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PSIA - Impact of Institutional and Trade Policy Reforms: Analysis of Mongolia's Cashmere Sector


Paper (706Kb)
March 11, 2003
1:00-2:30 PM
Presenter: Vera Songwe, EASPR, World Bank

Trade policies affect existing distributive relations and institutional structures in developing countries. The paper in the highlight box looks at the impact of institutional and trade policy reforms in the cashmere sector in a transition economy, Mongolia, over the last decade. The paper discusses some of the trade-offs and transmission mechanisms along the supply chain of various policies adopted by the government.

First the paper uses a growth simulation model to estimate the impact of institutional policies on the incomes of various agents along the cashmere supply chain. Second using a partial equilibrium model of export controls on raw materials the paper calculates the magnitude of the transfer of resources from herders to processors, and the net costs of the export-control regimes on the economy. (Please use the free Adobe Acrobat Reader to view the PDF file).

Combining the results of the partial equilibrium analysis and growth simulation forecasts model, the paper shows that the indirect effects of the trade policies on the cashmere industry and accompanying institutional policies have been more damaging than the tax policy adopted by the government.

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