(DP 1986-11) Import Liberalization Revisited

Florian A. Alburo

Abstract


The paper examines what happened when quantitative restrictions were removed in 1962 and the system of protection was replaced only with a tariff system in operation until about 1966 or 1967. The paper shows that the concerns that are directly and immediately influenced by import liberalization were hardly adversely affected by the 1962 decontrol program. Trade improved, shown by a healthy trade balance and a positive current account balance of magnitudes that are historical records; an improvement in foreign exchange reserves availability without using the stabilization funds provided by stand-by arrangements; consumer goods imports did not go haywire at all contrary to doom pronouncements; and smuggling did not show significant increments that can be considered alarming relative to past trends. Some implications are drawn with respect to the lack of accompanying policies which could have resulted in a real structural change and transformation of trade and industry.

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