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A profile of border protection in Egypt : an effective rate of protection approach adjusting for energy subsidies

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  • Valdes, Alberto
  • Foster, William

Abstract

This study examines recent effective rates of protection across the Egyptian economy, using an ad valorem price wedge introduced by nontariff barriers and energy subsidies, and compares today's effective rates of protection with those of a decade ago. The study uses 23 aggregated sectors from input-output matrix information. Although trade liberalization since the late-1990s has had a considerable impact in reducing protection of some industries, some sectors, such as the food and tobacco sector, remain relatively highly protected, due to tariff escalation and nontariff barriers, and due to energy subsidies. Energy subsidies are not formally sector specific but do favor sectors that are energy intensive (of particular note is the electricity sector). It appears that energy pricing is part of a strategy to subsidize and promote certain industries and in effect offset the dis-protection or taxation that results from tariffs on intermediate inputs. The case of the cement sector is notable because energy subsidies appear to almost exactly offset the negative impacts of tariffs and indirect taxes. The fertilizer sector has zero nominal tariffs, benefiting agriculture, and so a negative effective rate of protection due simply to tariffs on intermediate inputs. However, the fertilizer sector ends up with a very high a positive total effective rate of protection due to energy subsidies.

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  • Valdes, Alberto & Foster, William, 2011. "A profile of border protection in Egypt : an effective rate of protection approach adjusting for energy subsidies," Policy Research Working Paper Series 5685, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5685
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    1. Sampson, Gary P & Yeats, Alexander J, 1979. "On the Use of Belgium-Netherlands Coefficients for Effective Protection Analysis," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 496-507, November.
    2. Antoine Bouët & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2004. "A Consistent, Ad-Valorem Equivalent Measure of Applied Protection Across the World: The MAcMap-HS6 Database," Working Papers 2004-22, CEPII research center.
    3. Corden, W. M., 1971. "The substitution problem in the theory of effective protection," Journal of International Economics, Elsevier, vol. 1(1), pages 37-57, February.
    4. Gary P. Sampson, 1974. "On Factor Substitution and Effective Tariff Rates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(2), pages 293-296.
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    Cited by:

    1. Zaki, Chahir & Selwaness, Irène, 2012. "Assessing the Impact of Trade Reforms on Informality in Egypt," Conference papers 332191, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Aya Elewa, 2019. "Trade Openness and Domestic Market Share," Journal of Industry, Competition and Trade, Springer, vol. 19(3), pages 441-463, September.

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