Optimal Tariffs : Theory and Practice

Author/Editor:

Ali Ibrahim ; Arvind Subramanian ; Luis A. Torres-Castro

Publication Date:

June 1, 1993

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the theory underpinning the design of optimal tariffs in a developing economy, and the experience of implementation of tariff reforms. A central issue is whether and when a case can be made for a uniform tariff structure. While theory advocates a differentiated tariff structure (except under a balance of payments objective), political economy considerations, inadequate information, and administrative convenience point to a minimally differentiated tariff structure. The experience of reform indicates that tariff structures are mainly influenced by income distribution and protection objectives. The ability to successfully reduce tariffs depends on measures taken to alleviate fiscal and balance of payments constraints.

Series:

Working Paper No. 93/50

Subject:

English

Publication Date:

June 1, 1993

ISBN/ISSN:

9781451846898/1018-5941

Stock No:

WPIEA0501993

Format:

Paper

Pages:

64

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