IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

How import protection affects the Philippines'motor vehicle industry

  • Takacs, Wendy E.

The motor vehicle industry in the Philippines is regulated and protected by the provisions of development programs for cars, commercial vehicles, and motorcycles. Each program virtually prohibits the import of completely built-up vehicles, specifies minimum local content requirements for vehicles assembled in the country from imported completely knocked-down kits, and requires that firms assembling kits export to earn foreign exchange to cover the cost of the kits. Similar protective regimes have existed in a number of countries, especially in Latin America. The author develops a model to illustrate the economic impact and welfare cost of import prohibitions, local content requirements, and export requirements. She applies that model to Philippine data. Her results indicate that the protective regime in the Philippines imposes substantial costs on consumers and encourages the allocation of resources to relatively high-cost activities. Eliminating all of the restrictions overnight may lead to adjustment problems, but gradual liberalization could limit these problems. The proportion of domestic content required, the percentage of compensatory exports required for kits, and the tariff rates on kits could be lowered in stages, according to a preannounced schedule, to allow gradual adjustment. The prohibition on imports of assembled vehicles could be replaced by a tariff and phased out gradually. To avoid proportionately more protection of the assembly industry, the tariff on finished autos could be phased out more quickly than the other tariffs, to avoid sending false signals to the domestic industry about the direction of adjustment. To avoid increasing the effective rate of protection on assembly operations during liberalization, elimination of the domestic content and compensatory export requirements should be accompanied by decreases in the tariff rates on assembled vehicles.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1992/11/01/000009265_3961003203353/Rendered/PDF/multi0page.pdf
Download Restriction: no

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1035.

as
in new window

Length:
Date of creation: 30 Nov 1992
Date of revision:
Handle: RePEc:wbk:wbrwps:1035
Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Grossman, Gene M, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, MIT Press, vol. 96(4), pages 583-603, November.
  2. Michael L. Mussa, 1984. "The Economics of Content Protection," NBER Working Papers 1457, National Bureau of Economic Research, Inc.
  3. Munk, Bernard, 1969. "The Welfare Costs of Content Protection: The Automotive Industry in Latin America," Journal of Political Economy, University of Chicago Press, vol. 77(1), pages 85-98, Jan./Feb..
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1035. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.