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Trade liberalization and import demand: The Central American experience

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  • Stephanie Glover
  • Alan King

Abstract

We investigate the effect of trade liberalization on the price and income elasticities of demand for imports in five Central American economies. In contrast to recent studies, we find that liberalization has had little impact on import demand's sensitivity to price. However, the income elasticity is found to change significantly in three countries; doubling in two and halving in the third. Despite the similar characteristics and trade policies of the five economies, none of the explanations for structural change in import elasticities suggested in the literature can account for more than a minority of our results.

Suggested Citation

  • Stephanie Glover & Alan King, 2011. "Trade liberalization and import demand: The Central American experience," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(2), pages 199-219.
    • Handle: RePEc:taf:jitecd:v:20:y:2011:i:2:p:199-219
    DOI: 10.1080/09638199.2011.538226
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    References listed on IDEAS

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    1. Machinea, José Luis & Vera, Cecilia, 2005. "Trade, Direct Investment and Production Policies," IDB Publications (Working Papers) 3691, Inter-American Development Bank.
    2. Lora, Eduardo, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 3338, Inter-American Development Bank.
    3. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications 4293, Inter-American Development Bank, Research Department.
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    Cited by:

    1. Makram El‐Shagi & William C. Sawyer & Kiril Tochkov, 2022. "The income elasticity of import demand: A meta‐survey," Pacific Economic Review, Wiley Blackwell, vol. 27(1), pages 18-41, February.
    2. Adewuyi, Adeolu & Ogebe, Joseph O. & Oshota, Sebil, 2021. "The role of exchange rate and relative import price on sawnwood import demand in Africa: Evidence from modified heterogeneous panel data methods," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).

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