RELATIVE INCENTIVES AND TRADE STRATEGIES - TYPOLOGIES AND POSSIBILITIES

The paper investigates trade strategy classification within a general equilibrium framework which includes both tradeables and non-tradeable s. In a three-sector model there is apparently a wider range of trade strategies available than in the traditional two-sector model. Besides pure import-substitution (IS) and export promotion (EP) policies, min ed IS/EP policies might seek (ex ante) to create a pro-tradeables bias rather than approximate neutrality. However, the ex-post outcome depe nds upon the substitution complementarity and/or income effects of com mercial policies on equilibrium relative prices. The paper demonstrate s that the actual change in the incentive structure may differ from th e intended strategy.