DRD DISCUSSION PAPER Report No. DRD298 THE EFFECT OF NON-TARIFF BARRIERS IN FOOTWEAR TRADE: PRELIMINARY EVALU~riON by Taeho Bark Korea Development Institute and Jaime de Helo The Wot·ld Bank Development Research Department Economics and Research Staff World Bank The World Bank does not accept responsibility for the vie1vs expressed herein which are those of the author(s) and should not be attributed to the World Bank or to its affiliated organizations. The findings, interpretations~ and conclusions are the results of research supported by the Bank; they do not neceGsarily represent official policy of the Banko The designations employed, the presentation of materio.l, and any maps used in this document are solely for the convenience of the reader and do nvt imply the expression of any opinion whatsoever on the part of the World Bank or its affiliates concerning the legal status of any country, territory, city, area, or of its authorities~ or concerning the delimitations of its boundaries, or national affiliationo The Effects of Ron-Tariff Barriers in Footwear Trade: Preliminary Evaluation Taeho Bark Korea Development Institute and Jaime de Melo Development Research Department The World Bank May 1987 This paper reports on ongoing research financed under RPO 674-20 "The Footwear Industry in Developing Countrie~ and How it adjusted to Non-Tariff Barriers to International Trade". Prepared for a colloquium to be held in Toulouse June 29, 30, 1987 "Theorie de la Negociation et de la Competition Internationale". We thank Patrick Messerlin, Alan Winters and participants at an IIES workshop on European Trade Policy for helpful comments on an earlier version. The views are those of the authors and should not be attributed to their respective institutional affiliations. We thank Julfe Gwynn and Jackson Magargee·for much appreciated support. Abstract This paper analyzes economic aspects of non-tariff barriers to trade in the context of the quotas and voluntary export restraints that were imposed on footwear trade during 1977-81. The paper surveys the restrictive measures that were applied and offers some tentative conclusions as to why protection- ism ended. It is argued that the characteristics of the footwear industry, namely a mature industry with little product differentiation, low start-up costs and easily accessible technology contributed to making the restrictive measures ineffectives Evidence on the global pattern of footwear trade show that developing countries continued to increase their share in developed markets, even for the restricted footwear categories. The Effects of Non-Tariff Barrier9 in Footwear Trade:' Preliminary Evaluation I. Introduction Shifting patterns of comparative advantage call for a relocation of production of mature industries from developed to developing countries. Textiles and footwear, labor intensive industries which have been little affected by technical progress, are cases in point. However, the demand for protectionism from the· declining industries of developed countries slows this relocation. Now that successive multilateral trade negotiations have elimi- nated tariffs for most manufacturing products as a means of protectionism, non-tariff barriers to trade have become the major tool for retarding the ~eloeation of production of mature industries from developed to developing countries. This paper reports preliminary findings of ongoing research on how the relocation of the footwear industry has taken place from developed to developing countries and the role of non-tariff barriers in impeding that relocation. Unlike most work on the subject where footwear protectionism is stud- ied from a single country perspective {e.g. Morkre and Tarr {1980), Hufbauer et al. (1985)), we take a global perspective. This allows us to study how proiectionism spread across countries, and to gauge spillovers across markets and across broadly defined footwear categories. We concentrate our case study on the period starting in the early seventies when developing countries rapid- ly expanded their share in world footwear trade leading to the close down of - 2 - footwear factories in the developed world. In