Cobb douglas production function analysis of total factor productivity in Indian textile industry in the post multi-fiber agreement (MFA) period
Cobbb douglas production function; MFA; Quota removal; Textiles; Total factor productivity
Internnational tradee in textiles aand clothing wwas governedd by the systemm of bilateral quotas undeer the MMulti Fibre AgreementA (MMFA) since 11973 and thiss agreement has been repeplaced by thhe Agreeement on Texxtiles and Cllothing (ATC)C) from Januaary 1, 2005. The dismanntling of quotta restricctions had brrought about a significant change in thee structure off worldwide trrade in textilees as theere are no quuota barriers for the exporrt of textiles aand apparelss and the hithherto protecteed textilee industry wouldw be exposed to interrnational commpetition. It was widely believed annd highliighted in mosst of the studies that develloping economies, especiaally India andd China woulld be thee major gaineers in the neww policy regiime. In view of the changged trading ennvironment foor textilee trade, it wass considered important to analyze the immpact of quotta removal onn Indian textille industry, especiallyy with respecct to the prodductivity on thhis sector. Thee study has coonsidered fouur sub seectors of Indiian textile inddustry as givven in the Annnual Survey oof Industries, viz, Spinningg, Weavving and Finiishing of Texxtiles, Manuffacture of Other Textiles,, Manufacturre of Wearinng Apparrels and Manufacture off Crocheted aand Knitted Fabrics. Esstimates of CCobb Douglaas produuction function shows that the removal of textile quoota had impaccted all the foour sub sectorrs considdered in the study.s The imppact of quota removal on pproductivity iis positive andd significant iin the caase of spinninng, weaving aand finishingg of textiles ass well as in tthe manufactuure of wearinng apparrels. In the casec of mannufacture of other textiless and the mmanufacture oof knitted annd crochheted fabrics, the quota duummy coefficient is negatiive and signifificant at onee percent leveel. This sshows that thhe removal ofof quota restrrictions have adversely immpacted the ooutput of thesse sectorrs. 2020, North Carolina State University. All rights reserved.
Journal of Textile and Apparel, Technology and Management, Vol-11, No. 3, pp. 1-11.
Manoj G., Departmentt of Economics, Christ (Deemed to be University), Bangalore, Karnataka, India; Muraleedharann S., Departtment of Economics, Maharajas College, Cochinn, Kerala, India