IDEAS home Printed from https://ideas.repec.org/a/ags/saeasj/233665.html
   My bibliography  Save this article

A Quantitive Evaluation of the Potential Effects of Trade Policy Reversal in Sri Lanka: A Computable General Equilibrium (CGE) Analysis

Author

Listed:
  • Liyanaarachchi, Tilak Susantha
  • Bandara, Layatilleke S.
  • Naranpanawa, Athula

Abstract

In recent years there has been a trend in rising protectionism and a reversal of trade policy reforms in some developed and developing countries, particularly after the global financial crisis. Although some researchers and practitioners have discussed recent trends in trade policy reversal in both developed and developing countries in recent years, no serious attempts have been made to examine the effects of trade policy reversal in a developing country within an economy-wide framework. The current paper attempts to fill this research gap by answering the question: Can developing countries benefit from trade policy reversals? The study focuses particularly on the case of Sri Lanka. To address this central research aim the paper first reviews recent trends in import duty and para-tariffs in Sri Lanka, particularly after the global financial crisis. An economy-wide computable general equilibrium (CGE) model was then used to evaluate the effects of trade policy reversal on the Sri Lankan economy. The results of the Sri Lankan case study presented suggest that developing countries will not benefit from trade policy reversal at either the macro level or industry level.

Suggested Citation

  • Liyanaarachchi, Tilak Susantha & Bandara, Layatilleke S. & Naranpanawa, Athula, 2014. "A Quantitive Evaluation of the Potential Effects of Trade Policy Reversal in Sri Lanka: A Computable General Equilibrium (CGE) Analysis," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 16, pages 1-26, November.
    • Handle: RePEc:ags:saeasj:233665
    DOI: 10.22004/ag.econ.233665
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/233665/files/sjae16102.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.233665?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Matthieu Bussière & Emilia Pérez‐Barreiro & Roland Straub & Daria Taglioni, 2011. "Protectionist Responses to the Crisis: Global Trends and Implications," The World Economy, Wiley Blackwell, vol. 34, pages 826-852, May.
    2. Kelegama, Saman & Foley, Fritz, 1999. "Impediments to Promoting Backward Linkages from the Garment Industry in Sri Lanka," World Development, Elsevier, vol. 27(8), pages 1445-1460, August.
    3. World Bank, 2004. "Trade Policies in South Asia : An Overview, Volume 2. An Overview," World Bank Publications - Reports 15657, The World Bank Group.
    4. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
    5. Ganeshan Wignaraja, 1998. "Trade Liberalization in Sri Lanka," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-26267-0, December.
    6. Prema-chandra Athukorala, 2012. "Sri Lanka’s Trade Policy: Reverting to Dirigisme?," The World Economy, Wiley Blackwell, vol. 35(12), pages 1662-1686, December.
    7. Dunham, D.M. & Kelegama, S., 1994. "Economic liberalization and structural reforms : the experience of Sri Lanka, 1977-93," ISS Working Papers - General Series 19114, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    8. Naranpanawa, Athula & Bandara, Jayatilleke S. & Selvanathan, Saroja, 2011. "Trade and poverty nexus: A case study of Sri Lanka," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 328-346, March.
    9. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
    10. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    11. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014.
    12. Mark Horridge, 2000. "ORANI-G: A General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-93, Victoria University, Centre of Policy Studies/IMPACT Centre.
    13. Jayatilleke S. Bandara & Athula Naranpanawa, 2015. "Garment Industry in Sri Lanka and the Removal of GSP Plus by EU," The World Economy, Wiley Blackwell, vol. 38(9), pages 1438-1461, September.
    14. Bandara, Jayatilleke S, 1991. "Computable General Equilibrium Models for Development Policy Analysis in LDCs," Journal of Economic Surveys, Wiley Blackwell, vol. 5(1), pages 3-69.
    15. World Bank, 2004. "Trade Policies in South Asia : An Overview, Volume 3. Some Key Sectors," World Bank Publications - Reports 15658, The World Bank Group.
    16. World Bank, 2004. "Trade Policies in South Asia : An Overview, Volume 1. Operational Summary," World Bank Publications - Reports 14379, The World Bank Group.
