NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Internal Quota Allocation Schemes and the Costs of the MFA

Irene Trela, John Whalley

NBER Working Paper No. 3627
Issued in February 1991
NBER Program(s):ITI, IFM

This paper suggests that schemes used within developing countries to allocate textile export quota among domestic producers typically have more severe negative effects on developing country economic performance than the MFA export quotas themselves. We summarize allocation schemes in 17 countries, highlighting common 'lock-in' and 'rent dissipation' effects of such schemes. We then use a global general equilibrium model to evaluate the effects of MFA removal with and without these additional effects. Results indicate that estimates of gains to developing countries from an MFA removal are larger and by significant orders of magnitude (we suggest a factor of 8) when internal quota allocation schemes are also included. Removing the negative effects of quota allocation schemes thus seems to clearly dominate traditional access benefits to developing countries from MFA removal.

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Document Object Identifier (DOI): 10.3386/w3627

Published: Trela, Irene & Whalley, John, 1995. "Internal Quota-Allocation Schemes and the Costs of the MFA," Review of International Economics, Blackwell Publishing, vol. 3(3), pages 284-306, October. citation courtesy of

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