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International Trade in Natural Resources: Practice and Policy

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  • Michele Ruta
  • Anthony J. Venables

Abstract

Natural resources account for 20% of world trade, and dominate the exports of many countries. Policy is used to manipulate both international and domestic prices of resources, yet this policy is largely outside the disciplines of the WTO. The instruments used include export taxes, price controls, production quotas, and domestic producer and consumer taxes (equivalent to trade taxes if no domestic production is possible). We review the literature, and argue that the policy equilibrium is inefficient. This inefficiency is exacerbated by market failure in long run contracts for exploration and development of natural resources. Properly coordinated policy reforms offer an avenue to resource exporting and importing countries to overcome these inefficiencies and obtain mutual gains.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3778.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3778

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Keywords: natural resources; trade; export tax; tariff escalation; OPEC; WTO; terms of trade;

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Cited by:
  1. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "International Politics and Import Diversification in the Second Wave of Globalization," Development Working Papers, Centro Studi Luca d\'Agliano, University of Milano 342, Centro Studi Luca d\'Agliano, University of Milano, revised 13 Nov 2012.
  2. Dülger, Fikret & Lopcu, Kenan & Burgaç, Almıla & Ballı, Esra, 2013. "Is Russia suffering from Dutch Disease? Cointegration with structural break," Resources Policy, Elsevier, Elsevier, vol. 38(4), pages 605-612.
  3. Wübbeke, Jost, 2013. "Rare earth elements in China: Policies and narratives of reinventing an industry," Resources Policy, Elsevier, Elsevier, vol. 38(3), pages 384-394.

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