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Relative Incentives and Trade Strategies: Typologies and Possibilities

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  • CHRIS MILNER

Abstract

The paper investigates trade strategy classification within a general equilibrium framework which includes both tradeables and non‐tradeables. In a three‐sector model there is apparently a wider range of trade strategies available than in the traditional two‐sector model. Besides pure import‐substitution (IS) and export promotion (EP) policies, mixed IS/EP policies might seek (ex ante) to create a protradeables bias rather than approximate neutrality. However, the ex‐post outcome depends upon the substitution, complementarity and/or income effects of commercial policies on equilibrium relative prices. The paper demonstrates that the actual change in the incentive structure may differ from the intended strategy.

Suggested Citation

  • Chris Milner, 1995. "Relative Incentives and Trade Strategies: Typologies and Possibilities," The Economic Record, The Economic Society of Australia, vol. 71(3), pages 230-239, September.
    • Handle: RePEc:bla:ecorec:v:71:y:1995:i:3:p:230-239
    DOI: 10.1111/j.1475-4932.1995.tb01890.x
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    References listed on IDEAS

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    1. Neary, Peter, 1988. "Determinants of the Equilibrium Real Exchange Rate," American Economic Review, American Economic Association, vol. 78(1), pages 210-215, March.
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    3. Chen, Lein Lein & Devereux, John, 1994. "Protection, export promotion and development," Journal of Development Economics, Elsevier, vol. 43(2), pages 387-395, April.
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    8. Connolly, Michael & Devereux, John, 1992. "Commercial Policy, the Terms of Trade, and Real Exchange Rates," Oxford Economic Papers, Oxford University Press, vol. 44(3), pages 507-512, July.
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    Cited by:

    1. Milner, Chris & Zgovu, Evious, 2006. "A natural experiment for identifying the impact of 'natural' trade barriers on exports," Journal of Development Economics, Elsevier, vol. 80(1), pages 251-268, June.

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