turn, factory closedowns led to a demand for protectionism in many.developed countries. A surge of bilateral (and multilateral) NTBs took place in the mid-seventies, most notably in the US which negotiated bilateral VER arrangements with South Korea and Taiwan during the period June 1977 - June 1981. Then footwear protectionism subsided though, as the paper shows, a good deal of NTB protectionism remains. The purpose here is to analyze the developments that led to. this protectionism and to examine whether the officially stated objectives of protectionism were achieved, in particular with respect to South Korea and Taiwan. The case study serves to illustrate several trade-theoretic and political economy aspects of protectionism. These aspects are summarized in Section 2 where NTBs are contrasted with tariff-type measures. Section 3 summarizes a selection of the major NTB measures that were taken against footwear exports of developing countries. The discussion of footwear protec- tionism also serves to illustrate some of the propositions mentioned in Section 2. Section 4 .analyzes the evolution of trade shares between developed and developing countries over the period 1965-84. This global perspective serves to provide a broad assessment of how footwear protectionism affected the ongoing shift of comparative advantage towards developing countries. Section 5 turns to a more detailed examination of how trade flows from the restricted countries adjusted to the rising footwear protectionism of the late 1970s. Our conclusions are preliminary in part because the available data for analysis does not correspond precisely with the categories of footwear subject to NTBs. However, it appears that NTBs in footwear led only to a temporary slowdown in the growth of developing countries exports. Given that - 3 - NTB protectionism was widespread, this suggests that non-MFN protectionism outside of GATT of industries like footwear is not likely to have much impact on trade flows. 2. The Economics of NTBs The description of measures in Section 3 below indicates that two types of measures were applied: quotas, and voluntary export restraints (VERs). This section briefly summarizes the ways in which these measures differ from the traditional tariffs extended on aa MFN basis. To simplify the analysis, we will maintain two assumptions· that roughly characterize the footwear industry: (1) production takes place competitively before and after the imposition of NTBs; (2) the product subject to an NTB is undifferentiated so that domestically produced and foreign produced goods are perfect substitutes. These assumptions obviate the need to consider market structure considerations and simplify the graphical exposition. !/ Three aspects of NTBs will be underlined. First, except in the case where a quota is imposed, the trade restraint is imposed by the exporting country instead of the importing country. As is well-known, this has impli- cations for who gets the rents. Second, NTBs are usually negotiated on a bilateral basis. This has implications for third markets. Third, the bilat- eral negotiations of VERs and quotas often result in the commodity categories being loosely defined. This facilitates quality upgrading. Figure la shows the effects of a VER or quota on the importing coun- try for the case where the domestically produced good and the imported good are perfect substitutes in consum~tion. For the time being, assume that there is only o~e supplier to this market. With free trade, the market price is P 0 - 4 - Figure la Effects of a Quota in the Importing Country I / sw ( t+-t) / / ; ?t Sw+GJ~ s'w ~ su _.,.., _..., ..,...... \1J ~~ ....,..,. ,.,- .,.,.