis shows that there has been a structural transformation in terms of introduction of trend-stationarity in place of difference–stationarity. Intervention analysis shows that this effect has been positive, significant and long-lasting. This analysis implies that Indian apparel sector may benefit from the phasing out of MFA quotas.

Suggested Citation

  • NARAYANAN, G. Badri, 2008. "Effects Of Phasing Out Of Mfa Quotas On Indian Garment Exports, 1992-2003," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 8(1), pages 71-88.
    • Handle: RePEc:eaa:eerese:v:8:y2008:i:8_4
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    References listed on IDEAS

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    1. G. Badri Narayanan, 2007. "Effect of mergers on firm profits with trade liberalization: the role of technology," Applied Economics Letters, Taylor & Francis Journals, vol. 14(8), pages 607-610.
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    3. Wojciech W. Charemza & Derek F. Deadman, 1992. "New Directions In Econometric Practice," Books, Edward Elgar Publishing, number 84.
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    Keywords

    Country and Industry Studies of Trade; Economic Integration; Time Series Models;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • F1 - International Economics - - Trade

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