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Import-Reducing Effect of Trade Barriers: A Cross-Country Investigation

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Author Info
Qing Wang
Abstract

A comprehensive empirical investigation is carried out to ascertain the import-reducing effect of trade protection barriers. We first present a statistical summary of the status of global trade protection. Then, based on a monopolistic competition trade model and 1994 cross-country data on trade barriers, trade flows, and production, we estimate the import-reducing effect of trade barriers including both tariffs and non-tariff barriers (NTBs). We use the disaggregated cross-country, cross-industry data on manufactured goods and, unlike previous studies, our sample covers a broad range of countries-more than 70 in total-including countries from the most developed ones like those in the Group of Seven to the least developed one, Bangladesh. We specify an empirical model that captures the stylized facts well and helps generate sensible estimates. Our econometric framework is designed to control for the simultaneous determination of trade flows, trade barriers, and production. We find that both tariff and NTBs are quite significant in restricting imports.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/216.

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Date of creation: 03 Jan 2002
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Handle: RePEc:imf:imfwpa:01/216

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Related research
Keywords: Trade restrictions ; Tariffs ; Nontariff barriers ; Import restrictions ; Economic models ;

References listed on IDEAS
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  1. Feenstra, R.C., 1995. "Estimating the Effects of Trade Policy," Papers 95-10, California Davis - Institute of Governmental Affairs.
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  2. Leamer, Edward E, 1974. "The Commodity Composition of International Trade in Manufactures: An Empirical Analysis," Oxford Economic Papers, Oxford University Press, vol. 26(3), pages 350-74, November. [Downloadable!] (restricted)
  3. Laird, S., 1996. "Quantifying Commercial Policies," Papers 96-001, Stanford - Institute for Thoretical Economics.
  4. Hummels, D. & Levinsohn, J., 1993. "Monopolistic Competition and International Trade: Reconsidering the Evidence," Working Papers 339, Research Seminar in International Economics, University of Michigan.
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  5. Ray, Edward John, 1981. "The Determinants of Tariff and Nontariff Trade Restrictions in the United States," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 105-21, February. [Downloadable!] (restricted)
  6. Keith E. Maskus, 1991. "Comparing International Trade Data and Product and National Characteristics Data for the Analysis of Trade Models," NBER Chapters, in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 17-60 National Bureau of Economic Research, Inc. [Downloadable!]
  7. Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, vol. 68(2), pages 246-50, May. [Downloadable!] (restricted)
  8. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August. [Downloadable!] (restricted)
  9. Jong-Wha Lee & Phillip Swagel, 1994. "Trade barriers and trade flows across countries and industries," International Finance Discussion Papers 476, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  10. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December. [Downloadable!] (restricted)
  11. Harrigan, James, 1996. "Openness to trade in manufactures in the OECD," Journal of International Economics, Elsevier, vol. 40(1-2), pages 23-39, February. [Downloadable!] (restricted)
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