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Journal of African Economies Advance Access originally published online on May 4, 2007
Journal of African Economies 2008 17(1):131-160; doi:10.1093/jae/ejm007
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© The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

Trade Policy Reform and the Missing Revenue{dagger}

Channing Arndta and Finn Tarpb,*

a Purdue University
b University of Copenhagen

* Contact author: Finn Tarp; e-mail: finn.tarp{at}econ.ku.dk

In many African countries, large discrepancies exist between revenues implied by published tariff rates multiplied by estimated import volumes and actual receipts. We develop a stylised trade model where average and marginal tariff rates diverge and incorporate insights from this model into a computable general equilibrium model of an African economy (Mozambique) to study the implications of trade policy reform. Model simulations indicate that lowering tariff rates and reducing duty-free importation in a manner that maintains official revenue benefit nearly everyone. The main exception is those who benefited from duty-free imports in the base.

JEL Classification: D58, H26, O55

{dagger} This paper has been presented at various conferences. The authors would like to thank the participants for useful comments. Financial support from Danida is gratefully acknowledged. Valuable critique and advice from an anonymous referee and the editor of JAE, Augustin K. Fosu, is also appreciated. Views expressed are those of the authors and should not be attributed to their affiliated institutions.


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