The Implications of Trade Barriers for Sectoral Diversification and Macroeconomic Stability in Developing Economies
Abstract
The paper examines the implications of lower trade barriers for sectoral diversification and macroeconomic stability in developing economies with a large primary goods sector. It shows that lower trade barriers can have ambiguous effects on macroeconomic stability. It shows also that diversification, in the form of equal distribution of resources between nonprimary sectors, may be counterproductive. In fact, investment in the nonprimary sector with lower trade barriers unambiguously enhances macroeconomic stability in a developing economy that is subject to substantial primary shocks.Download Info
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Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/50.Length: 35
Date of creation: 01 Feb 2006
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Handle: RePEc:imf:imfwpa:06/50
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Related research
Keywords: Developing countries; Economic models; Export diversification; Trade restrictions;This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-02 (All new papers)
- NEP-DEV-2006-07-02 (Development)
- NEP-INT-2006-07-02 (International Trade)
- NEP-MAC-2006-07-02 (Macroeconomics)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- KAMGNA, Severin Yves, 2007.
"Diversification économique en Afrique centrale : Etats des lieux et enseignements
[Economic diversification in central Africa]," MPRA Paper 9602, University Library of Munich, Germany.
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