A dirty little secret? Import quotas: evidence from Mexico using an applied General Equilibrium Model

Resumen

The main theoretical argument against import quotas (and other trade barriers) is that they result in social welfare loss; hence, the rhetoric for most trade agreements focuses on their elimination so that welfare gains will improve enhancing opportunities. This research designs an applied General Equilibrium Model for Mexico to evaluate welfare loss from simulated intermediate goods import quotas in the manufacturing industry, finding non-significant welfare loss. Results have strong welfare and policy implications; one is that specific import quota policies to protect, support, develop, specific industries, should not be discarded by default, but a sound evaluation of the cases at hand should be carried out.