Efficiency, growth and exchange control regimes

Abstract

THE two-sector trade model, with growth explicitly built in, is used as the basic analytical framework in this study. The impact of protectionist policies on static and dynamic efficiency is evaluat ed in the light of the experiences of eleven countries' studied the Natio nal Bureau of Economic Research Pro ject on Foreign T'rade Regimes and Economic Development. The main as sumptions underlying the model are constant returns to scale, factor mobi lity across sectors, infinite foreign elas ticities of demand for exports and supply of imports, no transportation costs, pure competition, infinite elasticity of sub stitution between domestically produc ed and imported goods, and a savings function dependent on the distribution of income. Given these assumptions and the world terms of trade, the volu me and composition of production and trade, the functional distribution of income, and the volume of savings, are determined