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GTAP Resource #1350

"Trade Reform in the Partially Liberalized Economy of Turkey"
by Harrison, Glenn, Thomas Rutherford and David G. Tarr

Using a 40-sector computable general equilibrium model, the authors consider several trade liberalization options available to the Turkish government. They conclude that uniformity of tariffs and export subsidies would substantially improve Turkey's welfare. The authors counterfactually assume that Turkey's tariffs are at the 1985 level which reintroduces an anti-export bias of import tariffs. In this case, piecemeal tariff reduction to the 1989 level is beneficial. Even small export subsidies are not always beneficial, despite the rule of thumb that small export subsidies are a welfare-enhancing offset to the anti-export bias of import tariffs. Export subsidies in Turkey are highly dispersed, and piecemeal reductions in the export subsidies reduce that dispersion. When the authors counterfactually impose uniformity of tariffs and export subsidies, they note that small export subsidies are beneficial as a piecemeal policy for offsetting the anti-export bias. The authors show that in Turkey high export subsidies in sectors with high tariffs are particularly counterproductive - because at the multisector level the distortion introduced by the export subsidy dominates the reduction in anti-export bias. Turkey's proposed policy of harmonizing its tariff to the European Community's (EC's) common external tariff would yield only small welfare changes. Harmonizing the EC tariffs will require lowering tariffs below already low levels, in the presence of export subsidies almost as large as the existing average effective tariff rate. However harmonizing to the EC tariff structure can be beneficial if at the same time export subsidies are removed or reduced.

Also available as the journal article at

Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Published
By/In: The World Bank Economic Review, May 1993
Date: 1995
Created: Tarr, D. (8/8/2003)
Updated: Tarr, D. (8/28/2007)
Visits: 1,910
No keywords have been specified.

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