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The Effects of Trade Liberalization in Textiles and Clothing on the Greek Market for Cotton Yarn: A Multi‐Market Analysis
Author(s) -
Dadakas Dimitrios,
Katranidis Stelios D.
Publication year - 2010
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2009.00863.x
Subject(s) - clothing , yarn , liberalization , welfare , economics , clothing industry , international economics , commerce , market economy , engineering , mechanical engineering , archaeology , history
The Uruguay Round (1987–95) signaled the end of the Multifiber Agreement for textiles and clothing. The quota regime, in place since 1974, was decided, according to the Agreement on Textiles and Clothing, to be gradually eliminated by the year 2005. As a result, prices of cotton‐yarn in the world markets decreased, affecting producers in all cotton‐yarn exporting countries, including Greece. At the same time, the labor cost in western industrialized countries remained high, or even increased, exerting further pressure on yarn producers. The present paper examines these changes for the cotton‐yarn industry in Greece. We use a multi‐market partial‐equilibrium model which allows us to take into account simultaneous input and output price changes, relevant for the industry under study. Findings show that, after the implementation of the program for the gradual elimination of quotas, producers' welfare decreased whereas consumers noted substantial increases in welfare transfers.