Protection and the Own-Funds Window in Tanzania: An Analytical Framework and Estimates of the Effects of Trade Liberalization

IMF Working Papers, May 1, 1991

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Protection and the Own-Funds Window in Tanzania: An Analytical Framework and Estimates of the Effects of Trade Liberalization

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Bibliographic details

• Authors: Dean A. DeRosa
• Published: May 1, 1991
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451847154.001

Overview

• Presents a simple partial equilibrium framework to analyze economic implications of administered protection in Tanzania.
• Places analysis against the background of:
  • the country’s parallel exchange market, and
  • the establishment of the own-funds and open general license (OGL) facilities for authorizing imports.
• Provides estimates of the range of possible adjustment in the real exchange rate and trade flows resulting from:
  • a unification of the highly-fragmented import licensing system, coupled with
  • sufficient liberalization of the OGL facility to eliminate own-funded imports and the incentive to export smuggling.

Analytical framework

• Methodology: simple partial equilibrium framework (as described in the paper).
• Institutional features examined:
  • Parallel exchange market.
  • Own-funds import facility.
  • Open general license (OGL) facility.
• Focus on interactions between import licensing fragmentation and incentives for own-funded imports and export smuggling.

Estimated effects and scenarios

• Presents estimates of the range of possible adjustment in:
  • the real exchange rate, and
  • trade flows,

following reform scenarios that include:

• unification of the import licensing system, and
• sufficient liberalization of the OGL facility to eliminate own-funded imports and the incentive to export smuggling.

Policy implications and recommendations (as implied by analysis)

• Reform actions analyzed:
  • Unification of the highly-fragmented import licensing system.
  • Liberalization of the OGL facility to remove own-funded imports.
• Intended policy outcomes:
  • Elimination of incentives for export smuggling.
  • Adjustment in the real exchange rate consistent with unified and liberalized import authorization mechanisms.
  • Changes in import and export flows reflecting reduced administered protection and market distortions.

Key statistics and publication metadata

• Author: Dean A. DeRosa
• Date: May 1, 1991
• Pages: 28
• Volume: 1991
• Issue: 052
• Series: Working Paper No. 1991/052
• DOI: https://doi.org/10.5089/9781451847154.001
• Stock No: WPIEA0521991
• ISBN: 9781451847154
• ISSN: 1018-5941

Subjects and keywords

• Subject: Exchange rate adjustments, Exports, Foreign exchange, Imports, International trade, Real exchange rates, Trade liberalization
• Keywords: exchange rate, Exchange rate adjustments, export, export smuggling, export supply, Exports, import, import demand, import facility, import liberalization program, Imports, liberalization, Middle East, OGL imports, Real exchange rates, Sub-Saharan Africa, supply schedule, Trade liberalization, WP

Disclaimer (from the original working paper)

• 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.

Source: Protection and the Own-Funds Window in Tanzania: An Analytical Framework and Estimates of the Effects of Trade Liberalization, Dean A. DeRosa, IMF Working Papers 1991, 052 (1991), May 1, 1991.