Publication: Estimating Trade Restrictiveness Indices
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Date
2009
ISSN
00130133
Published
2009
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Abstract
Studies of the impact of trade restrictiveness on growth, poverty, or unemployment are frequent in the academic literature. Few authors, however, provide a precise definition of what they mean by trade restrictiveness. When they do, the definition is unlikely to have tight links with trade theory. The objective of this article is to fill this gap by providing for 78 developing and developed countries clearly defined indicators of trade restrictiveness that are well grounded in trade theory. Results suggest that poor countries tend to have more restrictive trade policies but they also face higher trade barriers on their exports.
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Publication Estimating Trade Restrictiveness Indices(World Bank, Washington, DC, 2006-02)The objective of this paper is to provide indicators of trade restrictiveness that include both measures of tariff and nontariff barriers for 91 developing and industrial countries. For each country, the authors estimate three trade restrictiveness indices. The first one summarizes the degree of trade distortions that each country imposes on itself through its own trade policies. The second one focuses on the trade distortions imposed by each country on its import bundle. The last index focuses on market access and summarizes the trade distortions imposed by the rest of the world on each country's export bundle. All indices are estimated for the broad aggregates of manufacturing and agriculture products. Results suggest that poor countries (and those with the highest poverty headcount) tend to be more restrictive, but they also face the highest trade barriers on their export bundle. This is partly explained by the fact that agriculture protection is generally larger than manufacturing protection. Nontariff barriers contribute more than 70 percent on average to world protection, underlying their importance for any study on trade protection.Publication Import Demand Elasticities and Trade Distortions(2008)This paper provides a systematic estimation of import demand elasticities for a broad group of countries at a very disaggregated level of product detail. We use a semiflexible translog GDP function approach to formally derive import demands and their elasticities, which are estimated with data on prices and endowments. Within a theoretically consistent framework, we use the estimated elasticities to construct Feenstra's (1995) simplification of Anderson and Neary's trade restrictiveness index (TRI). The difference between TRIs and import-weighted tariffs is shown to depend on the tariff variance and the covariance between tariffs and import demand elasticities.Publication Import Demand Elasticities and Trade Distortions(Washington, DC: World Bank, 2004-11)To study the effects of tariffs on gross domestic product (GDP), one needs import demand elasticities at the tariff line level that are consistent with GDP maximization. These do not exist. The authors modify Kohli's (1991) GDP function approach to estimate demand elasticities for 4,625 imported goods in 117 countries. Following Anderson and Neary (1992, 1994) and Feenstra (1995), they use these estimates to construct theoretically sound trade restrictiveness indices, and GDP losses associated with existing tariff structures. Countries are revealed to be 30 percent more restrictive than their simple or import-weighted average tariffs would suggest. Thus, distortion is nontrivial. GDP losses are largest in China, Germany, India, Mexico, and the United States.Publication Is Protectionism on the Rise? Assessing National Trade Policies during the Crisis of 2008(2010-04-01)To understand the role of trade policies in the crisis of 2008, this paper constructs the overall trade restrictiveness indices for a wide range of countries using their tariff schedules in 2008 and 2009. The index summarizes the trade policy stance of a country, taking into account the share of each good in trade as well as its corresponding import demand elasticity. Results show that there is no widespread increase in protectionism via tariff policies since the global financial crisis has unfolded. While many countries have adjusted tariffs upward on selected products, only a handful of countries, such as Malawi, Russia, Argentina, Turkey and China focus on products that have significant impacts on trade flows. The United States and the European Union, by contrast, rely mainly on anti-dumping duties to shield domestic industries. Overall, while the rise in tariffs and anti-dumping duties in these countries may have jointly caused global trade to drop by as much as US$43 billion during the crisis period, it explains less than 2 percent of the collapse in world trade.Publication Trade and Production, 1976-99(World Bank, Washington, DC, 2001-11)The authors have prepared this paper as a companion to the Trade and Production database, which contains trade, production, and tariff data for 67 industrial and developing countries at the industry level for 1976-99. The sector disaggregation in the database follows the International Standard Industrial Classification (ISIC), with data provided at the three-digit level (28 industries) for all 67 countries and at the four-digit level (81 industries) for 24 of these countries. The production data are from the United Nations Industrial Development Organization's Industrial Statistics Database at the three- and four-digit level of ISIC. They include value added, total output, average wages, capital formation, number of employees, number of female employees, and number of firms. The trade data are from the United Nations Statistics Division's Commodity Trade (Comtrade) database (through the World Bank's World Integrated Trade Solution, or WITS, software) and include imports and exports. Data on mirror exports (reported by trading partners) were obtained using WITS. The trade data are aggregated by region and income group, as defined by the World Bank. A separate data set provides bilateral trade flows (by partner) at the industry level. The data on average tariffs (most favored nation) are from the Trains database maintained by the United Nations Conference on Trade and Development and from the World Trade Organization's Trade Policy Reviews and Integrated Database. The database also provides an input-output table for each country using data from version 4 of the Global Trade Analysis Project (GTAP) database. The database is available on request on CD-ROM in a series of ASCII files and Microsoft Excel worksheets. It is also available on the Web at http://www.worldbank.org./research/trade.
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