Illusory revenues: Import tariffs in resource-rich and aid-rich economies
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.
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- 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 825-48, December.
- Collier, Paul & Venables, Anthony J, 2008.
"Illusory Revenues: Tariffs in Resource-Rich and Aid-Rich Economies,"
CEPR Discussion Papers
6729, C.E.P.R. Discussion Papers.
- 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.
- 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 209-22, February.
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