IMF Working Papers

Optimal Tariffs: Theory and Practice

By Ali Ibrahim, Arvind Subramanian, Luis A. Torres-Castro

June 1, 1993

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Format: Chicago

Ali Ibrahim, Arvind Subramanian, and Luis A. Torres-Castro Optimal Tariffs: Theory and Practice, (USA: International Monetary Fund, 1993) accessed June 18, 2025
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.

Subject: Duties, Foreign exchange, Imports, Income distribution, International trade, National accounts, Real effective exchange rates, Tariffs, Taxes

Keywords: Africa, Consumer goods, Drawback-type scheme, Duties, Duty drawback, Imports, Income distribution, Input tariff increase, Real effective exchange rates, Tariff increase, Tariff level, Tariff rate, Tariff reduction, Tariff reform, Tariff structure, Tariffs, WP

Publication Details

  • Pages:

    64

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1993/050

  • Stock No:

    WPIEA0501993

  • ISBN:

    9781451846898

  • ISSN:

    1018-5941

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