Effective Protection, Policy Appraisal and Trade Policy Reform

When the effective protection concept was first developed it was widely regarded as a key measure of the structure of protection and became widely deployed. It was however subject to a theoretical critique on the grounds that it was essentially a partial equilibrium measure, which could not be easily embedded in a general equilibrium framework. Notwithstanding this critique, the concept has continued to be widely used, especially in the context of policy reform and policy appraisal in developing countries. This paper reappraises the concept, reviews the extent of its application and discusses the factors behind its longevity as an investigative tool. The paper concludes that the measure still has a role to play in evaluating the structure of protection. JEL: F1