The Multi-Fibre Arrangement

Paper Summary:

Many developing nations rely heavily on their ability to produce low cost goods for the international market in order to fuel their economies. This paper examines how the Multi-Fibre Arrangement (MFA) was introduced to protect the economies of developed nations' textiles and clothing industries through the introduction of quotas. It also discusses how, as a result, many developing nations have found that their access to such large markets as the United States and the European Union have been restricted quite drastically and thus the expansion of such industries has been limited.

From the Paper:

"International trade is based on economic theory states that there is a potential gain from trade among two or more countries, in doing so each country will export the good in which it has a comparative advantage over another in the production of a certain commodity if its opportunity cost of producing that commodity is lower (Daniels, J. & Radebaugh, L. & Sullivan, D. 2004, p147). The theory of comparative advantage comes from the theory of absolute advantage which states that certain countries have an advantage over other countries in producing certain commodities, eg Saudi Arabia producing petroleum, Australia producing beef, China producing textiles and clothing. This can be due to differences in land, labour, capital and technology (Fraser, I & Fraser, S & Gionea, J. 2003, p206). "

Sample of Sources Used:

• Daniels, J.D. & Radebaugh, L.H. & Sullivan, D.P. (2004) International Business environments and operations. 10th ed. Pearson Hall, New Jersey.
• Fraser, I. & Fraser, S. & Gionea, J. (2003) Economics for Business. 2nd ed. McGraw-Hill, New South Wales.
• Gionea, J. (2004) International Trade and Investment: An Asia-Pacific Perspective. McGraw-Hill, New South Wales.
• Pugel, T. (2004) International Economics. 12th ed. McGraw-Hill, New South Wales.
• Global Trade Negotiations. (2002) Implementing the Agreement on Textiles and Clothing [Online, accessed 16th May 2006]. URL: http://www.cid.harvard.edu/cidtrade/issues/textiles.html

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