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A Quantitative Evaluation of the Potential Effects of Trade Policy Reversal in Sri Lanka: A Computable General Equilibrium (CGE) Analysis

Authors:

Tilak Susantha Liyanaarachchi ,

Griffith University, Queensland 4111, AU
About Tilak

PhD candidate

Department of Accounting, Finance and Economics, Griffith Business School

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Jayatilleke S. Bandara,

Griffith University, Queensland 4111, AU
About Jayatilleke

Associate Professor

Department of Accounting, Finance and Economics, Griffith Business School

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Athula Naranpanawa

Griffith University, Queensland 4111, AU
About Athula

Lecturer

Department of Accounting, Finance and Economics, Griffith Business School

 

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Abstract

In recent years there has been a trend in rising protectionism and a reversal of trade policy reforms in some developed and developing countries, particularly after the global financial crisis. Although some researchers and practitioners have discussed recent trends in trade policy reversal in both developed and developing countries in recent years, no serious attempts have been made to examine the effects of trade policy reversal in a developing country within an economy-wide framework. The current paper attempts to fill this research gap by answering the question: Can developing countries benefit from trade policy reversals? The study focuses particularly on the case of Sri Lanka. To address this central research aim the paper first reviews recent trends in import duty and para-tariffs in Sri Lanka, particularly after the global financial crisis. An economy-wide computable general equilibrium (CGE) model was then used to evaluate the effects of trade policy reversal on the Sri Lankan economy. The results of the Sri Lankan case study presented suggest that developing countries will not benefit from trade policy reversal at either the macro level or industry level.

Sri Lankan Journal of Agricultural Economics Vol. (16) No. 1 (2014) pp. 35-60

How to Cite: Liyanaarachchi, T.S., Bandara, J.S. & Naranpanawa, A., (2015). A Quantitative Evaluation of the Potential Effects of Trade Policy Reversal in Sri Lanka: A Computable General Equilibrium (CGE) Analysis. Sri Lankan Journal of Agricultural Economics. 16(1), pp.35–60. DOI: http://doi.org/10.4038/sjae.v16i1.4604
Published on 09 Dec 2015.
Peer Reviewed

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