    17. J. Mark Horridge & Brian R. Parmenter & Martin Cameron & Riaan Joubert & Areef Suleman & Dawie de Jongh, 1995. "The Macroeconomic, Industrial, Distributional and Regional Effects of Government Spending Programs in South Africa," Centre of Policy Studies/IMPACT Centre Working Papers g-109, Victoria University, Centre of Policy Studies/IMPACT Centre.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liyanaarachchi, Tilak S. & Naranpanawa, Athula & Bandara, Jayatilleke S., 2016. "Impact of trade liberalisation on labour market and poverty in Sri Lanka. An integrated macro-micro modelling approach," Economic Modelling, Elsevier, vol. 59(C), pages 102-115.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liyanaarachchi, Tilak S. & Naranpanawa, Athula & Bandara, Jayatilleke S., 2016. "Impact of trade liberalisation on labour market and poverty in Sri Lanka. An integrated macro-micro modelling approach," Economic Modelling, Elsevier, vol. 59(C), pages 102-115.
    2. Chris Milner, 2013. "Declining Protection in Developing Countries: Fact or Fiction?," The World Economy, Wiley Blackwell, vol. 36(6), pages 689-700, June.
    3. Asuyama, Yoko, 2015. "Skill sorting and production chains : evidence from India," IDE Discussion Papers 545, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Amirul Islam & Harry Bloch & Ruhul Salim, 2014. "How effective is the Free Trade Agreement in South Asia? An empirical investigation," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(5), pages 611-627, September.
    5. Ramesh Chandra & Rajiv Kumar, 2010. "South Asian Integration: Prospects and Lessons from East Asia," Chapters, in: Masahiro Kawai & Jong-Wha Lee & Peter A. Petri & Giovanni Capanelli (ed.), Asian Regionalism in the World Economy, chapter 12, Edward Elgar Publishing.
    6. Giordano, Paolo & Li, Kun, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.
    7. Naranpanawa, Athula & Bandara, Jayatilleke S. & Selvanathan, Saroja, 2011. "Trade and poverty nexus: A case study of Sri Lanka," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 328-346, March.
    8. Itakura, Ken & van der Mensbrugghe, Dominique, 2011. "Calibrating the Modified An Implicitly Directly Additive Demand System (MAIDADS) for Applied Economic Modeling," Conference papers 332140, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Asian Bank, 2017. "Bangladesh: Looking Beyond Garments - Employment Diagnostic Study," Working Papers id:11767, eSocialSciences.
    10. Naranpanawa, Athula & Bandara, Jayatilleke S., 2012. "Poverty and growth impacts of high oil prices: Evidence from Sri Lanka," Energy Policy, Elsevier, vol. 45(C), pages 102-111.
    11. Jayatilleke S. Bandara & Athula Naranpanawa, 2015. "Garment Industry in Sri Lanka and the Removal of GSP Plus by EU," The World Economy, Wiley Blackwell, vol. 38(9), pages 1438-1461, September.
    12. Haaparanta, Pertti & Kerkela, Leena, 2007. "Trade and Aid Policies: Their Impact on Economic Development in Mozambique," Conference papers 331650, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Haider A. Khan, 2007. "Social Accounting Matrix: A Very Short Introduction for Economic Modeling," CIRJE F-Series CIRJE-F-477, CIRJE, Faculty of Economics, University of Tokyo.
    14. Arief Anshory Yusuf, 2008. "INDONESIA-E3: An Indonesian Applied General Equilibrium Model for Analyzing the Economy, Equity, and the Environment," Working Papers in Economics and Development Studies (WoPEDS) 200804, Department of Economics, Padjadjaran University, revised Sep 2008.
    15. Prema-chandra Athukorala & Raveen Ekanayake, 2014. "Repositioning in the Global Apparel Value Chain in the Post-MFA Era: Strategic Issues and Evidence from Sri Lanka," Departmental Working Papers 2014-17, The Australian National University, Arndt-Corden Department of Economics.
    16. Peter Warr & Arief Anshory Yusuf, 2014. "Fertilizer subsidies and food self-sufficiency in Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 45(5), pages 571-588, September.
    17. Chalise, Sudarshan & Naranpanawa, Athula & Bandara, Jayatilleke S. & Sarker, Tapan, 2017. "A general equilibrium assessment of climate change–induced loss of agricultural productivity in Nepal," Economic Modelling, Elsevier, vol. 62(C), pages 43-50.
    18. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
    19. Maurizio Bussolo & Rafael E De Hoyos & Denis Medvedev, 2010. "Economic growth and income distribution: linking macro-economic models with household survey data at the global level," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 92-103.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:saeasj:233665. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/slaeaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.