- --- Pt. I Figure lb Effects of a VER in the Exporting Country / s 1c l +t~) ( t:;' / 0 ... - 5 - with OQ0 consumed, of which Q1Q0 is imported. Consider three alternative The traditional method is the tariff which ~ shifts upward the supply schedule to Sw(l+t) and the importing country's government collects the shaded area as revenue. For the developed countries which are members of GATT, this option is not used because it would entail having to make concessions. The second method is to unilaterally impose a t t quota of Q2Q3 = Q2Q3 • The result is the same except for distributional implications of the rent resulting from the quota. Since the quota is imposed by the importing country, the issue is how licenses are made available to importers. If they are made freely available to importers, the entire shaded area accrues to importers. Consider now the case where a two-tier allocation system is used: a fraction of the licenses are given to importers free of charge, and the remainder is auctioned by tender bid. ~I This is equivalent to charging importers a quota charge qm for all licenses, the rate being determined by the fraction of licenses that are auctioned off. lt Since it is assumed that importers are in perfect competition, the windfall profits to the importers is reduced and equal to area 2 3 2 3 Q' Q' Q"Q" since they have to pay qm per license to the government which implies that the supply schedule of imports is shifted upwards to ' (S +q ). w m The remainder of the rent is collected by the government. Consider now the third option, namely to negotiate a VER which is administered by the exporting country. This case is depicted in Figure lb which shows the export supply and the demand for exports. Let the negotiated VER re~uce quantities exported by Q1Q0 • With the VER, the rents depicted by the shaded area accrue to the exporting country. Symmetry with respect to the discussion of the import side holds. First a price ~estraint can be imposed - 6 - instead of a quantity constraint by imposing an export tariff, which shifts the export supply schedule to S'(l+te). This corresponds to aVER-Price restraint as was the case for the negotiation between the EEC and Brazil for exports of women's leather footwear. In contrast with the quota case, revenue accrues now to the exporting country government rather than to exporters. !/ Given that governments of exporting countries typically give away export licenses free of charge to exporters, with a quantity 'VER, the rent accrues to exporters. Thus, the essential point of a VER is that the rents accrue to the exporting country which explains why VERs are not opposed by exporting countries. ?_/ The second aspect of VERs which distinguishes them from tariff mea- sures is that negotiations are on a bilateral basis. As shown in Section 3 below, the VERs on footwear were source specific which implies that only some sources of supply were affected. To consider potential spillover effects return to Figure la but now let ' represent demand in the nonrestricted DhDh t importing market and S supply to that market. The effect of the VER will be w to shift the supply curve to the non-restricted market to sw ' t • wh1ch • • 1mpl1es I a production loss of Q4Q1 in the nonrestricted market and hence a demand for protectionism there. This of course is a reason for the "domino" effect discussed below in Section 3. ~/ The last issue has to do with the incentives to upgrade quality (i.e. to shift production towards items with higher unit values) when a VER is imposed. This aspect too has been well studied in the literature (e.g. Falvey (1979), Rodriguez (1979), Feenstra (1986)) and need only be summarized here. The argument is that insofar as higher quality has a higher market price (and licenses are transferable if firms are specialized in single quality - 7- Pli\'r'fDII PtManiofltl'I,.J (of It'll) ~· 191111 llldo• •• 6.4 6.4 12.7 (6.4) (6.4) ~l- 1~~ .. 74 1974- 1970 - 1975 · .. 77 am -sa n.s 0.0 11.4 1!11•1:1 (27..2) (O.o) 6.1 1911 A\1 1977-11 All 1981- a AU noa- ss 1977 .. !l 12.Z 12.3 lWIZ·Sl (0.2) (0..2) 19111- 12.1 ···- 8Z (4.6) s.~ 1981-84 .!!!!!.• Nall.1.taa u•>- I a c:alnt!•f"""• N.A.·"" ~ Melt& 'DIIIllll !I tBl a:lii!IM 8tll'tt.l SIIC'q ..... ~ ~ au. me ..al!clY ~ l)lct• an~ to 21 ~ 1111111tly effifJicld wtt:ft •1« J...- feobiiiB' ~4letUl'IIN. !J Illpcna brpll pnli'fiCUW .