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. Reveue 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 domonstrate 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 countires 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 Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford in its series OxCarre Working Papers with number 004.
Date of creation: 2008
Date of revision:
Aid; natural resources; import tariffs;
Other versions of this item:
- Collier, Paul & Venables, Anthony J., 2008. "Illusory Revenues: Tariffs in Resource-Rich and Aid-Rich Economies," CEPR Discussion Papers 6729, C.E.P.R. Discussion Papers.
- 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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