Article thumbnail
Location of Repository

Voluntary Export Restraints and Resource Allocation in Exporting Countries

By Jaime de Melo and L Alan Winters

Abstract

This article analyzes the resource implications of voluntary export restraints (VERs) for exporting countries. A simple analytical method is used to demonstrate that, by reducing the marginal revenue of its factors of production, a VER causes an industry in the exporting country to contract, and that the efficiency losses from a VER depend on the ease with which sales can be diverted from the restricted toward the unrestricted markets. The method is applied to test the effects of the U.S. Orderly Marketing Agreement (OMA) for producers of leather footwear in the Republic of Korea during the period 1977¿81. We estimate that the marginal revenue product of factors employed in leather footwear declined by as much as 9 percent because of the OMA, an estimate that is corroborated by inspection of time series on output, employment, and wages of the Korean footwear sector. This implies that there was pressure on the Korean footwear industry to contract as a result of the OMA

Publisher: Oxford University Press
Year: 1990
OAI identifier: oai:sro.sussex.ac.uk:25061
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://dx.doi.org/10.1093/wber... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.