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Growth, the External Terms of Trade and Endogenous Trade Liberalization

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  • Devereux, John
  • Chen, Lein Lein

Abstract

The authors study the effects of growth and changes in the external terms of trade on protection. There are two sectors, an urban sector and a rural sector, and trade policy is used to redistribute income between them. The authors show that growth precedes trade liberalization. In addition, they find that trade reform is triggered by falls in the world prices of primary exports or intermediate imports. These results are shown to hold for tariffs and quotas. Copyright 1999 by Kluwer Academic Publishers

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  • Devereux, John & Chen, Lein Lein, 1999. "Growth, the External Terms of Trade and Endogenous Trade Liberalization," Public Choice, Springer, vol. 98(1-2), pages 43-57, January.
    • Handle: RePEc:kap:pubcho:v:98:y:1999:i:1-2:p:43-57
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