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Political economy arguments for uniform tariffs

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  • Panagariya, Arvind
  • Rodrik, Dani

Abstract

During the 1980s the Bank aggressively promoted greater uniformity in tariffs in developing countries. The Bank's structural adjustment and trade reform programs have often recommended abolition of quantitative import restrictions and increased uniformity in tariffs. This report is a formal analysis of some political economy arguments for uniform tariffs. The authors present three models in which unifrom tariff rules may be adopted as a way of minimizing the welfare costs of endogenously determined tariffs. In the first two models, tariffs are demand determined : the government is essentially unable to resist the lobbying pressure. In the third model, tariffs are supply determined in the sense that they result from the government's preference for certain sectors over others. After examining the three models, the authors conclude that in each case it is possible for a uniform tariff regime to yield higher welfare than a regime in which tariffs can diverge across sectors.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 681.

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Date of creation: 31 May 1991
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Handle: RePEc:wbk:wbrwps:681

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Keywords: Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Export Competitiveness; Economic Theory&Research; National Governance;

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References

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  1. Balassa, Bela, 1989. "Tariff policy and taxation in developing countries," Policy Research Working Paper Series 281, The World Bank.
  2. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  3. W. M. Corden, 1958. "Import Restrictions And Triffs:A New Look At Australian Policy," The Economic Record, The Economic Society of Australia, vol. 34(69), pages 331-346, December.
  4. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  5. Ronald Findlay & Stanislaw Wellisz, 1982. "Endogenous Tariffs, the Political Economy of Trade Restrictions, and Welfare," NBER Chapters, in: Import Competition and Response, pages 223-244 National Bureau of Economic Research, Inc.
  6. Panagariya, Arvind, 1990. "How should tariffs be structured?," Policy Research Working Paper Series 353, The World Bank.
  7. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
  8. Rodrik, Dani, 1986. "Tariffs, subsidies, and welfare with endogenous policy," Journal of International Economics, Elsevier, vol. 21(3-4), pages 285-299, November.
  9. Panagariya, Arvind, 1992. "Input tariffs, duty drawbacks, and tariff reforms," Journal of International Economics, Elsevier, vol. 32(1-2), pages 131-147, February.
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Cited by:
  1. Arvind Panagariya, 2003. "The Economics And Politics Of Uniform Tariffs," International Trade 0309009, EconWPA.

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