-c1tr • ~ tcUf r.ca. ~ Infanlll pnlllllllnl 0111 kriiiU, - - · s. ,__, ~ Nc.f.aCa, 'DLtta. ie Brazil, Korea, Taiwan, Other LDC (4) je US, EEC, Other DC, other LDC + CPE ke Rubber + Plastic,Leather,Other footwear Where a """" denotes a growth rate {e.g. V. l = ((V~ l - V~)/ l V~) l and: .. k vlJ = exports of commodity k by country i to country j, j*k ... Vjk ~ growth of imports of commodity k by country j - 18 - A V = world growth of footwear exports (gw) Vi = growth of total footwear exports of country i (gi) All values are expressed in constant dollars, using as before, the industrial- ized country CPI index (IFS) as deflator. The constant-market-share formula decomposes the change in a country's exports into four terms: (1) a world term which states by how much a country's exports must grow to maintain constant market share; (2) a market term which indicates whether the country's expQrts were directed to fast or slow growing markets; (3) a commodity term which states whether the country's export composition has been in commodities growing faster or slower than average; (4) a residual. A negative (positive) residual reflects increases (losses) in market share. 23 1 The residual is often named the "competitive- ness" effect (see Leamer and Stern, 1970) even though it reflects more than changes in relative prices. In particular, the residual indicates quality changes and other effects such as changes in marketing efficiency, etc. In Tables 4 and 5 we express the contribution of each term in the decomposition as a percentage of the total change in country i's exports so that the figures add up to 1. It is clear from the trend analysis of changing comparative advantage that trends established up until 1976 were broken during the years of NTBs. To smooth the· fluctuation in the data, we report the decompositions based on averages of two adjacent years. · 24 / In particular, the years covered by NTBs include in the averaging the year before restrictions were applied (1976) and the year before the restrictions were lifted (1980). Table 4 summarizes the results of th~ constant-market-share decompo- sition for all footwear. Several results show up clearly. First Korea and - 19- ~ Omit~~& M11zDt !biN l?!calpo!1Wnl: AU l"oca.ur lf ~ ~ Od!er LlXlll !=!!!. 'tem 1 2 3 4 2 3 4 2 3 4 2 3 4 Q:twth rate 4.28 1.36 .49 .14 1.89 .64 .n .u· 4.46 .35 .72 .46 .60 .19 .55 -.'1:1 W!lrld (1) .u .19 .84 -.93 .25 .41 .53 -1.17 .u .73 .57 -.28 .8) 1.~ .15 .48 ~(2) .01 -~ 0.00 ..0.00 .00 -.25 .o3 -.17 -..01 .27 -.04 J)2 .Q3 .Ol -o.oo ...u Hlzfrat (3) -eO\ -.01 -.23 1.18 ...m .12 -.as 1-06 -~ ...u -.14 .54 .06 -.111 -~ Jl2 ~---(4) .91 .86 .39 .75 .78 .73 .52 1.29 .94 .u .61 .72 .u -.30 .26 .60 Jj J:!er:lolp;wfttan li'Ml 1D tqUitl.a:lle ,... claf1DIId in c:m. ~of tJ.. puf.odl (wt:h! pith uta, y 1D ~11) Pcicd 1: 70/71 - 73/74 ( . , Periccl 2: 73/74- 76/11. ( 261) Plldol! 3s 76/77 - 80/81 ( 41%) Puled 4: 80/81 - 83/84 (-lln ' J1 ~dan &11811 1D cquati.m 1. Tarn dlt.f1Did 1D tat. Dllf1D:f.tical cl CU. p&d.cdl• in Table 4. lerld ~ r11t111 in l.ut!wr foot'I«Hr aporta wn: 42%; 36%; 38%; -1:. for per1o&tl1-4, rapi(Uwl.J. . - 20 - Taiwan were gaining market share most among the group followed by Brazil. The rate at.which both countries were g~ining market share slowed down during period 3, in part because of the VERs, in part because their share in world trade was already quite high at the end of period 2. Other LDCs lost market share during period 2 and would have had to grow by 35 percent more than they did during that period to maintain their beginning of period market share. Did Brazil benefit from the VERs negotiated between the US and Korea and the US and Taiwan~ Clearly during period 3 when VERs were imposed, Brazil was gaining more market share than Korea (a lower value for the world term) com- pared to period 1. Also it is clear that other LDCs did relatively better · during that period compared with their performance during the pre-NTB periodo Finally both Korea and Taiwan continued to gain market share in period 3, with Taiwan gaining market share most of all the groupings, perhaps because its exports were less concentrated in leather. footwear than Korea's. Finally a comparison of the contribution of the market term during the last two periods shows that Korea and Taiwan were indeed concentrating their exports on slow growing markets (i.e. the US} during the VER period. However, both more than , recouped