Trade Effects of the Association of African Countries with the European Economic Community
Author:
Alassane D. Ouattara
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Publication Date:
01 Jan 1973
eISBN:
9781451947403
Language:
English
Keywords:
SP; company; EEC-AAC arrangement; EEC country; EEC market; EEC-AAC trade; EEC preference; EEC duty-free; EEC member country; Agricultural commodities; Tariffs; Exports; Trade barriers; West Africa; Africa; Central Africa; Middle East; North Africa; EEC imports
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IN FORMING the European Economic Community (EEC) in 1957, the six European countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) also decided to include their colonies in this attempt at economic integration. The aims of this inclusion, which had been advocated by France and supported by some other EEC countries, were to continue the preferential treatment between some member states and their overseas dependencies and to promote the economic and social development of these dependencies. Since these colonies were all developing countries, with economic structure substantially different from that of EEC countries, and because of their geographic location, they could not become full members of the EEC, but they were granted the special status of associate members by the Treaty of Rome in 1957. As associate members, these countries do not contribute to the budget of the Community and are not expected to carry out the obligations of the Treaty, except when special provisions apply to them. Although they cannot legally influence the policies of the EEC, it was agreed that the Community would keep the interests of associate members in mind when negotiating with third countries or adopting decisions applicable to the EEC members themselves.

Abstract

IN FORMING the European Economic Community (EEC) in 1957, the six European countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) also decided to include their colonies in this attempt at economic integration. The aims of this inclusion, which had been advocated by France and supported by some other EEC countries, were to continue the preferential treatment between some member states and their overseas dependencies and to promote the economic and social development of these dependencies. Since these colonies were all developing countries, with economic structure substantially different from that of EEC countries, and because of their geographic location, they could not become full members of the EEC, but they were granted the special status of associate members by the Treaty of Rome in 1957. As associate members, these countries do not contribute to the budget of the Community and are not expected to carry out the obligations of the Treaty, except when special provisions apply to them. Although they cannot legally influence the policies of the EEC, it was agreed that the Community would keep the interests of associate members in mind when negotiating with third countries or adopting decisions applicable to the EEC members themselves.

IN FORMING the European Economic Community (EEC) in 1957, the six European countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) also decided to include their colonies in this attempt at economic integration. The aims of this inclusion, which had been advocated by France and supported by some other EEC countries, were to continue the preferential treatment between some member states and their overseas dependencies and to promote the economic and social development of these dependencies. Since these colonies were all developing countries, with economic structure substantially different from that of EEC countries, and because of their geographic location, they could not become full members of the EEC, but they were granted the special status of associate members by the Treaty of Rome in 1957. As associate members, these countries do not contribute to the budget of the Community and are not expected to carry out the obligations of the Treaty, except when special provisions apply to them. Although they cannot legally influence the policies of the EEC, it was agreed that the Community would keep the interests of associate members in mind when negotiating with third countries or adopting decisions applicable to the EEC members themselves.

As a result of the association decision, 18 African countries, then colonies (or territories) of Belgium, France, and Italy, became associate members of the EEC. There were 14 former French colonies or dependencies (the Group of Fourteen, G-14)—the Republic of Cameroon, the Central African Republic, Chad, the People’s Republic of the Congo, also known as Congo (Brazzaville), Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper Volta;1 three former Belgian colonies—Burundi, Rwanda, and Zaïre, formerly called the Democratic Republic of Congo; and the Somali Republic. Although other African countries south of the Sahara (e.g., Nigeria, Kenya, Tanzania, and Uganda) sought and obtained associate membership in the EEC after 1957, the conditions of their association are substantially different from those of the above-mentioned 18 countries. Consequently, the terms “Associated African Countries” (AACs) or the “Group of Eighteen” (G-18) do not include this latter group.

When the association agreement became effective with the Treaty of Rome on January 1, 1958, several AACs were already linked in bilateral trade and payments arrangements with some EEC member countries. Within the framework of these arrangements, the African countries received trade preferences as well as substantial financial aid and technical assistance from their respective metropoles (i.e., the colonial powers). In return, the African colonies granted their respective metropoles reverse preferences in trade. The association agreement gradually established a preferential area between all EEC countries, on the one hand, and all associated countries, on the other hand. The EEC countries granted tariff preferences on their imports from the AACs and created the European Development Fund (EDF) to assist the associated countries financially in their development effort. In return, the AACs agreed to grant all EEC countries reverse preferences in the form of lower tariffs on EEC products compared with products of third countries and to gradually eliminate quantitative restrictions on their imports from all EEC countries.

The purpose of the present study is to analyze the impact of the association arrangement on the pattern of trade of the AACs and to determine the extent of trade creation or trade diversion caused by the association. Before turning to this, the author reviews the main trade provisions of the association and the theoretical expectations with regard to this trade arrangement.

