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Are duty drawbacks on exports worth the hassle?

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  • Elena Ianchovichina

Abstract

Many countries use duty drawbacks on exports, yet there is no consensus whether countries should embrace or abandon them. The answer depends on countries' development priorities and economic conditions. An increase in the drawback has a positive impact on export competitiveness, but the welfare effect is ambiguous. A welfare increase is more likely if the economy is small with high input tariffs, low initial drawback, low administrative costs and tariff leakages. In China duty drawback removal after meeting its WTO commitments improves welfare, but hurts economic efficiency, export competitiveness, and real incomes. Further liberalization can mitigate these negative effects.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 40 (2007)
Issue (Month): 3 (August)
Pages: 881-913

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Handle: RePEc:cje:issued:v:40:y:2007:i:3:p:881-913

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Cited by:
  1. Deng, Ziliang & Guo, Honglin & Zhang, Weifu & Wang, Chengqi, 2014. "Innovation and survival of exporters: A contingency perspective," International Business Review, Elsevier, vol. 23(2), pages 396-406.
  2. Fabrice Defever & Alejandro Riaño, 2012. "China's pure exporter subsidies," LSE Research Online Documents on Economics 48929, London School of Economics and Political Science, LSE Library.
  3. Yang, Dennis T., 2012. "Aggregate Savings and External Imbalances in China," IZA Discussion Papers 6964, Institute for the Study of Labor (IZA).
  4. Michelle Connolly & Kei-Mu Yi, 2008. "How much of South Korea’s growth miracle can be explained by trade policy?," Working Paper Series 2008-23, Federal Reserve Bank of San Francisco.
  5. Fabrice Defever & Alejandro Riaño, 2013. "China's Pure Exporter Subsidies," FIW Working Paper series 121, FIW.

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