during the post-VER period as the US was the only growing market durtng the early eighties as recession in Europe curtailed demand there. Surprisingly, the decomposition in Table 5 for leather -- which is our closest proxy for restricted footwear -- indicates not only that Korea and Taiwan continued to gain market share in that footwear category but that they gained more than other LDCs in period 3. Korea gained market share virtually as much as Brazil and Taiwan more than Brazil. The figures however do not capture the impact of VERs on plastic shoes which are not separated out in the sample. - 21 - TABLE 6 Competitiveness Effect !/ (Millions 1980 US$) Period 1 2 3 4 Country Korea All 68.·5 108.8 31.6 3.4 Leather 46.8 90.9 49.5 -14.3 Taiwan All 87.7 80.6 85.3 71.2 Leather 36.5 55.7 51.4 . 44.3 Brazil All 51.2 2.6 29.8 51.6 Leather 50.8 2.8 27.6 51.4.2 All 7.5 -10.6 23.5 -54.0 Other LDCs Leather 21.4 -13.8 9.2 -18.0 Sources: Tables 4 and 5. !/ The competitivenes~ effect is expressed in terms of its yearly contribution to country i's change in exports during each relevant period. - 22 - All terms in the decomposition, other than the competitiveness effect, largely reflect exogenous factors. The competitiveness effect thus summarizes mostly the effect of changing comparative advantage induced by relative price shifts including those due to quality upgrading. Table 6 shows the yearly value of the competitiveness effect. The values,show that the VERs slowed down Korea but not Taiwan and that Brazil and other LDCs showed a greater gain in competitiveness when Korea and Taiwan were restricted. In sum, the figures confirm that restrictions were not very successful in slowing down the shift in comparative advantage towards Korea and Taiwan. 6. Conclusions , NTBs differ from tariff protection in several respects. An important difference stems from the practice that NTBs are usually nnt extended on a multilateral basis and the product categories over which the restrictions are negotiated are usually loosely defined. As a result, when, NTBs are applied to relatively undifferentiated products like footwear it is relatively easy for the restricted countrfes to adjust to the restrictive measures. These principles were shown to be applicable in our preliminary analysis of how the global patterns of footwear trade by major product categories were affected by the numerous orderly marketi~g arrangements that were negotiated during 1977-81. Our case study of footwear showed that Korea and especially Taiwan continued to expand their market shares during the period of restrictions, though at a slower pace. Other developing countries which had been losing market share in the three years preceding the restrictions were able to regain some market share when the restri~tions were in effect. However, according to the constant-market-share decompositions, - 23 - the competitiveness of Korea and especially of Taiwan continued to prevail during the restrictions. Although the results are preliminary because the data are not sufficiently disaggregated to single out precisely the categories of footwear that were subject to restrictions, we tentatively conclude that protectionism faded partly because the restrictions were ineffective and the footwear industry continued to decline in developed countries. - 24 - Footnotes 1/ The implications of market structure considerations for the breakdown of the equivalence propositions between price and non-price rest~ictive measures is analyzed in Takacs (1978). Under our'assumptions, ~quivalence propositions hold so long as general equilibrium repercussions t~rough changes in the terms-of-trade can be neglected. Thus the fact that NTBs are quantity rather than price measures is irrelevant. ~/ This is the system used by Australia to allocate import licenses. 11 This equivalence is shown in Bark and de Melo (1987b). There the analysis is carried out from the point of view of two-tier license allocations on the export side where the criteria for allocation of licenses depends on (1) export shares in the restricted market ("basic" quota); (2) export volumes to nonquota countries ("open" quota). 