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Illusory revenues: Import tariffs in resource-rich and aid-rich economies

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  • Collier, Paul
  • Venables, Anthony J.

Abstract

Where imports are financed predominantly by rents from resource extraction or aid the revenue generated by tariffs is illusory. Revenue 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 demonstrate this proposition for a simple central case and show that the result is not overturned by generalisations around this case. We argue that trade policy formulation in such economies should recognize the illusory nature of tariff revenues.

Suggested Citation

  • Collier, Paul & Venables, Anthony J., 2011. "Illusory revenues: Import tariffs in resource-rich and aid-rich economies," Journal of Development Economics, Elsevier, vol. 94(2), pages 202-206, March.
  • Handle: RePEc:eee:deveco:v:94:y:2011:i:2:p:202-206
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    References listed on IDEAS

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    1. Paul Collier & Anthony J Venables, 2008. "Illusory Revenues: Tariffs in Resource-Rich and Aid-Rich Economies," OxCarre Working Papers 004, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    2. Abe, Kenzo, 1992. "Tariff Reform in a Small Open Economy with Public Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 209-222, February.
    3. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
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    Cited by:

    1. Breisinger, Clemens & Diao, Xinshen & Wiebelt, Manfred, 2012. "Can oil-led growth and structural change go hand in hand in Ghana? A multi-sector intertemporal general equilibrium assessment," Kiel Working Papers 1784, Kiel Institute for the World Economy (IfW).
    2. Derek Kellenberg & Arik Levinson, 2016. "Misreporting Trade: Tariff Evasion, Corruption, and Auditing Standards," NBER Working Papers 22593, National Bureau of Economic Research, Inc.
    3. Dora Benedek & Ernesto Crivelli & Sanjeev Gupta & Priscilla Muthoora, 2014. "Foreign Aid and Revenue: Still a Crowding-Out Effect?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(1), pages 67-96, March.
    4. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    5. Michele Ruta & Anthony J. Venables, 2012. "International Trade in Natural Resources: Practice and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 331-352, August.
    6. Breisinger, Clemens & Diao, Xinshen & Wiebelt, Manfred, 2014. "Can oil-led growth and structural change go hand in hand in Ghana?," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 507-523.

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