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A formal estimation of the effect of the MFA on clothing exports from LDCs

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  • Goto, Junichi

Abstract

This paper establishes a simple general equilibrium trade model to estimate the effects of the Multifibre Arrangement (MFA) on world trade in clothing, especially on exports from developing countries. The MFA greatly affects developing countries because the MFA restrictions are imposed discriminatively on the exports from developing countries. In 1988 Trela and Whalley estimated the welfare cost of the MFA to developing countries by using a rigorous general equilibrium framework. They showed that if the MFA were removed, the developing countries as a whole would gain by more than 3 billion dollars. In some sense the present paper is an extension of the Trela/Whalley paper, the main differences being : 1) the present paper incorporates in the model the additional realities like underutilization of quotas, 2) the emphasis of the present paper is placed on effects on trade and not on the effect of welfare, 3) the model developed in the present paper is much simpler than in the Trela Whalley one, and 4) product differentiation is more emphasized in the present paper.

Suggested Citation

  • Goto, Junichi, 1990. "A formal estimation of the effect of the MFA on clothing exports from LDCs," Policy Research Working Paper Series 455, The World Bank.
    • Handle: RePEc:wbk:wbrwps:455
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    References listed on IDEAS

    as
    1. Irene Trela & John Whalley, 1988. "Do Developing Countries Lose From the MFA?," NBER Working Papers 2618, National Bureau of Economic Research, Inc.
    2. Goto, Junichi, 1989. "The Multifibre Arrangement and Its Effects on Developing Countries," The World Bank Research Observer, World Bank, vol. 4(2), pages 203-227, July.
    3. 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.
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    Cited by:

    1. Erzan, Refik & Holmes, Christopher, 1992. "The restrictiveness of the multi-fibre arrangement on Eastern European trade," Policy Research Working Paper Series 860, The World Bank.
    2. Mausumi Kar, 2012. "National and Global Aspects of India’s Textiles and Apparel Industry and Trade: An Overview," South Asian Journal of Macroeconomics and Public Finance, , vol. 1(1), pages 81-133, June.
    3. Ben Bassem, 2009. "The Impact of the Removal of the Multi-Fiber Arrangements on Tunisian Textile and Clothing Exports," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(1), pages 206-219, May.

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