Estimated Effect of Removal of Tariff Protection in Developed Countries on Imports of Manufactured Goods from Latin America
THE CHANGE IN THE LESS developed countries' share in developed-country import markets can be measured by the share elasticity times the effective tariff in the developed country.1. The implicit assumptions are a perfectly elastic demand for imports in the developed countries and an elastic supply of those manufactured goods at present exported by developing countries.
Balassa has determined that the effective tariff (weighted average) in 1962 for the United States was 20 percent, for the United Kingdom 27.8 percent, for the European Economic Community (EEC) 18.6 percent, and for Japan 29.5 percent.2. These countries account for about 94 percent of the total imports of manufactured goods3. from Latin America into developed countries. In 1967 the United States imported $264 million in manufac-____________________