International Trade, Distortions and Long-Run Economic Growth

November 1, 1992

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Format: Chicago

Jong-Wha Lee. International Trade, Distortions and Long-Run Economic Growth, (USA: International Monetary Fund, 1992) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The links between trade and growth are examined in a neoclassical model of an open economy in which domestic production requires both domestic and imported inputs. The model shows that trade distortions induced by such government policies as tariffs and exchange controls generate cross-country divergences in growth rates and in per capita income over a long transitional period. The empirical results confirm that tariff rates and black market premia, interacting with an estimate of the share of free trade imports, have significant negative effects on the growth rate of per capita income across countries in the orders of magnitude predicted by the model.

Subject: International trade, National accounts, Personal income, Tariffs, Taxes, Trade barriers, Trade liberalization, Trade policy

Keywords: Free trade, Import share, Open economy, Personal income, Production function, Saving rate, Sub-Saharan Africa, Tariff rate, Tariffs, Trade barriers, Trade distortion, Trade liberalization, Trade policy, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/090
Stock No:

WPIEA0901992
ISBN:

9781451851335
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 40, No. 2, June 1993.

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