اصلاح تعرفه های درآمد خنثی و رشد در یک اقتصاد کوچک باز
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|25136||2003||20 صفحه PDF||سفارش دهید||8891 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Development Economics, Volume 71, Issue 1, June 2003, Pages 213–232
Formulating a two-final-good, two-input, small open endogenous growth model, we analyze the growth effect of revenue-neutral tariff reform. We find that the growth effect of tariff reform depends on the pattern of trade and the elasticities of substitution between inputs and between consumption of final goods. When the economy specializes in the capital good, the revenue-neutral substitution of a tariff on the imported final good for a tariff on the foreign intermediate good always raises the growth rate. However, when the economy specializes in the consumption good, the revenue-neutral tariff reform may raise or lower the growth rate.
To finance a targeted amount of expenditure, the government must collect revenue from various sources. In developing economies, tariffs on imports of final and intermediate goods contribute to a non-negligible part of government revenue. The World Bank (2001) reports that taxes on international trade accounted for about 17% of total current revenue on average in low- and middle-income economies in 1990. On the other hand, the two types of tariffs have different effects on resource allocation. In fact, the two types of tariffs are differentiated. According to the latest cross-country data provided by the World Bank (2001), the absolute value of the difference between the mean tariff rate on manufactured products (roughly representing final goods) and that on primary products (roughly representing intermediate goods) is about 3.8% on average1, whereas the mean tariff rate on all products is about 13.4%. We examine how a tariff structure designed to achieve a fixed amount of revenue affects the growth of a small open economy. Osang and Pereira (1996) constructed a small open endogenous growth model with physical and human capital and a foreign consumption good, a foreign investment good and a foreign intermediate good (which they called “the technology good”) to assist human capital accumulation. Using a numerical method, they showed that the revenue-neutral substitution of a tariff on the investment good for a tariff on the intermediate good always raises the growth rate. 2 This result contrasts with the following intuition: revenue-neutral substitution of one tariff for another in total may have an ambiguous effect on the growth rate since both the investment good and the intermediate good are essential for economic growth. 3 To explore such a possibility in as simple a setup as we can, this paper presents an analytically tractable model with general functional forms. We develop a two-final-good, two-input, small open endogenous growth model. Each of the two final goods, a capital good (e.g. machine) and a consumption good (e.g. food), is produced from domestic capital (e.g. machine installed for production) and a foreign intermediate good (e.g. raw material). Since the price of the foreign intermediate good is given, the economy completely specializes in the sector that offers the higher rental rate of capital. Our model can be seen as a hybrid of Lee (1993, Section 3) and Kaneko (2000). In Lee (1993), a single final good is produced from capital and a foreign intermediate good. In Kaneko (2000), capital and consumption goods are produced from domestic physical and human capital.4 Our main results are summarized as follows. First, when the economy specializes in the capital good, the revenue-neutral substitution of a tariff on the imported final good for a tariff on the foreign intermediate good always raises the growth rate. Second, however, when the economy specializes in the consumption good, the revenue-neutral tariff reform may raise or lower the growth rate depending on the elasticities of substitution between inputs and between consumption of final goods. Noting that the rate of return to capital is equal to the rental rate, divided by the domestic price of the capital good, less the depreciation rate, these results follow from two sources. First, lowering the tariff rate on the foreign intermediate good raises the rental rate by raising the relative scarcity of capital in the operating sector, whereas raising the tariff rate on the imported final good does not affect the rental rate since the imported sector is not operating. Second, if and only if the economy specializes in the consumption good, raising the tariff rate on the imported final good raises the domestic price of the capital good. The main difference between the results in this paper and those in the previous literature is due to the more flexible pattern of trade in this paper. In Osang and Pereira (1996), the pattern of trade is fixed by Armington-type consumption and production structures. This paper, in contrast, allows for the variable pattern of trade. The rest of this paper is organized as follows. Section 2 formulates the model. Section 3 examines the determination of patterns of specialization and prices. 4 and 5 analyze the growth effects of revenue-neutral tariff reform when the economy specializes in the capital and consumption goods, respectively. Section 6 investigates the welfare effect. Section 7 concludes by discussing policy implications and directions for further research.
نتیجه گیری انگلیسی
The results obtained in this paper have some policy implications. First, the pattern of trade is crucial in judging the effect of revenue-neutral tariff reform on the growth rate. For example, if a developing economy exports machines, then the revenue-neutral substitution of tariffs on foods for tariffs on raw materials is likely to promote growth. On the other hand, if the economy exports foods, then we cannot immediately tell which tariffs should be substituted for the other to speed up growth. Second, in the case that the economy exports the consumption good, estimating the elasticities of substitution provides a useful guide to the direction of growth-enhancing revenue-neutral tariff reform. If and only if the installed machines and the raw materials are highly elastic in production, and the machines and the foods are not so elastic in consumption, the government should substitute the tariffs on the machines for the tariffs on the raw materials to enhance growth. Otherwise, it should go the other way around. Third, growth-enhancing revenue-neutral tariff reform is not always welfare-enhancing. We have shown that breaking down the welfare effect into growth, substitution, and income effects is useful in understanding the sources of welfare change. The model in this paper is open to further research. First, to formulate an analytically tractable model, this paper makes some simplifying assumptions: there are no adjustment costs, no labor–leisure trade-offs, no international borrowing and lending, logarithmic utility, and so on. Relaxing these assumptions will make the model more realistic, although numerical methods will be more useful than analytical ones in that case. Second, our model is free from any kind of market failure. If we incorporate externality or public good, then it is interesting to see whether and in what case our policy recommendation will be valid.