Production-weighted Estimates of Aggregate Protection in Rich Countries toward Developing Countries
AbstractA challenge in the development of aggregate indexes of trade protection is finding weights to put on various tariffs that a) reflect their importance to exporters and b) are not endogenous to the protection being measured. One common basis for weights is actual imports; but these, as is well-known, are endogenous. Various authors have worked to correct this endogeneity, but doing so is difficult in product areas where protection is both high and widespread. For this reason, I develop a new set of estimates of overall protection in rich countries with respect to developing ones that eschews import weights as much as possible in favor of weights based on the value of exporter’s total production in each product area. The results are generally much higher than those from the Bouët et al. (2004) “MAcMap” data set; there, weights are based on imports of large reference groups of countries. I conclude that product areas in which protection is high and widespread are systematically de-emphasized when using pure MAcMap weights to aggregate across major product groups. In particular, when gauging rich-country protection with respect to developing countries, agriculture is de-emphasized. I also develop estimates of trade-distorting subsidies by country and commodity and translate these into tariffequivalents with the methodology of Cline (2004) in order to estimate overall protection levels. Agricultural tariffs dominate subsidies in trade-distorting effect, and agricultural protection in turn dominates goods protection generally. Japan is most protective, largely because of rice tariffs near 900%, followed by Norway and Switzerland. Because of their greater reliance on agriculture, the poorest countries face higher trade barriers than wealthier developing countries, despite tariff preferences.
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Bibliographic InfoPaper provided by Center for Global Development in its series Working Papers with number 66.
Length: 24 pages
Date of creation: Aug 2005
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Doha Round; measuring trade openness; agricultural subsidies;
Other versions of this item:
- David Roodman, 2007. "Production-weighted Estimates of Aggregate Protection in Rich Countries Towards Developing Countries," The World Economy, Wiley Blackwell, vol. 30(6), pages 999-1028, 06.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-AGR-2006-07-21 (Agricultural Economics)
- NEP-ALL-2006-07-21 (All new papers)
- NEP-DEV-2006-07-21 (Development)
- NEP-INT-2006-07-21 (International Trade)
- NEP-SEA-2006-07-21 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anderson, James E & Neary, J Peter, 1994.
"Measuring the Restrictiveness of Trade Policy,"
World Bank Economic Review,
World Bank Group, vol. 8(2), pages 151-69, May.
- Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006.
"Estimating Trade Restrictiveness Indices,"
CEPR Discussion Papers
5576, C.E.P.R. Discussion Papers.
- David Roodman & Julie Walz, 2010. "Commitment to Development Index 2010," Working Papers id:3232, eSocialSciences.
- William Cline, 2002. "An Index of Industrial Country Trade Policy Toward Developing Countries," Working Papers 14, Center for Global Development.
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