Domestic resource cost and effective protection once again

The note examines some questions relating to the use of the domestic resource cost (DRC) and the effective rate of protection (ERP) measures for project selection and for evaluating the cost of protection (promotion).

Balassa, Bela; Schydlowsky, D. M. · 1970

Abstract

It is shown that while DRC and ERP give the same results under optimal policies, the choice between them becomes relevant in a nonoptimal situation. Moreover, if nonoptimal policies can be expected to persist during the life of the project, one needs to utilize shadow prices reflecting these policies in preference to first-best shadow prices. The paper finally considers the applicability of ERP and DRC under alternative assumptions.

Connected topics

Economic analysis748→

Domestic resource cost and effective protection once again

Effective devaluation as an export incentive in less developed countries

Economic crisis and recovery in El Salvador, 1978-1992

The IMF"s world economic outlook : advancing structural reforms, April 2004

Framework for the analysis of rural electrification projects

Documents in this collection

Social rate of discount, targets, and instruments

ECONOMICS OF HEALTH, EDUCATION, AND COMMUNICATIONS IN DEVELOPING COUNTRIES

Effective devaluation as an export incentive in less developed countries

Economic crisis and recovery in El Salvador, 1978-1992

The IMF"s world economic outlook : advancing structural reforms, April 2004

Framework for the analysis of rural electrification projects