Definition of Quotas
Simply stated, Quota is an allotment. It is an official limit on the quantity of something. In other words, it can be the share assigned to an individual, group or an entity. For example, in the field of business and commerce, an ‘Activity Quota’ of a salesperson, is the minimum level of sales-oriented tasks, like making phone calls, that the person should perform during a given period.
Role in Manufacturing
From monitoring workers’ productivity to meeting production targets, Quotas play important role in manufacturing. However, quotas have been criticized because they alone, take into account only numbers, and exclude quality of the work or the manner used to realize those numbers. W. Edwards Deming, who was a well known proponent of statistical quality control, criticized quotas in his fourteen points on Quality Management. He recommended eliminating numerical quotas for the workforce and numerical goals for the management. Members of the Organization of Petroleum Exporting Countries (OPEC) frequently agree upon oil production quota for individual member countries. This helps control the global crude supply and hence its global price. Every year the US government sets the Aggregate Production Quotas (APQ) for controlled substances like ephedrine and pseudoephedrine. Manufacturers and importers of such substances apply to receive government quota. This quota system ensures availability of these substances for scientific, industrial and use, yet limits their availability for non-essential public consumption.
Significance in Commerce
In international trade, a ‘Quota’ means, a government imposed limit on quantity of goods or services that can be imported or exported by that country in a given time period. ‘Quotas’ and ‘Tariffs’ are the tools generally used by governments in managing imports into the country. Quotas are generally more effective than tariffs in restricting trade, because the foreign (exporting) country cannot offset the effects of quotas by providing higher export subsidy or by depreciating its currency against the importing country’s currency. Import quotas used to play a significant role in global trade. However, since the 1995 renegotiation of general agreement on tariffs and trade (GATT), it has become very difficult for a country to introduce quotas.
Population Quotas in Military Conscription
The United States first used national conscription during the Civil War. The Confederacy created a law in 1862 requiring young men between the age of 18 and 35 to join military. However, overseers of slaves, government officers and clergymen were excluded. The Union followed soon and authorized its draft within a state when the state could not meet its quota with volunteers. After the Emancipation Proclamation came into effect, U.S. states vigorously enlisted former slaves to meet their enlistment quotas. This law also permitted that the men selected in the draft could provide substitutes or pay commutation money. In Chile, military service is voluntary but if quotas necessary for the military are not fulfilled, the government can recruit conscripts. In Thailand, every selection station has a recruitment quota. First a call is made for volunteers. If the number of volunteers is less than the quota for the station, then the remaining men are enlisted by conscript. Manufacturers and importers of such substances apply to receive government quotas. This quota system ensures availability of these substances for scientific, industrial and use, yet limits their availability for non-essential public consumption.
Quotas In Affirmative Action
Quotas are also used to extend affirmative action. In India, there is an elaborate quota system for public jobs, admission to government funded colleges and some elected assemblies. These quotas are filled by members of disadvantaged groups. For women in India, there is a quota of one-third of all seats in local elected bodies. In Sweden, on the other hand, courts have held that ethnic quotas in universities are discriminatory and therefore unlawful. Affirmative action in the US is not based on the quota system. Instead, it focuses on issues such as education, employment and some specific special consideration to some excluded groups. President Nixon wrote in his memoirs, “We would not impose quotas, but would require federal contractors to show affirmative action to meet the goals of increasing minority employment".