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Domestic Content and Compensatory Export Requirements: Protection of the Motor Vehicle Industry in the Philippines

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  • Takacs, Wendy E

Abstract

The motor vehicle industry in the Philippines is protected by a virtual embargo on the importation of new vehicles but operates under the burden of domestic content and compensatory export requirements that protect Philippine producers of automotive components. This article develops a model to assess the net impact of this complicated protective regime. Estimates indicate substantial benefits to the assembly and components industries and losses to vehicle purchasers. Reform of the system to eliminate the embargo as well as the domestic content and compensatory export restraints at current tariff rates would benefit vehicle purchasers but would increase the effective rate of protection to assembly operations by decreasing prices of components. Reform measures to eliminate the domestic content and compensatory export requirements should be accompanied by simultaneous reductions in tariffs on assembled vehicles. Copyright 1994 by Oxford University Press.

Suggested Citation

  • Takacs, Wendy E, 1994. "Domestic Content and Compensatory Export Requirements: Protection of the Motor Vehicle Industry in the Philippines," The World Bank Economic Review, World Bank, vol. 8(1), pages 127-149, January.
    • Handle: RePEc:oup:wbecrv:v:8:y:1994:i:1:p:127-49
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    Cited by:

    1. Tcha, MoonJoong & Kuriyama, Takashi, 2003. "Protection policy under economies of scale -- the welfare effects of tariffs on the Australian automotive industry," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 655-672, September.
    2. Hung, Chih-Ming & Weng, Yungho, 2024. "Optimal local content requirement under export share requirement consideration," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 114-122.
    3. Beghin, John C. & Blake Brown, A. & Hasyim Zaini, M., 1997. "Impact of domestic content requirement on the US tobacco and cigarette industries," Agricultural Economics, Blackwell, vol. 15(3), pages 201-212, January.
    4. Pursell, Garry, 2001. "Australia's experience with local content programs in the auto industry - lessons for India and other developing countries," Policy Research Working Paper Series 2625, The World Bank.
    5. MoonJoong Tcha & Takashi Kuriyama, 2002. "Welfare Effects of Protection and Economies of Scale - The Case of The Australian Automotive Industry," Economics Discussion / Working Papers 02-11, The University of Western Australia, Department of Economics.
    6. Sahoo, Anshuman & Shrimali, Gireesh, 2013. "The effectiveness of domestic content criteria in India's Solar Mission," Energy Policy, Elsevier, vol. 62(C), pages 1470-1480.

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