The Welfare Cost of Tariff Protection in the Balkan Countries
AbstractFor eight Balkan countries (Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Macedonia, Romania, Serbia & Montenegro, and Slovenia) the welfare cost of tariff protection on imports of goods based on recent years tariff data (2001 to 2003) is computed. The computation is based on a partial equilibrium framework with constant elasticity demands and perfect substitutes with a compilation of 6000 tariff lines. The focus on the import market allows to identify tariff peaks but the welfare loss of protection is concentrated in a small set of products, namely food products, tobacco, textiles and agriculture. With a simulated extrapolation to imports of services and when the administrative cost of tax collection is taken into account, the welfare cost is equal, on average, to 0.7% of GDP, that is $ 0.9 billion ($ 18 per capita). In Romania, the highest protection deals with intermediate goods and capital goods -as in import substitution policies used in the past by developing countries- strengthening the perverse effect of trade policy on economic growth.
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Bibliographic InfoPaper provided by The Vienna Institute for International Economic Studies, wiiw in its series The wiiw Balkan Observatory Working Papers with number 057.
Date of creation: Oct 2004
Date of revision:
Publication status: Published as The wiiw Balkan Observatory Working Paper, October 2004
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
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