Effects of the multifibre arrangement on developing countries' trade : an empirical investigation

Abstract

This paper addresses two issues: (i) the extent of the restrictiveness/effectiveness of the Multifibre Arrangement (MFA) with respect to the developing country suppliers of textile products during the 1980s, and (ii) the extent to which these restrictions yield trade gains for the less established developing suppliers. After analyzing data, the author's made the following conclusions. Rather than ease up, the MFA became more restrictive. Proportionately more shipments were subject to quotas and volume generally grew less where quotas were binding. The unit value of shipments subject to binding quotas also increased substantially more than the unit value of unconstrained items. Developing countries that were new exporters of textile products also hoped to capture a larger share of the textile market as a result of quotas for other developing countries. However, the needy countries have benefited little from the MFA, and countries whose exports grow soon find themselves on the restricted list. Finally, domestic producers in the United States have benefited most from the MFA.

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