11 A Two-tier quota allocation in which a fraction of licenses are auctioned off is not discussed here since it is not done in practice. However conclusions are the same as in Figure la. !1 Another reason why VERs are not opposed by exporters is that they are typically only negotiated for a few years at a time. - 25 - !1 Another interesting implication of spillovers, relevant for the footwear VERs discussed below in Section 3, is the case where some members of a customs union (e.g. the UK) or of a free trade area (e.g. Sweden) negotiate a VER.unilaterally. Hamilton (1986b) discusses this case and shows that, compared with a global supply restriction, a VER leads to a greater efficiency loss as partner imports rise more than in the global restriction case. II However, in the differentiated product case, Feenstra (1986)·reaches ambiguous conclusions when quality is treated as a variable that can be continuously varied (the "hedonic" approach). Theoretical analyses in the hedonic vein yield the result that a quota will raise (lower) quality if consumers purchasing the lower quality products receive the smallest (largest) surplus. S/ This section draws on Hamilton (1986a) who also discusses the justifi- cations officially provided for the measures taken. . 21 Excluded are the smaller countries like Ireland, Norway, Denmark and Greece and EEC members like Benelux and Italy which only resorted to NTBs for a short while. Also excluded are EEC members like West Germany which did not take measures beyond those i~posed at the Community level. II I It - 26 - 10/ Brazil introduced an export ban on hides and an export tax of 18 percent on finished leather to keep input prices low. When pressure was exerted, Brazil apparently moved towards a 15 percent export subsidy on all foot- wear which led the European Footwear Confederation to seek for imposition of countervailing duties from the EC Commission. In November 1981, Brazilians agreed to impose an export tax on women's leather footwear to counteract the full effect of the subsidy. !!/ Hamilton (1986b) analyses the economics of tender bids with an application to Hong Kong. 12 / The Australian system of trade in quotas is det&iled in Hamilton (1986a). For an analysis of the US quotas in cheese see Anderson (1985). 1 3/ If a quota leads to a change in market structure from one of competition to one characterized by a producer-importer monopolist, and the quota falls in the inelastic portion of the demand curve, then the quota will not be filled. There is no information about quota fulfillment rates in Japan. 14/ The domino effect worked in reverse as well since Canada lifted its quota shortly after the US did. '' l - 27 - 15/ In the US case Yoffie's account makes it clear that the US footwear industry interests were not adequately represented in the negotiations. His account of the negotiations suggests that US negotiators favored "the" national interest. 16/ Bhagwati (1987) dubs this case the "porous protection" model to distinguish it from the more standard "rent transfer" model for VERs in differentiated products. The ineffectiveness of restriction is also forcefully made in Baldwin (1982). 17/ Footwear technology at the micro level is described in Boon (1980). His visits to factories in Spain and Mexico and his comparisons with developed countries suggest similar choice of technique. Boon also shows (chp. 3) that at all observed factor price ratios across countries machines operated solely on huma~ energy were obsolete in the early seventies. 18/ The categories correspond to the following SITC codes: Rubber and Plastic (85101); Leather (85102), other (85103-5). It is unfortunate that data does not allow us to construct a nonrubber footwear category, since such a category would approximate more closely the footwear category most subject to NTBs. l9/ 1981 is excluded from the samples years of restrictionism because it corresponded the first year of recession and it is believed that NTBs were no longer binding. See Hamilton (1986a). - 28 - 20/ "Other footwear is an aggregation of the following three footwear categories: wood & cork; footwear NES (i.e. mostly parts); and gaiters. In this group gaiters accounted for 10% of LDC exports in 1977 and parts 50%. Up until 1980 parts increased 3.75 fold and wood & cork 2.75 fold so both categories shared equally. However the second surge during 1981-82 was completely dominated by parts as wood & cork exports returned to their 1977 level. 