I. Trade Provisions of Association

The reciprocal trade preferences were contained in the Association Conventions. The provisions of association were agreed upon among the six EEC countries on March 25, 1957. They were renewed in July 1963 in the Second Convention of Association, generally known as the Yaoundé Convention,2 and in July 1969 in the Third Convention of Association, commonly referred to as Yaoundé II.

Under the First Convention of Association, tariff reductions between the EEC and the associated countries were planned in three stages—25 per cent in the first stage, 50 per cent in the second stage (from the level of the first stage), and the remainder in the third stage. However, the Convention provided that

each Associated State may retain or introduce customs duties and charges having an effect equivalent to such duties which correspond to its development needs or its industrialization requirements or which are intended to contribute to its budget.3

The member states of the EEC were to eliminate quantitative restrictions on their imports from the associated countries on the same scale as that adopted for use among themselves. The associated countries, after a period of one year following the entry into force of the First Convention, were required to adopt quotas to be applied without discrimination between member states (i.e., no discrimination in favor of a member that had special relations with the associated countries).

Under the Yaoundé Convention, goods exported by the AACs to the EEC continued to benefit from the EEC’s progressive abolition of customs duties. However, upon entry into force of the Convention, customs duties and charges having an equivalent effect were abolished for the products listed in Table 1 that originated in the AACs; the same products were subject to the common customs duties of the Community when originating in third countries. The provisions for tariff reductions by the AACs on their imports from the EEC remained valid, although reductions were to be made more rapidly whenever the economic situation permitted.

Table 1.

Goods Originating in the AACS and Admitted Duty-Free in the EEC, Beginning in June 1964 1

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Sources: Royal Institute of International Affairs, Convention of Association Between the European Economic Community and the African and Malagasy States Associated with that Community, Annex to the Convention (Oxford University Press, 1963), p. 27; European Community Information Service, Community Topics, No. 26, Partnership in Africa: The Yaoundé Association (December 1966).

When these goods originate from nonassociated countries, they are subject to the tariffs shown.

Duty temporarily suspended.

All quantitative restrictions applied by each associated country to imports of goods originating in the EEC, and all measures having an equivalent effect, had to be abolished not later than four years after the entry into force of the Convention through the use of a global quota opened indiscriminately to all EEC members.4 In the event that the use of tariffs proved insufficient to meet development needs and industrialization requirements, or in the event of balance of payments difficulties or agricultural problems connected with the requirements of existing regional market organizations, an associated country could retain or introduce quantitative restrictions on imports of goods originating in the EEC.

The structure and general concept of Yaoundé II, which entered into force on January 1, 1971, remain largely the same as in the Yaoundé Convention. The trade measures included (1) a lowering of the EEC’s common external tariff (CET) for a number of tropical products 5 and provisions to allow the AACs to participate in the generalized system of preferences; (2) a widening of the freedom given to the AACs to cooperate among themselves or with other African countries at a similar level of development in the framework of customs unions, free trade areas, and economic cooperation agreements; and (3) a set of trade promotion measures to compensate the AACs for the possible consequences of the reduction of preferences and the abolition of price support.

Consequently, the EEC-AAC arrangement is a preferential area that was established gradually. An important step was the adoption by the EEC in June 1964 of the CET on imports of certain tropical products (e.g., coffee and cocoa) from nonassociated countries, while AAC exports of these products entered the EEC duty-free. However, for AAC tropical products that competed with EEC agricultural products (e.g., sugar), certain raw materials (cotton and timber) and minerals, metals, and petroleum, no preferences were given to the AACs by the EEC. Thus, a weighted average tariff based on ten products of the AACs that constitute about 75 per cent of their total exports shows that the index of tariff preference declined from 4.2 per cent in 1959 to 3.4 per cent in 1964. This reflects the fact that the tariff preference on some major exports by the AACs was lowered following the association (Table 2). However, the tariff preference was gradually granted by nonmetropolitan countries (e.g., Germany). The associated countries could not eliminate all charges on imports from the EEC, since import taxes represent a substantial proportion of their governments’ budgetary revenue and the EEC is by far the most important supplier of the AACs. However, many associated countries granted the EEC a margin of preference in the structure of their tariffs by adopting a two-column tariff consisting of a customs duty of a discriminatory nature, from which exemption was granted to EEC countries, and a fiscal duty of a revenue nature, to be levied on all imports regardless of their origin.6

Table 2.

Changes in EEC Tariffs for Major Exports by the AACS, 1957–64

(Ad valorem rates as percentage of value)

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Source: Commision des Communautés Européennes, Evolution du Régime Douanier, Fiscal et Contingentaire des Principaux Produits Tropicaux Importés dan les Etats Membres de la Communauté Economique Européenne de 1958 à 1968 (Brussels, 1968).

