Illusory Revenues: Tariffs in Resource-Rich and Aid-Rich Economies
AbstractWhere imports are financed predominantly by rents from resource extraction or aid, the revenue generated by tariffs is illusory. Revenue earned by the tariff is offset by a reduction in the real value of aid and resource rents. Revenue is however moved between accounts in the government budget, which, in the case of aid, may reduce the burden of donor conditionality. We demonstrate this proposition and its qualifications analytically and by simulating the effects of tariffs on revenue, real income, and export diversification for a range of cases. Whereas countries in which tariff revenue is illusory should adopt more liberal trade regimes, we show that currently there is no such tendency.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6729.
Date of creation: Feb 2008
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Other versions of this item:
- Paul Collier & Anthony J Venables, 2008. "Illusory Revenues: Tariffs in Resource-Rich and Aid-Rich Economies," OxCarre Working Papers 004, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- F1 - International Economics - - Trade
- F35 - International Economics - - International Finance - - - Foreign Aid
- Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
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