The allocation of import restraints: Evidence from the textile and apparel industries

This dissertation develops a model which illuminates the allocation of an import restraint among exporting countries. The methodology is then used to explain the division of the right to import textile and apparel products in the United States.;The model developed determines the optimal division of the import restraint among exporting countries relying heavily on past work in the field of political economy developed by Stigler, Peltzman, and Hillman & Cassing. The principal result of the model is that the import market will be allocated primarily according to historical market share, although minor deviations will be made to appease special interest groups.;Empirical work was done to determine the compatibility of the model to the actual history of the restraint system in the textile industry. The model was tested by first predicting the import share of each restrained exporting country if the restraint system had remained constant, and then analyzing the deviations between the predicted and actual import share. Conclusions are reached regarding the major winners and losers of the restraint system. The major finding is that Colombia, India, and Korea would have had a larger market share in the absence of restraints. Next, political variables are used to explain why a country gained (lost) market share as a result of the restraint system. An interesting finding is that the single most important determinant of these deviations is the share of U.S. economic and military aid received by a country. It is found that the greater the share of aid a country receives, the more they have been hurt by the restraint system. One implication of this result is that the United States may have used their economic and military aid to coerce major textile and apparel producer into restraining their exports.