French tariffs for imports from outside the French franc area.

Initial EEC tariff when applied; otherwise, tariff of most important member of the EEC on the import of the commodity from an AAC.

Tariffs applicable with the entry into force of the Youndé Convention.

Tariff rates during association period are for the Benelux countries (Belgium, the Netherlands, and Luxembourg).

The elimination of quantitative restrictions within the EEC was also applicable to the AACs, although it did not affect most AAC exports, since metropolitan European powers applied no quantitative restrictions to imports from their former colonies; when used, as France did in some instances, these restrictions served to guarantee the former colony a share of the market in the importing country. On the other hand, quantitative restrictions were frequently applied to imports from non-associated countries. By 1962, the AACs that applied quantitative restrictions to imports from some EEC countries adopted global quotas for specific commodities that were imported from the EEC. These quotas were enlarged from year to year at the expense of quotas applied to non-EEC countries, and by June 1968, in accordance with the provisions of the Yaoundé Convention, quantitative restrictions on imports from EEC countries other than France were eliminated in all the former French colonies; these restrictions were maintained by most of the former French colonies on their imports from non-EEC countries. 7

Trade relations among the associated countries were not affected by the association arrangement, although there are customs unions among several AACs.

II. Theoretical Issues Regarding the EEC-AAC Arrangement

In terms of customs union theory, the preferences offered by the EEC to AAC products could result in some trade creation in the sense that the AACs could supply the EEC with some goods that were formerly produced by the EEC countries themselves. This outcome is highly unlikely in the short run, since the range of commodities produced in the AACs is substantially different from that produced in the EEC countries (i.e., there is complementarity rather than competitiveness in production). The exceptions are perhaps sugar and some oilseeds; however, for these two commodities the EEC has an intricate protective policy that is applied even to the associated countries. Also, preferences could result in some trade diversion in the sense that the AACs could displace certain goods of nonassociated countries in the EEC on account of the tariff preference received by the AACs in the EEC market.

Since the AAC group has relatively free access to the EEC market, some trade creation in favor of the AACs can be expected in the long run, when the AACs can produce and export simple manufactured products to the EEC to replace the EEC production of such goods. However, the possibility of producing simple manufactures for export in most associated countries has been affected by the static production functions resulting from limited technological progress and by limited substitution in the factors of production. Less developed countries (LDCs) in general have faced difficulties in trying to expand their exports to developed industrial countries. Since the EEC-AAC arrangement permits easy access for AAC products to the EEC market in contrast to difficult access to the markets of other industrial countries, the association should cause the EEC to increase its share in total AAC exports. Because the association also permits AAC products easier access to the EEC market in comparison with similar products from nonassociated countries, it should also cause the AACs to increase their share in the total exports of the LDCs to the EEC.

With regard to imports by the AACs, the EEC-AAC arrangement could cause the share of the EEC in total AAC imports to rise. This could happen for three reasons. First, the AACs could now import from the EEC those goods that they produced primarily themselves under previous trade restrictions that have now been removed—in other words, trade creation. Again, this is highly unlikely on account of the lack of competition in the range of commodities produced by both sides. Any competition would have to be in the production of simple manufactured products, but, as most other developing countries have done, the associated countries have introduced restrictions aimed at protecting their infant industries. Second, an increase in the share of the EEC in total AAC imports could also be attributable to the fact that the AACs might now import from the EEC those goods that they formerly imported from non-EEC countries—in other words, trade diversion. This possibility is more likely than trade creation, given the production possibility frontiers in the EEC and the AACs. However, trade diversion in favor of some EEC countries (e.g., Belgium and France) that received preferential treatment in their colonies prior to the association is not likely to be significant. Nonmetropolitan EEC countries, however, could expand their share in AAC imports significantly because of the tariff advantage and the freedom from quantitative restrictions granted to them in the AAC market in connection with the association. Third, an increase in the share of the EEC in total AAC imports could also be attributable to the better competitive position of the EEC resulting from internal and external economies owing to the formation of the EEC rather than to the EEC-AAC arrangement.

