The multi- fibre arrangement and South Asia

Abstract

Withdrawal of Multi Fibre Arrangement affected the textile and clothing industries worldwide. This chapter studies impact of MFA phase-out on export growth for seven major Asian exporters between 1995 and 2005. We use constant market share analysis to reflect on the conditions of clothing and textile industries in these countries. We observe that the removal of quota led to significant changes in country-wise export shares – countries with more efficient production techniques captured larger shares in the post-MFA phase. It supports a recent theoretical proposition that removal of quota in this case would lead to concentration of textile production in few larger countries in Asia at the expense of many smaller ones that previously enjoyed considerable export shares.