Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-23T06:16:27.063Z Has data issue: false hasContentIssue false
  • English
  • Français

TRADE, LUXURY GOODS, AND A GROWTH-ENHANCING TARIFF

Published online by Cambridge University Press:  24 April 2017

Leonid V. Azarnert
Leonid V. Azarnert*
Affiliation:
Ariel University
*
Address correspondence to: Leonid V Azarnert, Department of Economics and Business Administration, Ariel University, Ariel, 40700, Israel; e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

This article presents a Ricardian model of trade with learning-by-doing to study the effect of barriers to trade in products with low growth potential on the long-run economic growth. The model shows that, when elasticity of demand for the product with a lower learning potential is greater than unity, a tariff imposed on this product can shift the demand toward the product with a higher learning potential, thus enhancing growth in the exporter economy. Therefore, although with some possible negative effect on the welfare in the short run, barriers for the export of natural luxury goods may be beneficial for developing economies in the long run, since they increase their incentive to develop sectors with higher growth potential.

Keywords

Trade BarriersLuxury GoodsLearning-by-Doing
Type
Articles
Information
Macroeconomic Dynamics , Volume 22 , Issue 6 , September 2018 , pp. 1462 - 1474
Copyright
Copyright © Cambridge University Press 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

I would like to thank an anonymous referee for comments that helped improve the readability of the paper. Comments of participants in the 2015 annual conference of the European Trade Study Group conference in Paris are gratefully acknowledged.

References

REFERENCES

Azarnert, Leonid V. (2004) Redistribution, fertility, and growth: The effect of the opportunities abroad. European Economic Review 48, 785–795.Google Scholar
Azarnert, Leonid V. (2008) Foreign aid, fertility and human capital accumulation. Economica 75, 766–781.Google Scholar
Azarnert, Leonid V. (2010) Immigration, fertility, and human capital: A model of economic decline of the west. European Journal of Political Economy 26, 431–440.Google Scholar
Azarnert, Leonid V. (2012) Guest-worker migration, human capital and fertility. Review of Development Economics 16, 318–330.Google Scholar
Azarnert, Leonid V. (2014) Agricultural exports, tariffs and growth. Open Economies Review 25, 797–807.Google Scholar
Azarnert, Leonid V. (2016) Transportation costs and the Great Divergence. Macroeconomic Dynamics 20, 214–228.Google Scholar
Bond, Eric W., Kazumichi, Iwasa, and Nishimura, Kazuo (2013) Poverty traps and inferior goods in a dynamic Heckscher – Ohlin model. Macroeconomic Dynamics 17, 1227–1251.Google Scholar
Caron, Justin, Fally, Thibault, and Markusen, James R. (2014) International trade puzzles: A solution linking production and preferences. Quarterly Journal of Economics 129, 1505–1552.Google Scholar
Fajgelbaum, Pablo, Grossman, Gene M., and Helpman, Elhanan (2011) Income distribution, product quality, and international trade. Journal of Political Economy 119, 721–765.Google Scholar
Ferreira, Pedro Cavalcanti, Pessoa, Samuel, and Santos, Marcelo Rodrigues Dos (2016) Globalization and the industrial revolution. Macroeconomic Dynamics 20, 643–660.Google Scholar
Galor, Oded (1994) Tariffs, income distribution and welfare in small overlapping-generation economy. International Economic Review 35, 173–192.Google Scholar
Galor, Oded and Mountford, Andrew (2006) Trade and the great divergence: The family connection. American Economic Review 96, 229–303.Google Scholar
Galor, Oded and Mountford, Andrew (2008) Trading population for productivity: Theory and evidence. Review of Economic Studies 75, 1143–1179.Google Scholar
Hillbom, Ellen (2012) Botswana: A development-oriented gate-keeping state. African Affairs 111, 67–89.Google Scholar
Jaimovich, Esteban and Merella, Vincenzo (2015) Love for quality, comparative advantages, and trade. Journal of International Economics 97, 376–391.Google Scholar
Krugman, Paul (1987) The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher: Notes on trade in the presence of dynamic scale economies. Journal of Development Economics 27, 41–55.Google Scholar
Lucas, Robert E. (1988) On the mechanics of economic development. Journal of Monetary Economics 22, 3–22.Google Scholar
Markusen, James R. (2013) Putting per-capital income back into trade theory. Journal of International Economics 90, 255–265.Google Scholar
Matsuyama, Kiminori. (1992) Agricultural productivity, comparative advantage, and economic growth. Journal of Economic Theory 58, 317–334.Google Scholar
Olsson, Ola (2006) Diamonds are a rebel's best friend. World Economy 29, 1133–1150.Google Scholar
Opp, Marcus M. (2010) Tariff wars in the Ricardian model with a continuum of goods. Journal of International Economics 80, 212–225.Google Scholar
Redding, Stephen (1999) Dynamic comparative advantage and the welfare effect of trade. Oxford Economic Papers 51, 15–39.Google Scholar
Sasaki, Hiroaki (2015) International trade and industrialization with negative population growth. Macroeconomic Dynamics 19, 1647–1658.Google Scholar
Spilimbergo, Antonio (2000) Growth and trade: The North can lose. Journal of Economic Growth 5, 131–146.Google Scholar
Strulik, Holger and Weisdorf, Jacob (2014) How child costs and survival shaped the industrial revolution and demographic transition. Macroeconomic Dynamics 18, 114–144.Google Scholar
Warchol, Greg L., Zupan, Linda L., and Clack, Willie (2003) Transnational criminality: an analysis of illegal wildlife market in Southern Africa. International Criminal Justice Review 13, 1–27.Google Scholar
Yanikkaya, Halit (2003) Trade openness and economic growth: A cross-country empirical investigation. Journal of Development Economics 72, 57–89.Google Scholar