Trade and Industrial Policy in Developing Countries: A Manual of Policy Analysis

276 Pages·1993·25.313 MB·English

by  David Greenaway, Chris Milner (auth.)

TRADE AND INDUSTRIAL POLICY IN
DEVELOPING COUNTRIES
Also by David Greenaway
INTERNATIONAL TRADE POUCY
ECONOMIC DEVELOPMENT AND INTERNATIONAL TRADE (editor)
CURRENT ISSUES IN INfERNATIONAL TRADE (editor)
CURRENT ISSUES IN MACROECONOMICS (editor)
Also by Chris Milner
EXPORT PROMOTION STRATEGIES: Theory and
Evidence from Developing Countries (editor)
POUCY ADJUSTMENT IN AFRICA (co-editor)
TRADE AND INDUSTRIAL POLICY
IN DEVELOPING COUNTRIES
A Manual of Policy Analysis
David Greenaway
and
Chris Milner
!50th YEAR
M
MACMILLAN
© David Greenaway and Chris Milner 1993
All rights reserved. No reproduction, copy or transmission of
this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
First published 1993 by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
ISBN 978-0-333-46920-0 ISBN 978-1-349-22782-2 (eBook)
DOI 10.1007/978-1-349-22782-2
A catalogue record for this book is available
from the British Library.
To Susan and Ruth
Contents
List of Tables xi
List of Figures xiv
List of Charts XV
Preface xvi
1 Introduction and Overview 1
1.1 Background and Aims 1
1.2 Outline of the Manual 2
PART I TRADE AND DEVELOPMENT
2 Instruments of Trade and Industrial Policy 7
2.1 Introduction 7
2.2 Economic effects of instruments of import
substitution 8
2.3 Economic effects of instruments of export
promotion 28
2.4 Instrument packages and policy strategies 37
2.5 Concluding comments 40
3 Trade Policy and Development 42
3.1 Introduction 42
3.2 Evolution of thought on trade and development 43
3.3 Trade as a source of impoverishment:
structuralism 45
3.4 Trade as a source of enrichment: neo-classicism 49
3.5 Policy orientation and trade policy 55
3.6 Concluding comments 59
vii
viii Contents
PARTll TOOLS OF POLICY EVALUATION: PARTIAL
ANALYSIS
4 The Structure of Nominal Protection 63
4.1 Introduction 63
4.2 Measuring nominal tariffs 63
4.3 Measuring non-tariff barriers 68
4.4 The extent of tariff and non-tariff protection 71
4.5 Concluding comments 77
5 Effective Protection Analysis 78
5.1 Introduction 78
5.2 The effective protection concept 79
5.3 Extensions to the effective protection concept 81
5.4 Measurement problems in effective protection
analysis 84
5.5 Empirical evidence on effective protection 91
5.6 Policy appraisal issues 95
5. 7 Concluding comments 97
6 Domestic Resource Cost Analysis 98
6.1 Introduction 98
6.2 Domestic resource costs concepts 99
6.3 . Applications of the DRC methodology 102
6.4 DRC analysis and policy appraisal 112
6.5 Concluding comments 114
PARTm TOOLS OF GENERAL EQUILIBRIUM ANALYSIS
7 Shift Analysis and the Incidence of Protection 117
7.1 Introduction 117
7.2 The theoretical framework 118
7.3 True protection and the incidence of
protection 122
7.4 Empirical application of the model 126
7.5 Uses and implications of the analysis 132
7.6 Concluding comments 135
8 Computable General Equilibrium Modelling 136
8.1 Introduction 136
8.2 Origins and development of CGE modelling 137
8.3 General equilibrium models: some basic
principles 138
8.4 Applying general equilibrium analysis 143
Contents IX
8.5 A CGE model to analyse foreign trade
restrictions illustrated 152
8.6 Concluding comments 157
Appendix 8.1: The equations of the TQR model 158
9 Applied CGE Analysis of Trade Policy 162
9.1 Introduction 162
9.2 Effective protection and resource pulls 163
9.3 Costs of protection and rent seeking 166
9.4 Trade regimes and market structure 168
9.5 Trade taxation and government revenue 172
9.6 Growth and trade strategy simulation 175
9. 7 Concluding comments 177
PART IV EVALUATING COMPARATIVE ADVANTAGE
10 Revealed Comparative Advantage 181
10.1 Introduction 181
10.2 Conceptual issues and problems 182
10.3 Trade performance and 'revealed' comparative
advantage 184
10.4 A price-based measure of revealed comparative
advantage 188
10.5 Concluding comments 193
11 Potential Comparative Advantage 194
11.1 Introduction 194
11.2 Factor content and the stages approach 195
11.3 Export similarity and comparative trade
performance 198
11.4 Policy reform and cost competitiveness 205
11.5 Concluding comments 208
PARTV THE MODELLING AND REFORMULATION OF
POLICY
12 Structural Adjustment Lending: Rationale and Trade
Policy Aspects 211
12.1 Introduction 211
12.2 Structural adjustment lending: origins and
structure 212
12.3 Trade policy reform in SALs 219
12.4 The role of policy appraisal in SALs 222
12.5 Concluding comments 225
x Contents
13 Structural Adjustment Lending: Timing, Sequencing
and Economic Effects 226
13.1 Introduction 226
13.2 Adjustment experience and economic
performance 227
13.3 Timing, sequencing and adjustment 235
13.4 Factors influencing sustainability 239
13.5 Policy appraisal, timing, sequencing and
adjustment 241
13.6 Concluding comments 241
Notes 243
References 246
Name Index 255
Subject Index 257