The Multi-Fibre Agreement Phase-Out: Efficiency Implications of Textile Firms in India

Sasidaran Gopalan and K.R. Shanmugam

MPRA Paper from University Library of Munich, Germany

Abstract: This paper empirically investigates the implications of unshackling of the global textile trade, following the complete phasing out of the Multi-Fibre Agreement (MFA) in 2005, on the efficiency of firms in the Indian textiles industry. By employing Stochastic Coefficients Frontier Approach, it estimates the overall and input specific efficiency values for 215 sample firms during 1993-94 to 2005-06. Results of the paper show that the average efficiency declined over the years, indicating the presence of inefficiency in using inputs. Given that there is a paucity of empirical studies dealing with efficiency of the Indian textile firms in the light of phasing out of the MFA, this paper seeks to fill such a gap.

Keywords: Multi-Fibre Agreement; Technical Efficiency; Stochastic Coefficients Frontier Approach; Panel Data (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2009
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Published in Trade and Development Review 1.3(2010): pp. 59-75

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