Parameter Lists and Data Sources

Demand and supply parameters are required for the model. The demand parameters are income elasticity of demand, price elasticity of demand, elasticity of demand for domestically produced products, elasticity of total demand for imports, elasticity of demand for imports from restricted and unrestricted products, and substitution demand for imports by source in restricted and unrestricted markets. The parameters have been gathered from this study's estimates as well as from several other studies. These include: Houthakker and Taylor (1970); Moshin (1974); Stern, Francis and Schumacher (1976); Tan (1978); Stone (1979); Lee and others (1980); Grossman (1982); Kirmani, Milajoni and Mayer (1984); Hufbauer, Berliner and Elliott (1986); Koekkoek and Mennies (1986); Cline (1987); and Erzan and Karsenty (1987). Where the elasticity of demand for a particular country is not available, a formula has been derived from the data available and market shares. Estimate of the elasticity of substitution is not available by source. It is assumed to be low (0.5) in developing countries, as there is limited access to these markets and thus low degree of substitution is allowed, and higher (2.5) for developed countries in both restricted and unrestricted markets, where a higher degree of substitution is allowed from different sources because these markets are more open despite the MFA.

Data on supply parameters were difficult to obtain. The elasticity of transformation between clothing and other products was close to 1 for industrial countries and the ROW, and lower in other developing countries. Other elasticities have been assumed to be equal to 1 in all countries/country groups following Cline (1987).