Substitutability and protectionism: Latin America’s trade policy and imports from China and India
Facchini, Giovanni; Olarreaga, Marcelo; Silva, Peri; Willmann, Gerald

View/ Open
Cite this item:
Facchini, G., Olarreaga, M., Silva, P., & Willmann, G. (2007). Substitutability and protectionism: Latin America’s trade policy and imports from China and India (Economics Discussion Papers Series No. 705). Otago University. Retrieved from http://hdl.handle.net/10523/906
Permanent link to OUR Archive version:
http://hdl.handle.net/10523/906
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.
Date:
2007-04
Publisher:
Otago University
Pages:
34
Series number:
705
Keywords:
Latin America; Protectionism.
Research Type:
Discussion Paper
Collections
- Economics [315]
- Discussion Paper [438]