Trade liberalisation and embedded institutional reform: Evidence from Chinese exporters

Amit Khandelwal, Peter K. Schott , Shang-Jin Wei 15 January 2013

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Economists traditionally assess the welfare losses of trade barriers without considering the underlying institutions that support them. In fact, these institutions may amplify welfare losses substantially. Corrupt customs agents, bureaucratic red tape and the withholding of goods in bonded warehouses may favour some firms at the expense of others, resulting in a substantial misallocation of resources. Anecdotal evidence along these lines is easy to spot.

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Topics:  Institutions and economics International trade

Tags:  China, import quota, export licence

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