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Are duty drawbacks on exports worth the hassle?

Author

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  • Elena Ianchovichina

Abstract

Many countries use duty drawbacks on exports, yet there is no consensus whether countries should embrace or abandon them. The answer depends on countries' development priorities and economic conditions. An increase in the drawback has a positive impact on export competitiveness, but the welfare effect is ambiguous. A welfare increase is more likely if the economy is small with high input tariffs, low initial drawback, low administrative costs and tariff leakages. In China duty drawback removal after meeting its WTO commitments improves welfare, but hurts economic efficiency, export competitiveness, and real incomes. Further liberalization can mitigate these negative effects.

Suggested Citation

  • Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 881-913, August.
  • Handle: RePEc:cje:issued:v:40:y:2007:i:3:p:881-913
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    Cited by:

    1. Deng, Ziliang & Guo, Honglin & Zhang, Weifu & Wang, Chengqi, 2014. "Innovation and survival of exporters: A contingency perspective," International Business Review, Elsevier, vol. 23(2), pages 396-406.
    2. Fabrice Defever & Alejandro Riaño, "undated". "China's Pure Exporter Subsidies," Discussion Papers 12/11, University of Nottingham, GEP.
    3. Michelle Connolly & Kei-Mu Yi, 2015. "How Much of South Korea's Growth Miracle Can Be Explained by Trade Policy?," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 188-221, October.
    4. Defever, F. & Reyes, J-D., 2016. "Does the Elimination of Export Requirements in Special Economic Zones A ect Export Performance? Evidence from the Dominican Republic," Working Papers 16/04, Department of Economics, City University London.
    5. Dennis Tao Yang, 2012. "Aggregate Savings and External Imbalances in China," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 125-146, Fall.
    6. Channing Arndt & Finn Tarp, 2008. "Trade Policy Reform and the Missing Revenue †," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(1), pages 131-160, January.
    7. Mulu Gebreyesus & Ashagrie Demile, 2017. "Why export promotion efforts failed to deliver? Assessment of the export incentives and their implementation in Ethiopia," Working Papers 017, Ethiopian Development Research Institute.
    8. Bussolo,Maurizio & Vargas Da Cruz,Marcio Jose, 2015. "Does input tariff reduction impact firms'exports in the presence of import tariff exemption regimes ?," Policy Research Working Paper Series 7231, The World Bank.
    9. Fabrice Defever & Alejandro Riaño, 2017. "China’s Dual Export Sector," Discussion Papers 2017-01, University of Nottingham, GEP.
    10. Hatta, Tatsuo, 2015. "Revenue-Constrained Combination of an Optimal Tariff and Duty Drawback," AGI Working Paper Series 2015-19, Asian Growth Research Institute.

    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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