On the static and dynamic costs of trade restrictions for small developing countries
September 2007
Article
volume 84, issue 1 pp 46-60.
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We analyze the costs of trade restrictions for a small developing economy (LDC). Intermediate goods invented elsewhere are only introduced on the LDC market if it is profitable to do so. The LDC economy evolves to a balanced growth path in which income, welfare, and the share of available goods increase if trade restrictions fall. The adjustment path is asymmetric: an increase in trade restrictions leads to a slow-down of economic growth, while a decrease may lead to a rapid catch-up process. The dynamic costs of trade restrictions are in general substantially larger than the static costs.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
Automatically Extracted Terms
- trade restrictions
- trade
- restriction
- ldc market
- market
- growth
- increase
- set-up costs
- change
- economy
- welfare
- policy
- level
- ldc economy
- policy change
- marrewijk
- van marrewijk
- profit
- variety
- set-up
