Measuring the TFP Costs of Barriers to Trade

Pedro Ferreira and Alberto Trejos

No 644, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: We perform development decompositions measuring the effect of trade restrictions on TFP and labor productivity. An economy with two tradable and non-storable intermediate goods, used in the production of a non-tradable final good, is assumed. The solution of the static trade and factor allocation problem generates a mapping between factor endowments and final output, which is then used in our exercises. For middle income economies with high tariff rates, the effects of trade restrictions are significant; in some cases, enough to attribute to protectionism one third of their TFP disadvantage. The impact on GDP per worker is also relevant

Keywords: cross-country TFP differences; protectionism (search for similar items in EconPapers)
JEL-codes: F1 O11 O47 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed006:644

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