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Tariff Structure In A Small Open Economy: A Theoretical Analysis

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  • Sarbajit Chaudhuri

    (Dept. of Economics, Calcutta University)

Abstract

Developing countries have been facing substantial adjustment costs in their endeavor in implementing trade reform. To lessen the adjustment costs of trade reform and to diffuse political support for protection a uniform tariff policy has often been recommended. The present paper examines the efficacy of this policy in terms of a 3„e4 specific factor full-employment structure reasonable for a developing economy. It shows that whether a symmetric tariff structure would be able to protect all the import-competing sectors crucially depends on the economy¡¦s trade pattern. The paper is then extended to include Harris-Todaro type unemployment of unskilled labour. In this framework also the implications of the uniform tariffs and then welfare effects of tariffs on one sector have been studied. Finally, the consequences of tariffs on urban unemployment of unskilled labour have been examined.

Suggested Citation

  • Sarbajit Chaudhuri, 2005. "Tariff Structure In A Small Open Economy: A Theoretical Analysis," International Trade 0511006, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0511006
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    References listed on IDEAS

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    1. Motta, Massimo, 1992. "Multinational firms and the tariff-jumping argument : A game theoretic analysis with some unconventional conclusions," European Economic Review, Elsevier, vol. 36(8), pages 1557-1571, December.
    2. Chaudhuri, Sarbajit & Mukherjee, Ujjaini, 2002. "Removal of protectionism, foreign investment and welfare in a model of informal sector," Japan and the World Economy, Elsevier, vol. 14(1), pages 101-116, January.
    3. Hamid Beladi & Sugata Marjit, 1996. "An Analysis of Rural-Urban Migration and Protection," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 930-940, November.
    4. Panagariya, Arvind & Rodrik, Dani, 1993. "Political-Economy Arguments for a Uniform Tariff," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 685-703, August.
    5. Sugata Marjit, 1993. "Uniform tariffs in general equilibrium —A simple model," Journal of Economics, Springer, vol. 57(2), pages 189-196, June.
    6. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, vol. 11(1), pages 33-57, January.
    7. Ricardo Hausmann & Michael Gavin, 1996. "Securing Stability and Growth in a Shock Prone Region: The Policy Challenge for Latin America," Research Department Publications 4020, Inter-American Development Bank, Research Department.
    8. Sarbajit Chaudhuri & Ujjaini Mukhopadhyay, 2002. "Economic liberalization and welfare in a model with an informal sector," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 143-172.
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    Cited by:

    1. Dwibedi, Jayanta & Chaudhuri, Sarbajit, 2011. "Poverty alleviation programs, FDI-led growth and child labour under agricultural dualism," MPRA Paper 29997, University Library of Munich, Germany.
    2. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.

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    More about this item

    Keywords

    Full-employment; specific factor; uniform tariffs; Hechscher- Ohlin subsystem; skilled labour; unskilled labour; urban unemployment;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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