21/ This comparison is made by Yoffie in his study of the negotiations of NTBs in textiles and footwear in the US case. He concludes that in both instances protectionism only temporarily slowed market penetration. 22/ When the US negotiated VERs with Korea and Taiwan, 25% of domestic nonrubber footwear sales was accounted for by imports from these t~o countries. The US negotiated for 1977 a 25% decline in the volume of nonrubber footwear imports from 1976 levels for both countries and a 2% yearly increase in volume for the following four years. 23/ If world trade gro~th is negative, then a positive (negative) residual reflects losses (increases) in market shares. 24/ In terms of equation (1); v~ = v~ = v:1 + v:•l 1 .1 l 2 - 29 - Appendix Figure,Al shows the origin and destination of footwear trade for the footwear categories defined in the text. Note the following. First, intra- developing country footwear trade was not stimulated during the period of footwear protectionism. Second, intra-developed country trade started to decline in 1978-79e This is what one would expect from protection which ren- ders sales in the domestic market more profitable than export sales. Third, the sharp rise in "other" footwear trade during the years when protectionism was spreading was not solely a developing country phenomenon. Hence this shift may partly reflect a change in fashion (e.g. women's boots). Does the shift in com~arative advantage reflect relative price shifts? With little success we fitted import share equations for developed countries. For all footwear our results were (t - values in parenthesis): ln mt = -22.42 + 0.34lnP~ 0 ~ 0.36 lnP~c+ 4.02 lnY~c (-5.38) (0.26) (-0.91) (4.20) Ji 2 = 0.96 D-W = MLDC Where mt : ~C , PLDC and PDC are trade-weighted manufacturing wholesale Mt price indices (expressed in dollars) and yDC is real GDP of OECD countries. The highly significant coefficient for the income term indicates that homothe- ticity by country of origin is rejected by the data, a result that is to be expected at this level of aggregation. Likewise, the lack of statistical I - 30- Figure AJ. Footwear Trade: Origin and Destination ORICIN OE5f!Nio TfOrt ,j ··~----------------------~~.------- -~·, ~ilj ,+ :t-1 I I .:II..; .... .'' •• 0 a 1 I / \. . ' •• :·~ •1 .i A. s' ! ,,. ::~ /' \~)f I ,... ~ H~ t ,. .- I l "~j .... )t1 .., v~ ,: 1J .. u-1 I .•. .... 1 I ; 7=:-:i I '9'!1i ' .. , ... •t?l .,,, .,,.. ''" ··7· :~ j I 3 f ~ .J:Ct ..,... uc: ..,..~ "'»~ :IQ ) I I /""', I \ / I"- ; ~ ,/ $~ ~ ! ....~ .... t.. ,If V' ,t .... r..',' .... .,,. r ,,,, ,,,, .... •..U ,............ ..... ••• 'tlllt ,,,. ~~~=-&a====~~ .,,, .UIICID "»I"'IIMll ..... .., •• ,. .... • ... :1 ~· • .=s ., :aa :::3··~ ,.-c~. . =~ ., G--------------------------~-------- ~~ / \ ! I ' \~ .ltt'1 : i I \ I -~ a-4 ! i ! &eli ll:)IJ.l 'tO ... I I I. -i .. I ,, (~I .I l!, I ! •oo.! i I ·~ l ld\l l l l il l l l l! :ls:r: :; ;: 6: :!:=:~=: := •••--==--==1=i 1 10~ .... 5 oW .,., ... • .... tl}fl ..... ..,. ,,, '"' .... •... •tte .,., .,., •,,, '''~ .,,. '''' ''"' ••• '"" NOTES: Millions 1980 $US: Rubber, leather Thousands 1980 $US: Other ,!.9URCES: See Text. - 31 - significance of the price indices in explaining the shift in comparative advantage is not surprising since the price indices are not good proxies for relative costs. Insignificance of the price indices was also found for similar regressions for e6ch of the three footwear categories. I • - 32 - References Anderson, J. 1985. "The Relative Inefficiency of Quotas: the Cheese Case," American Economic Review, pp. 178-90. Aw, B. and M. Roberts. 1986. "Measuring Quality Change in Quota Constrained Markets: The Case of US Footwear," Journal of International Economics. Aw, B. and M. Roberts. 