International Journal of Human Capital in Urban Management
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Is there a connection between tariffs and economic growth? A computable general equilibrium analysis based on the Global Trade Analysis Project model

Document Type : ORIGINAL RESEARCH ARTICLE

Authors

S.Sh. Hossain
H. Delin
M. Mingying

Department of Agricultural Economics, The Institute of Agricultural Economics and Development, Graduate School of Chinese Academy of Agricultural Sciences, Beijing, China

https://doi.org/10.22034/IJHCUM.2022.03.07
Abstract
BACKGROUND AND OBJECTIVES: Tariff policy has a significant impact on a country's economic progress. The primary objective of this paper was to describe the construction of the Computable General Equilibrium (CGE) model and then analyze the economic impacts among simulated countries by introducing policy shocks like increases and decreases in tariffs.   
METHODS: Tariff reductions resulted in an increase in intraregional and interregional trade, which is expected to spur long-term investment and economic growth. To examine the economic implications in multiple ways, this article initially used a tariff removal scenario and subsequently increased the tariff. The relationship between production, activity, elements, and other economic sectors of regions was depicted in this paper using a computational general equilibrium model based on the global trade analysis project model.      
FINDINGS: The simulation resulted in a lower tariff having a beneficial influence on Korea's economic growth compared to other countries. In the agricultural and processed food sectors, Korea's trade balance improved dramatically, with exports and imports continuing high, while exports and imports in the manufacturing and service sectors declined. In contrast to other countries, Korea's processed food output surged by 198%. Finally, in comparison to other countries, Korea's welfare grew by $ US currency 17.56 billion. On the other hand, the trade balance between China and the United States fell by $US currency 6.25 billion and $US currency 7.95 billion, respectively. Korea's trade balance increased considerably, rising by $ 21.78 billion in US currency. Korea's GDP fell by about 0.8%, while China's dropped by nearly 0.3%. Other countries' gross domestic product changed slightly. 
CONCLUSION: The influence of various tariff policies on countries is examined in this research paper. Computational general equilibrium analysis of tariff policies in the agriculture, processed food, infrastructure, manufacturing, and service sectors has gotten little attention in the past, so this paper used the Global trade analysis project model to try to fill in the gaps and find the benefits of mutual economic policy among countries. 

Keywords

Computable general equilibrium model (CGE)
Economic growth
Policy
Sector
Subjects

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International Journal of Human Capital in Urban Management
Volume 7, Issue 3 - Serial Number 27
Summer 2022
Pages 383-392

  • Receive Date 28 March 2022
  • Revise Date 30 May 2022
  • Accept Date 20 June 2022

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