Measuring The Costs Of Protection In Venezuela

Abstract

This research looks into the static effects on the Venezuelan economy of removing trade barriers in the form of tariffs in textiles, agricultural products, steel and automobile. Based on a methodology used by the United States International Trade Commission, this paper documents that gains to consumers for every job lost range from $85,384 in the agricultural industry to $1,096,714 in the automobile industry. Removal of these barriers would increase national welfare in excess of $1 billion per year, which is equivalent to 1% of Venezuelas GDP (based on statistics from the 90s). This evidence suggests significant misallocation of resources that may retard the growth process.