Working Paper: CEPR ID: DP8903
Authors: Michele Ruta; Anthony J. Venables
Abstract: Natural resources account for 20% of world trade, and dominate the exports of many countries. Policy is used to manipulate both international and domestic prices of resources, yet this policy is largely outside the disciplines of the WTO. The instruments used include export taxes, price controls, production quotas, and domestic producer and consumer taxes (equivalent to trade taxes if no domestic production is possible). We review the literature, and argue that the policy equilibrium is inefficient. This inefficiency is exacerbated by market failure in long run contracts for exploration and development of natural resources. Properly coordinated policy reforms offer an avenue to resource exporting and importing countries to overcome these inefficiencies and obtain mutual gains.
Keywords: export tax; natural resources; OPEC; tariff escalation; terms of trade; trade; WTO
JEL Codes: F1; F13; Q3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| export taxes (H25) | domestic prices (P22) |
| export taxes (H25) | government revenues (H29) |
| export taxes (H25) | distortionary effects (H31) |
| export restrictions (F14) | world prices (P22) |
| export taxes + domestic consumption taxes (H29) | suboptimal policy equilibrium (D51) |