Effective Tariff Protection and Resource Allocation: A Non-Parametric Approach
An effort is made to provide a more satisfactory test of the usefulness of effective tariff rates in determining resource movements by comparing effective rates of protection calculated for South Africa for two points of time with resource shifts over the same time. Also tested are whether the ''high'' and ''low'' effective rates and percentage changes in effective rates predict resource shifts better tha the complete scale of rates. The authors then test the conclusion that resources have been attracted to only those sectors that have very high effective rates or large percentage changes in effective rate and examine the association between nominal tariff rates and resource allocation. Cohen in 1969 and Guisenger and Schydlowsky in 1970 showed that there is a high correlation between nominal and effective rates, which raises the question of whether it is worth calculating effective tariff rates if nominal rates are close substitutes. 14 references.