Emerging Policy Issues: Localisation Barriers to Trade

Susan Stone, James Messent and Dorothee Flaig
Additional contact information
Susan Stone: OECD
James Messent: OECD
Dorothee Flaig: OECD

No 180, OECD Trade Policy Papers from OECD Publishing

Abstract: Despite the predominately negative evidence of the impact of local content requirements on trade, they continue to play a significant role in trade policy. This has been particularly true since the financial crisis of 2008. The work presented here provides new evidence of the detrimental effects these policies have on the imposing country’s own economy. Most empirical studies have focused on the long run inefficiencies associated with LCRs, notably in the effected sector. This paper highlights the costs to other sectors in the economy, the different impacts on intermediate versus final demand, and the declines in trade in third-party economies, despite not engaging in direct trade with the imposing country. Economies imposing LCRs experience a decrease in exports in non-LCR effected sectors and a growing concentration of domestic activity in a few targeted sectors, undermining potential growth and innovation on a broader scale. The paper concludes by offering policy alternatives.

Keywords: CGE; impact; Local Content Requirements; trade policy (search for similar items in EconPapers)
JEL-codes: F14 F47 F68 (search for similar items in EconPapers)
Date: 2015-05-01
New Economics Papers: this item is included in nep-cmp and nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://doi.org/10.1787/5js1m6v5qd5j-en (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oec:traaab:180-en

Access Statistics for this paper

More papers in OECD Trade Policy Papers from OECD Publishing Contact information at EDIRC.
Bibliographic data for series maintained by ().