Protection, distortions and investment incentives in Zaire. A quantitative analysis

  • Siggel E
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Abstract

This paper analyses the incidence of various trade and investment policies and their impact on the resource allocation of a small, open developing economy, Zaïre. It is based on the premise that resource pulls are better measured by the protection of profits than that of value added. The study shows that in Zaïre the incentives and disincentives provided by various policies counteract each other and partially defeat their purpose. Evidence of such contradictions is provided by comparing effective rates of protection with measures of distortional taxes and subsides, as well as a measure of total profit protection. While most of the quantitative analysis is based on data of 1970/72, effective protection is also estimated for the present time following the devaluation in 1983 and various measures of exchange liberalization. © 1986.

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Authors

  • Eckhard Siggel

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