DP5576 Estimating Trade Restrictiveness Indices

Author(s): Hiau Looi Kee , Alessandro Nicita , Marcelo Olarreaga

Publication Date: March 2006

Keyword(s): trade restrictiveness indices

JEL(s): F10 , F11 , F13

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP5576.asp

The objective of this paper is to provide indicators of trade restrictiveness that include both measures of tariff and non-tariff barriers for 91 developing and developed countries. For each country, we estimate three trade restrictiveness indices. The first one captures the extent to which trade policies at home affect domestic welfare. This follows the work of Anderson and Neary (1992, 1994 and 1996). The second index captures the impact of trade distortions on each country’s import bundle. This follows the work of Anderson and Neary (2003). The last index focuses on market access and summarizes the trade distortions imposed by the rest of the world on each country’s export bundle. All indices are estimated for the broad aggregates of manufacturing and agriculture products. Results suggest that poor countries (and those with the highest poverty headcount) tend to be more restrictive, but they also face the highest trade barriers on their export bundle. This is partly explained by the fact that agriculture protection is generally larger than manufacturing protection. NTBs contribute more than 70 percent on average to world protection, underlying their importance for any study on trade protection.