Effects of Phasing Out of Mfa Quotas on Indian Garment Exports, 1992-2003

• Badri G. Narayanan ^[1]
  1. [1] Purdue University

     Purdue University

     Township of Wabash, Estados Unidos

     
• Localización: Estudios Economicos Regionales y Sectoriales : EERS: Regional and sectoral economic studies : RSES, ISSN 1578-4460, Vol. 8, Nº. 1, 2008, págs. 71-88
• Idioma: inglés
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• Resumen

  • We examine the impact of phasing out of MFA quotas on Indian garment exports as an example of competitive labour-intensive sector in an emerging market economy that has been recently facing removal of export restraints. We employ three different methodologies using a monthly data from 1992:11 to 2003:9: Perron’s (1989) methodology of testing for unit roots in the presence of trend break, split-sample test of trend-break hypothesis and intervention analysis. The major conclusion is that the WTO’s decision to phase out the MFA quotas has had a positive impact on the Indian Garment Exports. Perron’s trend break hypothesis does support this as a cause for change in intercept, while the split-sample analysis shows that there has been a structural transformation in terms of introduction of trend-stationarity in place of difference–stationarity. Intervention analysis shows that this effect has been positive, significant and long-lasting. This analysis implies that Indian apparel sector may benefit from the phasing out of MFA quotas.