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Agricultural Exports, Tariffs and Growth

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  • Leonid V. Azarnert

Abstract

This article presents a Ricardian model of trade with learning-by-doing to study the effect of barriers to trade in products with low growth potential on the long-run economic growth. The model shows that, when elasticity of demand for the product with a lower learning potential is lower than unitary, a reduction in the tariff imposed on this product, may shift the demand toward the product with a higher learning potential, thus enhancing economic growth in the exporter economy. Therefore, the current trend of reduction in tariffs on agricultural exports not only generates a positive welfare effect in the short run, but may similarly be beneficial for developing economies in the long run, since it also increases their incentive to develop sectors with higher growth potential.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2014/wp-cesifo-2014-01/cesifo1_wp4583.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4583.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4583

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Keywords: trade barriers; agricultural export; learning-by-doing;

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References

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  1. Jean-Christophe Bureau & Sébastien Jean, Alan Matthews, 2005. "The consequences of agricultural trade liberalization for developing countries: distinguishing between genuine benefits and false hopes," The Institute for International Integration Studies Discussion Paper Series iiisdp073, IIIS.
  2. Leonid V. Azarnert, 2011. "Guest-Worker Migration, Human Capital and Fertility," CESifo Working Paper Series 3429, CESifo Group Munich.
  3. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank.
  4. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
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  6. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
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  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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  15. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," World Bank Economic Review, World Bank Group, vol. 22(2), pages 187-231, June.
  16. World Bank, 2010. "World Development Indicators 2010," World Bank Publications, The World Bank, number 4373, October.
  17. repec:fth:stanho:e-92-3 is not listed on IDEAS
  18. Esteban Jaimovich & Vincenzo Merella, 2011. "Love for Quality, Comparative Advantage, and Trade," Carlo Alberto Notebooks 216, Collegio Carlo Alberto, revised 2012.
  19. Galor, Oded, 1994. "Tariffs, Income Distribution and Welfare in a Small Overlapping-Generations Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 173-92, February.
  20. Tim Josling, 1993. "Protectionism in agriculture: Slow progress towards freer trade in agricultural products," Open Economies Review, Springer, vol. 4(2), pages 211-228, June.
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Cited by:
  1. Kamei, Keita & Sasaki, Hiroaki, 2014. "Is Agricultural Productivity Growth Good for Industrialization? Infrastructures and the Welfare Maximizing Tax Rate," MPRA Paper 53606, University Library of Munich, Germany.

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