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The Effects of Trade Liberalization in Textiles and Clothing on the Greek Market for Cotton Yarn: A Multi-Market Analysis

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  • Dimitrios, Dadakas
  • Stelios, Katranidis D.

Abstract

The Round of Uruguay (1987-1995) signaled the end of the Multi Fiber Agreement (MFA) for textiles and clothing. The quota regime, in place since 1974, was decided, according to the Agreement on Textiles and Clothing (ATC; 1995), to be gradually eliminated by the year 2005. As a result, prices of cotton yarn in the world markets decreased affecting producers in all cotton yarn exporting countries, including Greece. At the same time, the labor cost in the western industrialized countries remained high, or even increased, exerting further pressure on yarn producers. The present paper examines these changes for the cotton yarn industry in Greece, the sector under consideration in this paper. We use a multi-market partial equilibrium model which allows us to take into account input and output price changes, relevant for the industry under study. Using line integral theory, Seemingly Unrelated Regressions (SUR) with restrictions (IZEF) and non-parametric bootstrap we estimate the welfare effects to producers and consumers. Findings show that the gradual elimination of quotas had a substantial negative effect on the welfare of cotton yarn producers while consumers' welfare has been affected in a positive manner.

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  • Dimitrios, Dadakas & Stelios, Katranidis D., 2006. "The Effects of Trade Liberalization in Textiles and Clothing on the Greek Market for Cotton Yarn: A Multi-Market Analysis," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25779, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25779
    DOI: 10.22004/ag.econ.25779
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    1. Dimitrios Dadakas & Stelios D. Katranidis, 2011. "Perspectives for the textiles and clothing industry in Greece: Past experience, outlook and policy implications," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 61(1-2), pages 13-38, January -.
    2. Florence Oluremi Okeowo & Rafiu Adewale Aregbeshola, 2018. "Trade Liberalization and Performance of the Nigerian Textile Industry," Journal of Economics and Behavioral Studies, AMH International, vol. 10(2), pages 33-47.
    3. Damoun Ashournia & Per Svejstrup Hansen & Jonas Worm Hansen, 2013. "Trade Liberalization and the Degree of Competition in International Duopoly," Review of International Economics, Wiley Blackwell, vol. 21(5), pages 1048-1059, November.
    4. Dimitrios Dadakas & Stelios D Katranidis, 2009. "Trade Liberalization in T&C: An Overview of the Welfare Effects," Discussion Paper Series 2009_15, Department of Economics, University of Macedonia, revised Nov 2009.
    5. Bullock, David S. & Dadakas, Dimitrios & Katranidis, Stelios D., 2009. "Measuring the Effects of Technology Change in Multiple Markets : Application to the Greek Cotton Yarn Industry," MPRA Paper 67204, University Library of Munich, Germany, revised 2012.

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