1.) Under what conditions does a nominal tariff applied to an import product ove

Question

1.) Under what conditions does a nominal tariff applied to an import product overstate or understate the actual, or effective, protection afforded by the nominal tariff?
2.) Less-developed nations sometimes argue that the industrialized nations' tariff structures discourage the less developed nations from undergoing industrialization. Explain.
1.) Under what conditions does a nominal tariff applied to an import product overstate or understate the actual, or effective, protection afforded by the nominal tariff?
2.) Less-developed nations sometimes argue that the industrialized nations' tariff structures discourage the less developed nations from undergoing industrialization. Explain.

Explanation / Answer

1Ans
Numerous measures of the degree of openness of a country to trade have been utilized in the literature. David (2004) is an extensive review, covering some 70 different measures, and discussing much of the debate that has surrounded their use. Measures of the trade policy stance of regions within the global economy, flawed as they may be, clearly have a place in interpreting the implications of preferential trading agreement (PTAs), not least because theory indicates a critical role for both pre- and post-PTA tariff levels. There are two broad categories of openness measure, those based on incidence (direct measures of policy instruments), and those based on outcomes (indirect measures of the degree of distortion using prices or quantities traded). Rose (2004) further breaks the measures down into seven categories: 1. Openness: This outcome based measure is what most trade economists have in mind when referencing

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