III. Overall Trade Impact of the EEC-AAC Arrangement

Availability of data

Prior to 1960, all the AACs were dependencies of three EEC member countries. The only exceptions were West Cameroon (a British trust territory then called Southern Cameroons that joined the French-speaking Republic of Cameroon in 1961 to form the Federal Republic of Cameroon and became the United Republic of Cameroon in 1972) and British Somaliland Protectorate (which joined with Italian Somali-land, a trust territory, in 1960 to form the Somali Republic). Because of this colonial history, statistical information prior to 1960 is not strictly comparable with similar data thereafter. Furthermore, trade data are not always available on a country basis in the former French colonies prior to 1960; such statistics were published separately only for French West Africa (including Guinea, which is not associated with the EEC), French Equatorial Africa, French Cameroon, Madagascar, and the autonomous Republic of Togo. Trade statistics for the former Belgian territories were reported for the single grouping of Belgian Congo and Rwanda-Urundi until 1959, after which date separate statistics were reported for Congo (Leopoldville) and Rwanda-Urundi until 1963.

In the following proposed statistical procedures, the period prior to the EEC-AAC arrangement covers 1953–58. The association period (1959–68) is subdivided into 1959–64 and 1965–68, since the association arrangement moved close to a free trade area only in mid-1964 with the entry into force of the Yaoundé Convention. Despite the aforementioned problem of coverage, trade data for 1953–58 are broadly comparable with those for 1959–68. The exclusion of former British Cameroon and former British Somaliland from trade statistics prior to 1958 is adequately compensated by the inclusion of Guinea (a non-associated country) in the statistics for West Africa during this period. However, measurement problems of compilation, coverage, and conversion technique are not handled in the scope of the present study.

Since the arrangement between the EEC and the AACs provides preferences for certain AAC primary exports to the EEC and reverse preferences for EEC exports to some associated countries, it was argued earlier that the association might be expected to (1) cause AAC exports to the EEC to rise relative to total exports; by the AACs; (2) cause AAC exports to the EEC to rise relative to exports by the LDCs to the EEC; and (3) cause AAC imports from the EEC to rise relative to total imports by the AACs.8

Exports by the AACS to the EEC

During the preassociation period (1953–58), the share of the EEC in total exports by the AACs averaged about 72 per cent per annum (Table 3). France alone accounted for about 38 per cent of total AAC exports in this period. With the association, the share of the EEC declined to 71 per cent in the first period (1959–64) and to 69 per cent in the second period (1965–68), with France’s share dropping to 37 per cent and 32 per cent, respectively. Meanwhile, the share of EEC countries other than France remained at 34 per cent from preassociation to the period 1959–64; it rose to 38 per cent during 1965–68. The share of non-EEC countries increased throughout the periods under review.

Table 3.

AAC Exports: Regional Distribution, 1953–68

(In per cent)

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Sources: Tables 15, 16, and 21 (in the Statistical Appendix).

The trend of exports with respect to the EEC as a whole is somewhat contrary to expectations. One would have expected a rise in the EEC’s share, since the exports of associated countries have relatively free access to the EEC market compared with their exports to other industrialized countries. However, Table 3 shows that the trend in the EEC’s share was explained by the declining French share of the AACs exports. For the former French colonies (G-14) that make up the bulk of the associated countries, the association meant a reduction in the preferential margin that they enjoyed vis-à-vis other countries in the French market.9 This resulted in a gradual erosion of their position in that market, and the share of France in their exports declined from 62 per cent in the preassociation period to 57 per cent during 1959–64 and to 42 per cent during 1965–68 (Table 4). Because they received new preferences in EEC countries other than France, their share in those countries tended to rise with the association but not sufficiently to compensate for the drop caused by the loss of preference in France. The increase in the share of non-EEC countries in exports by the AACs can be attributed partly to the importance of the U. S. market in imports of coffee and cocoa; thus, it was difficult for many AACs to redirect established channels in the export of these commodities following association. Furthermore, primary products respond to preferences with substantial lags, particularly when production is derived from tree crops.

Table 4.

G-14 Exports: Regional Distribution, 1953–68

(In per cent)

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Sources: Tables 15, 16, and 21 (in the Statistical Appendix).

The evolution of the share of France in total AAC exports shows a sharp drop in the ratio, from 36 per cent in 1958 to 29 per cent in 1959. This can be explained by the devaluation of the French franc in late 1958 and the pari passu devaluation of the CFA franc (the currency of the former French colonies in Africa).10 As the supply of most primary commodities is inelastic, devaluation could not result in any significant increase in the volume of exports of such goods in the short run. However, the export price in French francs not having changed since the French and CFA francs were devalued pari passu, the U.S. dollar equivalent declined, leading to a drop in the dollar value of total exports. This is seen in Table 21 (in the Statistical Appendix), where exports by the G-14 to France declined from $438 million in 1958 to $347 million in 1959.

