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Economic Performance, Trade Restrictiveness, and Efficiency

Author

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  • J. Christophe Bureau
  • Nancy H. Chau
  • Rolf Färe
  • Shawna Grosskopf

Abstract

The paper addresses the question of whether trade restrictiveness impacts economic performance, via a trade restrictiveness index that is decomposable into a trade distortion and a domestic distortion component. The paper builds on the Anderson and Neary price index measure of trade distortion, in evaluating trade restrictiveness via a distance function approach. This is accomplished by adding a “dual” version to their trade restrictiveness price index, based on distance functions that scale output quantities. The authors compute the trade restrictiveness quantity index (TRQI) using a parametric frontier approach to model the production side of the economy, and a panel of information on the agricultural sector of a set of European Community countries. The results suggest that the use of TRQI makes a considerable difference to interpretations of the efficiency impact of agricultural trade policies in EC countries, as compared to policy‐oriented aggregates or result‐oriented measures of trade restrictiveness.

Suggested Citation

  • J. Christophe Bureau & Nancy H. Chau & Rolf Färe & Shawna Grosskopf, 2003. "Economic Performance, Trade Restrictiveness, and Efficiency," Review of Development Economics, Wiley Blackwell, vol. 7(4), pages 527-542, November.
    • Handle: RePEc:bla:rdevec:v:7:y:2003:i:4:p:527-542
    DOI: 10.1111/1467-9361.00207
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    References listed on IDEAS

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    1. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 107-125.
    2. J. Peter Neary, 1998. "Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High‐Technology Industries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 187-206, March.
    3. Fennell, Rosemary, 1997. "The Common Agricultural Policy: Continuity and Change," OUP Catalogue, Oxford University Press, number 9780198288572, Decembrie.
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    Cited by:

    1. Chau, Nancy H. & Färe, Rolf, 2011. "Shadow pricing market access: A trade benefit function approach," Journal of Economic Theory, Elsevier, vol. 146(4), pages 1631-1663, July.
    2. Raimondos-Moller, Pascalis & Woodland, Alan D., 2006. "Measuring tax efficiency: A tax optimality index," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1903-1922, November.
    3. Jeffrey Reimer & Sang Kang, 2010. "Estimation of trade and domestic distortions: an application to world agriculture," Journal of Productivity Analysis, Springer, vol. 34(3), pages 257-265, December.
    4. Maria Cipollina & Luca Salvatici, 2008. "Measuring Protection: Mission Impossible?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 577-616, July.

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