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Impacts of Import Tariff Reforms on Mongolia's Economy: CGE Analysis with the GTAP 8.1 Data Base

Author

Listed:
  • Enkhbayar Shagdar

    (Economic Research Institute for Northeast Asia (ERINA))

  • Otgonsaikhan Nyamdaa

    (National University of Mongolia)

Abstract

Foreign trade plays an essential role in Mongolia's economy and the country has been pursuing a relatively liberal foreign trade policy during the course of its transition toward a market economy. However, aiming at supporting domestic industries and encouraging manufacturing and higher value-added production in the country, Mongolia's recent trade policy favors raising its customs duty rates up to the WTO bound levels. An analysis of the effects of Mongolia's import tariff reforms on the country's economy using the standard CGE Model and GTAP Data Base (Version 8.1) revealed that although the country's domestic production would expand as a result of the import tariff reforms, they would result in losses of the country's total welfare, as the allocative efficiency losses are greater than the terms-of-trade gains. Therefore, it is required to spend the additional import tax revenues properly in order to compensate for such losses. In addition, the increased import tariffs had a similar effect to a real exchange rate appreciation and resulted in decreased exports. However, in the case of Mongolia raising import tariffs to its WTO bound rates, the country's industrial output would expand along with the increased exports of Mongolia's major manufacturing industries, such as leather, meat, dairy cashmere and wool products.

Suggested Citation

  • Enkhbayar Shagdar & Otgonsaikhan Nyamdaa, 2017. "Impacts of Import Tariff Reforms on Mongolia's Economy: CGE Analysis with the GTAP 8.1 Data Base," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 5(1), pages 1-25, March.
    • Handle: RePEc:eri:review:5:1:1-25
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    References listed on IDEAS

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    Cited by:

    1. Shagdar, Enkhbayar & Nakajima, Tomoyoshi, 2020. "Economic Impacts to Be Brought by the DPRK’s Return to International Society: CGE Analysis with the GTAP 9A Data Base," Conference papers 333199, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Yoonkyo Cho & Taehwan Kim & Jaewhak Roh, 2021. "An analysis of the effects of electronic commerce on the Korean economy using the CGE model," Electronic Commerce Research, Springer, vol. 21(3), pages 831-854, September.
    3. Enkhbayar Shagdar & Tomoyoshi Nakajima, 2018. "Economic Effects of Free Trade Agreements in Northeast Asia: CGE Analysis with the GTAP 9.0a Data Base," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 6(1), pages 37-53, July.
    4. Enkhbayar Shagdar & Nakajima Tomoyoshi, 2018. "Economic Effects of Free Trade Agreements in Northeast Asia: CGE Analysis with the GTAP 9.0a Data Base," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 6(1), pages 37-53, July.
    5. Davaajargal Lkhagva & Zheng Wang & Changxin Liu, 2019. "Mining Booms and Sustainable Economic Growth in Mongolia—Empirical Result from Recursive Dynamic CGE Model," Economies, MDPI, vol. 7(2), pages 1-16, May.

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