The decline in the share of the EEC in the total AAC exports was reflected in all three groupings of former French colonies, that is, West Africa, Central Africa, and Madagascar (Tables 15 and 16, in the Statistical Appendix). This downward movement was steepest in Madagascar, where the share of the EEC in Malagasy exports went from 72 per cent in 1953 to 39 per cent in 1968 and the value dropped from $61 million to $50 million. On the other hand, the share of the EEC in the total exports of the former Belgian colonies (Burundi, Rwanda, and Zaïre) rose from 69 per cent in 1953 to 78 per cent in 1968, with most of the rise occuring in the period 1965–68. The bulk of Zaïre’s exports consists of minerals that received no preference from the bilateral arrangement with Belgium to the association arrangement, and the increase in exports can be attributed in part to larger production of copper and to higher world market prices for this commodity.

Comparing the preassociation period (1953–58) with the association period, the share of the EEC in total Somali exports declined from 80 per cent to 59 per cent, partly as a result of the lessening of preferences for bananas but also owing to the inclusion of British Somaliland in the trade statistics in 1960, as shown by the dramatic jump in Somalia’s total exports from $19 million in 1959 to $34 million in 1960. Since British Somaliland traded mainly with the United Kingdom, the share of the EEC in Somalia’s total exports dropped from 68 per cent in 1959 to 57 per cent in 1960.

Export performance of the AACS compared with other LDCs

Since the formulation of the EEC in 1958, the economies of the EEC member countries have grown rapidly, and intra-EEC trade, as well as trade with other countries, has risen substantially. In general, this expansion has taken place with industrial countries, particularly the United States and the European Free Trade Association. However, trade expansion with developing countries has also been important. Since the AACs have special trade ties with the EEC, one would expect, ceteris paribus, EEC-AAC trade to expand more rapidly than EEC trade with other developing countries.

Thus, the association should cause the AACs to increase their share in exports by LDCs to the EEC. In fact, the share of the AACs declined from 14 per cent in the preassociation period to about 12 per cent in the association period (Table 5). A breakdown of the association period indicates a slight reduction in the AACs’ share from 12 per cent in the first period (1959–64) to 11.5 per cent in the second period (1965–68). These developments, which imply that LDCs other than the AACs have increased their share of EEC imports from the LDCs during the periods under review, are contrary to expectations. However, a comparison of the AACs with various groupings of the LDCs sheds more light on these developments. The only regions that show a clear rise in their share of the EEC market from the preassociation period to the association period are the Middle East and North Africa. These two regions comprise the major oil-exporting countries among the LDCs and thus are not truly competitive with the AACs. The Latin American countries, which are for the most part exporters of primary commodities, experienced a decline in their share of the EEC market, particularly from the period 1959–64 to 1965–68. For the group of LDCs called Competing Africa (i.e., Angola, Ghana, Nigeria, Kenya, Tanzania, and Uganda—see Table 18 in the Statistical Appendix), the share of the EEC market increased in the period 1959–64 but dropped during 1965–68. Asia’s share in the EEC market dropped substantially from the preassociation period to the association period.

Table 5.

Exports by LDCS to the EEC: Regional Shares, 1953–68

(In per cent)

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Source: Table 25 (in the Statistical Appendix).

The disaggregation of the data by various geographical areas shows that although the performance of the AACs was contrary to expectations a change seems to have taken place since 1965. During the period 1965–68, the growth rate of AAC exports to the EEC was much higher than that of competing regions (i.e., Latin America and “Competing Africa”). As a result, the share of these two regions combined in EEC imports from all LDCs dropped from about 29 per cent during 1959–64 to about 27 per cent during 1965–68. This development implies that the effects of the tariff preference granted by the European Common Market to the AACs began to be felt during 1965–68. Prior to mid-1964, EEC tariffs on primary products were reduced only gradually, and some of the reductions were also applied to nonassociated LDCs; furthermore, Germany, Italy, and Belgium were permitted to import duty-free, within specified quotas, certain quantities of bananas and coffee from nonassociated countries. In short, prior to mid-1964, preferences for the AACs in the EEC market were diffused by special provisions designed to safeguard the political and economic interests of some EEC countries in nonassociated developing countries. From mid-1964, the EEC’s CET on tropical products originating in non-associated countries was established. This development explains why EEC imports from countries (or groups of countries) that are similar to the AACs either in export composition (Latin America) or in overall economic structure (Africa) did not grow as fast as EEC imports from the AACs.

Imports by the AACS

The share of the EEC in total AAC imports rose from 66 per cent during 1953–58 to 68 per cent in the ten-year period ending in 1968 (Table 6); accordingly, the share of non-EEC countries dropped from 34 per cent to 32 per cent. The expansion in the share of the EEC in the imports of the AACs took place entirely in the period 1959–64 and is explained by the sharp increase in the share of France from about 46 per cent during the preassociation period to about 51 per cent in the period 1959–64; at the same time, the share of EEC countries other than France dropped from 21 per cent to 17 per cent.

