Trade restrictions with imported intermediate inputs : when does the trade balance improve? (English)

The author's model demonstrates that when imports are predominantly intermediate inputs - as they are in most developing countries - import restrictions can not always be relied upon to improve the trade balance. Such restrictions act as a supply shock to the economy. Unless nontraded goods are intensive users of imported intermediaries, the general equilibrium consequence of import restrictions is a large enough reduction in export supplies to swamp...
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Citation

Lopez, Ramon; Rodrik,Dani.

Trade restrictions with imported intermediate inputs : when does the trade balance improve? (English). Policy, Planning and Research Department working papers ; no. WPS 174 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/547101468740960260

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