17. Measures of protection: methodology, economic interpretation and policy relevance.
FAO Economic and Social Development Paper No. 84; FAO, Rome, Italy; ISBN 92-5-102859-1; 1989, 58 pp. + appendices
This paper analyzes the properties and the policy significance of the measures of protection currently used by economists in a variety of national and international situations.
The main objective of the paper is to define a set of operational rules to measure the extent and the consequences of government market interventions, with a view to provide guidance for the evaluation of structural adjustment policies involving movements to freer trade. This objective is pursued through a survey of the different measures and of the underlying theoretical constructions and a review of their implications for economic policy.
The paper is oganized as follows: the first section describes the problem area and the possible theoretical approaches and classifies the measures into the three categories of the "price gap", income gap" and "real income gap", according to whether they measure price, incomes or welfare differences due to protection. These three gap measures are reviewed in the second, the third and the fourth section.
Summarizing and concluding the following has been stated:
- Measures of protection have been devised with the two-fold objective of quantifying trade distortions through the measurement of its effects on several economic variables: prices, value added, exchange rates, producers and consumers welfare, government income. More recently general equilibrium models have attempted to measure effects on wages, employment and growth.
Measures of protection can be a valuable tool for policy making, provided that they are used with caution. Both ex ante and ex post measures should be used in the policy process of structural adjustment for different tasks: the ex ante measures to agree on the removal of tariff levels and other specifications, the ex post measures to evaluate priorities and set monitorable targets.
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