Table 6.

AAC Imports: Regional Distribution, 1953–68

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Sources: Tables 19, 20, and 22 (in the Statistical Appendix).

These developments between the preassociation period and the first association period (1959–64) can be explained by several factors. First, as a result of the devaluation of the French franc in December 1958 and the pari passu devaluation of the CFA franc, the domestic currency cost of imports by the former French colonies from countries other than France and the French franc area rose, thus giving France a competitive edge equal to the amount of the devaluation. Consequently, imports from France replaced imports from other countries (including other EEC countries), and the share of France in the imports of the G-14 rose from 64 per cent in 1957 to more than 70 per cent in the four-year period following the devaluation (Table 7). Second, during the period 1959–64, the preferences given to EEC countries other than France were also granted to France by several associated countries. This occurred in the countries of the Central African Customs and Economic Union and the Malagasy Republic, which had nondiscriminatory tariff schedules before the association arrangement but granted a margin of tariff preference to all EEC countries in the early 1960s (see Appendix I). Third, such preferences were granted in a piecemeal fashion, and the margin of the tariff preference was limited to customs duties, which are not substantial in comparison with other taxes levied on imports from all countries, including the EEC.11 In many AACs the revenue from customs duties does not exceed 5 per cent of the total receipts from duties and taxes on imports, and the ratio of customs duties to imports from outside the EEC is generally less than 10 per cent (Table 23, in the Statistical Appendix).12 Finally, following the pressure for more revenue, several AACs increased the rates of taxes on imports, leaving the customs duties unchanged, thus reducing the margin of preference enjoyed by EEC countries as a group.

Table 7.

G-14 Imports: Regional Distribution, 1953–68

(In per cent)

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Sources: Tables 19, 20, and 22 (in the Statistical Appendix).

During the second period of association (1965–68), the share of the EEC in AAC imports remained at the level of the previous period, reflecting a decline in the share of France from 51 per cent to 46 per cent and an increase in the share of EEC countries other than France from 17 per cent to 22 per cent. The share of non-EEC countries remained unchanged at 32 per cent from one period to the other. The expansion in the share of EEC countries other than France can be explained by the liberalization of imports from these countries by several AACs. In effect, by June 1968 all quota restrictions against EEC countries had been abolished but quotas against third countries were maintained, although they were generally increased from year to year. As a result of the liberalization, the share of EEC countries other than France in the imports of the former French colonies jumped from 8 per cent during 1959–64 to 16 per cent during 1965–68. The share of non-EEC countries also increased. Disbursements of aid, with a large import content, from the EDF rose significantly after 1964, which, of course, contributed to the performance of the EEC countries. The decline in the share of France in imports by its former colonies was due to the erosion of its competitive margin in the markets of these countries owing to rapid inflation in France in this period, which led to the devaluation of the French franc in August 1969.

The performance of the EEC in the imports of various geographical areas is less uniform than it was for exports. In West Africa, where the preferences received by France before the association were gradually extended to other EEC countries, the share of the EEC in the total imports of the region declined from about 74 per cent in 1953 to 70 per cent in 1968; however, a substantial rise in the ratio took place in the years immediately following the devaluation of the French franc and the pari passu devaluation of the CFA franc. The West African countries maintained the preferential customs duties that were granted to EEC countries unchanged during most of the period under review but raised the fiscal import taxes that are levied on all imports regardless of origin. In Central Africa, where France and other EEC countries received tariff preferences following the association, the share of the EEC in the region’s total imports rose from 68 per cent in 1953 to 76 per cent in 1968. In Madagascar, which also gave preferential tariff treatment to the EEC after the association, the EEC’s share in its imports increased from 80 per cent in 1953 to 82 per cent in 1968.

Apart from the devaluation of the CFA franc and the French franc, political difficulties in Zaïre in the early 1960s, which virtually paralyzed its economy, distorted further developments in the early years of association. Total imports by Zaïre declined from the equivalent of US$276 million in 1959 to slightly over US$190 million in 1960 and 1961 (Table 19, in the Statistical Appendix), and its imports from the European Common Market dropped from US$152 million in 1959 to US$85 million in 1961 (Table 20, in the Statistical Appendix). Thereafter, and particularly during the period 1964–68, Zaire’s imports grew rapidly with economic reconstruction, and the share of the EEC rose from 48 per cent in 1964 to 56 per cent in 1968.

Owing to the problems of coverage mentioned in the study of exports, the share of the EEC in Somalia’s imports declined sharply in 1960. Thereafter, it climbed gradually, with imports from the EEC doubling between 1960 and 1968 while total imports increased by only one third in the same period.

