A formal estimation of the effect of the MFA on clothing exports from LDCs
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.
Economic Theory&Research,Environmental Economics&Policies,Access to Markets,Markets and Market Access,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT
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