 Voluntary Export Restraints and Resource Allocation in Exporting CountriesThe World Bank Economic Review, 1990, vol. 4, issue 2, 209-33 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. Copyright 1990 by Oxford University Press. Date: 1990 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:wbecrv:v:4:y:1990:i:2:p:209-33 Ordering information: This journal article can be ordered from Access Statistics for this article The World Bank Economic Review is currently edited by Eric Edmonds and Nina Pavcnik More articles in The World Bank Economic Review from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.