IV. Trade Creation and Trade Diversion in the EEC-AAC Arrangement

The impact of association on EEC-AAC trade flows was mild at first but became more noticeable beginning in 1965. This impact is the combined result of trade creation and trade diversion. It is generally agreed that an a priori judgment regarding the net effects of a customs union on trade flows (i.e., trade creation outweighing trade diversion, or vice versa) cannot be made without a detailed study of the economies involved.13 As the association is a trade arrangement between two groups of countries that are economically dissimilar, it was argued earlier that its trade diversion effects are likely to outweigh those of trade creation. This section attempts to determine the relative importance of trade creation and trade diversion in the EEC-AAC arrangement.

Proposed statistical procedure

Trade creation (or diversion) can be measured by the volume of each item of trade created (or diverted) multiplied by the cost differential if the supply schedule is infinitely elastic in a member country. Although it is sometimes possible to obtain the necessary data for computing cost differentials, the determination of the volume of trade created (or diverted) remains a difficult empirical problem. In the arrangement between the EEC and the AACs, investigations into trade creation and diversion are even more difficult, owing to the lack of data on costs in the African countries. Consequently, less refined methods are called for.

In recent years, several attempts have been made to provide an indication of the trade creating and trade diverting effects of the EEC.14 Such investigations, which deal with both ex ante and ex post situations (i.e., the possible repercussions of the EEC before and after its creation), have pointed out the main problem areas in this type of analysis. These include the difficulty of abstracting from the effects of economic growth on trade flows and of differentiating between the trade creating and trade diverting effects. In order to remedy some of these problems, Balassa has suggested that a comparison of ex post income elasticities of import demand in intra-area trade (i.e., imports of countries forming the customs union among themselves) and in extra-area trade (imports of union members from nonunion members), for periods preceding and following integration, may permit a distinction between the trade creation and trade diversion impact of a customs union.15 Assuming that income elasticities of import demand would have remained unchanged in the absence of integration, a rise in the income elasticity of demand for intra-area imports indicates gross trade creation, while a fall in the income elasticity of demand for extra-area imports provides evidence of the trade-diverting effects of the union.16

Balassa’s method of investigating trade creation and trade diversion is used here. This method assumes that the EEC-AAC arrangement is the single most important factor affecting trade flows between the EEC and the AACs. Using the following notation

i = EEC

j = AAC

k = non-EEC and non-AAC countries

M1 = intra-area imports = Σmji + Σmij

ME = extra-area imports = Σmjk + Σmik

Y = Σyi + Σyj

we want to estimate equations (1) and (2) for periods before and after association

( 1 ) log ⁡ M 1 = a ⁢ + α log ⁢ Y
( 2 ) log ⁡ M E = b + β log ⁡ Y

In equation (1), the estimate of a should rise from the period before the association to the period of the association for trade creation. The reverse should occur in equation (2) for the estimate of β to indicate trade diversion.

In order to assess the true impact of the association with respect to the AACs and other LDCs, the following accommodations have been made: (i) MI is the sum of AAC imports from the EEC and of AAC exports to the EEC; (ii) ME is the sum of AAC imports from non-EEC countries and of EEC imports from LDCs other than the AACs; and (iii) Y is the total gross national product (GNP) of EEC countries.

We also use as a dependent variable ME*, which is equal to ME reduced by the EEC imports from the oil exporters (North Africa and the Middle East). The change under (ii) seeks to eliminate from our results the impact of the formation of the EEC on its members and on other industrial countries, which would otherwise overshadow the effects of the association on the AACs and other LDCs; along the same lines, we seek to eliminate the effects attributable to the oil-exporting countries by using ME*. Under (iii), the GNP of the EEC is used instead of that of all 24 countries concerned, owing to the lack of GNP data in the AACs during the entire period under review. This is not unreasonable, since in 1965 the total GNP of all the AACs accounted for 2.3 per cent of the EEC’s gross product; however, the elasticities will be underestimated over time, as economic growth in the EEC has been much faster than in the AACs and the LDCs taken as a whole.17 The size of the elasticities is likely to be less than 1, since most exports of the AACs are primary commodities.

Analysis of income elasticities

There is good reason to assume, a priori, that the income elasticities of import demand would have remained unchanged in the absence of the EEC-AAC arrangement. As noted earlier, various groups of the AACs had close economic and financial ties with some EEC countries prior to the association. This relationship resulted in closely linking the developments in the former colonies with policies in the metropolitan countries. Most of the exports of the former colonies went to the metropolitan European countries, and most of their imports also originated in Europe. Consequently, changes in trade channels would have been unlikely in the absence of the association, and it is reasonable to assume that significant variations in the elasticity estimates can be attributed to the association arrangement.

