Effective Protection, Policy Appraisal and Trade Policy Reform

Abstract

When the effective protection concept was first developed it was widely regarded as a key measure of the structure of protection and became widely deployed. It was however subject to a theoretical critique on the grounds that it was essentially a partial equilibrium measure, which could not be easily embedded in a general equilibrium framework. Notwithstanding this critique, the concept has continued to be widely used, especially in the context of policy reform and policy appraisal in developing countries. This paper re-appraises the concept, reviews the extent of its application and discusses the factors behind its longevity as an investigative tool. The paper concludes that the measure still has a role to play in evaluating the structure of protection.

Keywords: protection, trade policy

JEL Classification: F1