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Substitutability and protectionism: Latin AmericaÕs trade policy and imports from China and India

Giovanni Facchini (), Marcelo Olarreaga (), Peri Silva () and Gerald Willmann ()

No 705, Working Papers from University of Otago, Department of Economics

Abstract: This paper examines the trade policy response of Latin American governments to the rapid growth of China and India in world markets. To explain higher protection in sectors where a large share is imported from these countries, we extend the 'protection for sale' model to allow for different degrees of substitutability between domestically produced and imported varieties. The extension suggests that higher levels of protection towards Chinese goods can be explained by high substitutability between domestically produced goods and Chinese goods, whereas lower levels of protection towards goods imported from India can be explained by low substitutability with domestically produced goods. The data supports the extension to the 'protection for sale' model, which performs better than the original specification in terms of explaining Latin America's structure of protection.

Keywords: Latin America; Protectionism (search for similar items in EconPapers)
JEL-codes: F10 F11 F13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-04, Revised 2007-04
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Related works:
Journal Article: Substitutability and Protectionism: Latin America's Trade Policy and Imports from China and India (2010) Downloads
Working Paper: Substitutability and Protectionism: Latin America’s Trade Policy and Imports from China and India (2007) Downloads
Working Paper: Substitutability and protectionism: Latin America's trade policy and imports from China and India (2007) Downloads
Working Paper: Substitutability and protectionism: Latin America's trade policy and imports from China and India (2007) Downloads
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