Domestic Distorions and International Trade

Download or read book Domestic Distorions and International Trade written by James E. Anderson and published by World Bank Publications. This book was released on 1993 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we develop techniques for measuring the trade policy equivalent of domestic distortions, using a distance function approach. Our measure, the Trade Restrictiveness Index, is shown to equal the uniform tariff which is welfare-equivalent to a given pattern of domestic taxes and subsidies. We extend the Index to incorporate taxes on non-traded goods and factor markets and illustrate its operationality with an application to liberalization in Mexican agriculture. We conclude that our Index has considerable potential in empirical work and as an aid to trade negotiators.