Strategic trade policy, learning by doing effects and economic development

This paper examines the general equilibrium consequences of temporary and permanent trade policy interventions in circumstances where the price of non-tradeables endogenously adjusts to trade policy changes and where there may be learning-by-doing externality effects in the tradeables goods sector. Using a simple multisector, dynamic model, the paper demonstrates the difficulties of designing mixed and selective interventions such that the ex-post real exchange rate and welfare outcomes are in line with the ex-ante intent. (C) 1997 Elsevier Science Ltd. All rights reserved.