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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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  1. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
  2. Jean-Christophe Bureau & Sébastien Jean & Alan Matthews, 2005. "The Consequences of Agricultural Trade Liberalization for Developing Countries: Distinguishing Between Genuine Benefits and False Hopes," Working Papers 2005-13, CEPII research center.
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  7. Spilimbergo, Antonio, 2000. " Growth and Trade: The North Can Lose," Journal of Economic Growth, Springer, vol. 5(2), pages 131-46, June.
  8. Leonid V. Azarnert, 2012. "Guest‐worker Migration, Human Capital and Fertility," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 318-330, 05.
  9. Pablo Fajgelbaum & Gene M. Grossman & Elhanan Helpman, 2011. "Income Distribution, Product Quality, and International Trade," Journal of Political Economy, University of Chicago Press, vol. 119(4), pages 721 - 765.
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  13. Galor, Oded, 1994. "Tariffs, Income Distribution and Welfare in a Small Overlapping-Generations Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 173-92, February.
  14. Vincenzo Merella & Esteban Jaimovich, 2013. "Love for Quality, Comparative Advantage, and Trade," 2013 Meeting Papers 244, Society for Economic Dynamics.
  15. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
  16. World Bank, 2010. "World Development Indicators 2010," World Bank Publications, The World Bank, number 4373.
  17. 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.
  18. Pablo D. Fajgelbaum, 2011. "Income Distribution, Product Quality and International Trade," 2011 Meeting Papers 415, Society for Economic Dynamics.
  19. 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.
  20. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  21. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  22. 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.
  23. Krueger, Anne O, 1998. "Why Trade Liberalisation Is Good for Growth," Economic Journal, Royal Economic Society, vol. 108(450), pages 1513-22, September.
  24. George Alogoskoufis, 2014. "Endogenous Growth and External Balance in a Small Open Economy," Open Economies Review, Springer, vol. 25(3), pages 571-594, July.
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