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Agricultural Exports, Tariffs and Growth

  • Leonid V. Azarnert

This article presents a Ricardian model of trade with learning-by-doing to study the effect of barriers to trade in products with low growth potential on the long-run economic growth. The model shows that, when elasticity of demand for the product with a lower learning potential is lower than unitary, a reduction in the tariff imposed on this product, may shift the demand toward the product with a higher learning potential, thus enhancing economic growth in the exporter economy. Therefore, the current trend of reduction in tariffs on agricultural exports not only generates a positive welfare effect in the short run, but may similarly be beneficial for developing economies in the long run, since it also increases their incentive to develop sectors with higher growth potential.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2014/wp-cesifo-2014-01/cesifo1_wp4583.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4583.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4583
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  17. Dollar, David, 1992. "Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-1985," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 523-44, April.
  18. Krueger, Anne O, 1998. "Why Trade Liberalisation Is Good for Growth," Economic Journal, Royal Economic Society, vol. 108(450), pages 1513-22, September.
  19. Henson, Spencer & Loader, Rupert, 2001. "Barriers to Agricultural Exports from Developing Countries: The Role of Sanitary and Phytosanitary Requirements," World Development, Elsevier, vol. 29(1), pages 85-102, January.
  20. Azarnert, L.V.Leonid V., 2004. "Redistribution, fertility, and growth: The effect of the opportunities abroad," European Economic Review, Elsevier, vol. 48(4), pages 785-795, August.
  21. Spilimbergo, Antonio, 2000. " Growth and Trade: The North Can Lose," Journal of Economic Growth, Springer, vol. 5(2), pages 131-46, June.
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  24. Vincenzo Merella & Esteban Jaimovich, 2013. "Love for Quality, Comparative Advantage, and Trade," 2013 Meeting Papers 244, Society for Economic Dynamics.
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