There have been two contrasting views regarding the effect of MFA on the
One has criticised increasing protectionism in
major of the
positive impacts of MFA in promoting the textile and
developing countries. to country because of
In reality, the actual effects of MFA the varying economic conditions and
garment industry in differed from country experiences in global
trade. The implications of exporting countries and new
MFA differed particularly between long-standing
such as Bangladesh, MFA proved a blessing since it induced
from more advanced economies to Bangladesh.
industrial re-location said that Bangladesh
as a garment exporter was created by the MFA regime6.
The sudden surge of Bangladesh garments in the OECD markets led in 1985 to a fresh imposition of quotas by some countries like the UK, France, the US and Canada. Later the UK and France lifted restrictions and subsequently only the US
restrictions affected growth at that time
Bangladesh’s RMG sector significantly was mainly owing to the US market.
because the export Implementation of
caused a decline in absolute terms for most items in the first months of However after a transition period, in 1987 the level of growth increased
again, mainly due to diversification into non-quota items (Wiig 1990: 154-159).
5 Raffaelli (1994: 61) delineates the effects as follows: limitation of competitive exports; disruption to individual lines of production; transference of resources to less efficient lines of production; discouragement and /or distortion of investment; switch from less sophisticated products to different, more sophisticated products; improvement in quality; transference of production to third countries; fight for a guaranteed share of the market; quota ownership and attendant problems; costs of quota management and political costs.
6 Besides the industrial relocation by quota-hoppers, political instability in neighbouring Sri Lanka led to a buyers’ shift to Bangladesh (Rahman 1993: 5).