1987. "Price and Quality Level Comparisons for US Footwear Imports: An Application of Multilateral Index Numbers." Mimeo. Pennsylvania State University. Bark, T. and J. de Melo. 1987a. nExport Mix Adjustment to the Imposition of VERs: Alternative Allocation Schemes," DRD Discussion Papers No. 214, World Bank. Bark, T. and J. de Melo. 1987b. "Export Quota Allocations, Export Earnings and Market Diversification." Mimeo. World Bank. Boon, G. K. 1980. Technology and Employment in Footwear Manufacturing. The Netherlands: Sijthoff and Noordhoff. Bhagwati, J. 1987. "VERs Quid Pro Quo DFis and VIEs: Political-Economy- Theoretic Analysis," International Economic Journal, 1(1), pp. 1-15. Falvey, R. 1979. "The Comparison of Trade Within Import-Restricted Categories," Journal of Pol;_tical Economy, pp. 1142.:..65. Hamilton, c. 1985. "Economic Aspects of Voluntary Export Restraints" in Do Greenwawy, ed., Current Issues in International Trade. London: Macmillan. Hamilton, c. 1986a. "The Rise and Fall of Footwear Protectionism." Mimeo .. World Bank. Hamilton, C. 1986b. "An Assessment of Voluntary Restraints on Hong Kong Exports to Europe and the USA," Economia, pp. 339-50. Hamilton, c. 1986c. "The Upgrading Effects of Voluntary Export Restraints, .. Review of World Economics, pp. 358-64. Hufbauer, G., D. Berliver, Ku Elliott. 1985. Trade Protection in the US: 31 Case Studies. MIT Press. Leamer, E. and R. Stern. 1970. Quantitative International Economics. Boston: Allyn and Bacon, - 33 - Morkre, M. and D. Tarr. 1980. "Effects of Restrictions on United States Imports: Five Case Studies and Theory." USFTC, Bureau of Economics, Washington, D. c. Nogu~s, J., A. Olechowski, and A. Winters. 1986. "The Extent of Nontariff Barriers to Industrial Countries' Imports," World Bank Economic Review, 1(1), PP• 181-99. Rodriguez, C. 1979. "The Quality of Imports and the Differential Welfare Effects of Tariffs, Quotas, and Quality Controls as Protective Devices," ganadian Journal of Economics, pp. 439-49. Takacs, W. 1978. "The Non-Equivalence of Tariffs, Import Quotas, and Voluntary Export Restraints,u Journal of International Economics, pp. 565- 73. Takacs, w. 1986. "Import Quota Permit Auctions: An Analytical Approach and Discussion of Issues." Mimeo. Washington, D. C.: IIE. Yoffie, D. 1983. Power and Protectionism. Columbia University Press. JDD/IE-001/3.24.87/jhm Some Recent DRD Discussion Papers 280. Labour Allocation Across Labour Markets Under Different Informational Schemes and tne Costs and Benefits of Signalling, by 0. Stark and E. Katz. 2g1. Mobility, Skill and Information, by O. Stark and E. Katz. 282. Labour ~1obility and Intrafamilial Income Transfers: Theory and Evidence from Botswana, by 0. Stark and R. Lucas. 283. Labour Migration, Income Inequality and Remittances: A Case Study of Mexico, by 0. Stark, J.E. Taylor and S. Yitzhaki. 284. Female Labour Mobility, Skill Acquisition and Choice of Labour Markets: Theory and Evidence from the Philippines, by 0. Stark and J. Lauby. 285. Market Structure, Jobs, and Productivity: Observations from Jamaica, by P.B. Doeringer. 286. Coordination of Taxes on Capital Income in Developing Countries, by P.B. Musgrave. 287. The Effects of Labor Regulation Upon Industrial Employment in India, by P.R. Fallon. 288. Factor Substitution in Production in Industrialized and Less Developed Countries, by D. Demekas and R. Klinov. 289. On the Effect of Subsidies to Basic Commodities on Inequality in Egypt, by S. Yitzhaki. 290. Implementing a Computable General Equilibrium Model on GAMS - The Cameroon Model, by T. Condon, H. Dahl, and s. Devarajan. 291. Effects of Exchange Rate Changes in Developing Countries, by B. Balassa. 292. Public Enterprise in Developing Countries: Issues of Privatization, by B. Balassa. 293. Inter-Industry and Intra-Industry Specialization in Manufacturing Goods, by B. Balassa and L. Bauwens. 294. The International Monetary System and Exchange Rate Policies in the Developing Countries, by B. Balassa. 295. The Economics of Divestiture: Ex Ante Valuation and Ex Post Evaluation, by L.P. Jones, P. Tandon and I. Vogelsang. 296. The Labor Market in Zimbabwe: Historical Trends and an Evaluation of Recent Policy, by P.R. Fallon. 297. Costs and Returns to Liberalization- The Jamaican Case, by R. Klinov.