A consideration of income elasticities for intra-area imports provides evidence of gross trade creation in the EEC-AAC arrangement, with the elasticity increasing from 0.58 in the preassociation period (1953–58) to 0.68 in the association period (1959–68)—see Table 8, equations (2) and (3); when the association period is divided into two subperiods (1959–64 and 1965–68), the resulting coefficient does not change significantly, as shown by the Chow tests 18 in Appendix II.

Table 8.

Income-Elasticity Equations for Intra-Area Trade and for Extra-Area Trade with LDCS and with Competing LDCS

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R2 = Coefficient of correlation squared, adjusted for degrees of freedom. D-W = Durbin-Watson statistic. SEE = Standard error of estimate.

The demand elasticity for extra-area imports declines only slightly, from 0.81 in the preassociation period to 0.79 in the association period—equations (7) and (8); the coefficient, however, does change significantly from one period to the other, thus providing evidence of trade diversion. Similar equations pertaining to the subperiods 1959–64 and 1965–68 do not yield a coefficient that changes significantly.

Changes in the size of the elasticities for intra-area and extra-area imports indicate that the gross trade creation and trade diversion effects were limited. However, the simultaneous occurrence of these two effects would seem to indicate that the increase in intra-area trade was due more to substitution for foreign sources of supply than to substitution among products of union members, that is, that the gross trade creation does not reflect trade creation proper (see footnote 16). This result is consistent with theoretical expectations.

The lack of a more significant trade diversion effect in the period 1965–68, compared with 1959–64, derives from the inclusion of the oil-exporting countries in the data for EEC imports from LDCs. When such data are reduced by EEC imports from North Africa and the Middle East, the elasticities in the relevant equations—(14) and (15)—show substantial trade diversion from one period to the other, the coefficient declining from 0.61 to 0.29. The coefficients for equations (12) and (13), which refer to extra-area trade adjusted for EEC imports from the oil-exporting countries in the periods 1953–58 and 1959–68, do not change significantly from preassociation to the full period of association.

Disaggregation of the data to provide an insight as to the areas and commodities where trade diversion and gross trade creation were experienced is not possible, owing to inadequate statistics in AACs. However, a review of AAC performance in its main export commodities to the EEC will shed more light on these issues.

Commodity analysis

The AACs export to the EEC a variety of products, most of which are primary commodities. The important ones are timber, coffee, cocoa, groundnuts, and bananas. However, the single most important export product is copper (from Zaïre), which accounts for 15–20 per cent of the AACs’ total exports to the EEC. The expansion in AAC exports during the period 1958–68 was essentially due to products that received no preferential tariff treatment as a result of the association arrangement; copper alone accounted for almost 40 per cent of the increase in total AAC exports to the EEC, and timber for about 12 per cent (Table 9). Products such as coffee, cocoa, and bananas, which enjoy tariff preference in EEC vis-à-vis other LDCs, have contributed very little to export expansion. Exports of several other primary products (e.g., groundnuts, cotton, and palm kernels) actually declined. A detailed analysis of AAC performance in the export of commodities that receive preferential treatment in the EEC follows.

Table 9.

Exports by the AACS to the EEC: Composition, 1958–68

(In millions of U.S. dollars)

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Sources: Communauté Economique Européenne, Les Echanges Commerciaux entre la CEE et les Etats Africains et Malgaches Associés, 1958–1966/67, Etudes, Série Aide du Développement, No. 2 (1966), and Rapport Annuel d’Activité du Conseil d’ Association a la Conférence Parlementaire de I’ Association, July 1, 1970-June 30, 1971 (Brussels, 1971).

Coffee

The share of the AACs in EEC coffee imports from LDCs declined slightly, from 24 per cent during 1959–64 to 22 per cent during 1965–68 (Table 10). This occurred despite the tariff advantage of about 10 per cent enjoyed by the AACs in the EEC market. As the table shows, the bulk of AAC coffee exports to the EEC is made by the former French colonies. Before the association these countries had a tariff advantage of 20 per cent in the French market, which absorbed most of their production. This tariff advantage was reduced to 18 per cent in January 1959; further reductions were made in subsequent years, leading to the adoption in mid-1964 of the CET of 9.6 per cent levied by the EEC on coffee imported from nonassociated countries.19 The Benelux countries (Belgium, the Netherlands, and Luxembourg) levied no customs duty on coffee imports, but with the association they were to levy a duty of 4.8 per cent ad valorem on coffee imports from non-associated countries beginning in 1962. However, owing to special provisions in the Treaty of Rome, they were able to import coffee duty-free from nonassociated countries in 1962–63, and the tariff rate of 9.6 per cent was applied beginning only in 1965. In Germany the customs duty on coffee was equivalent to 26 per cent ad valorem in 1957. With the formation of the EEC, this tariff was reduced in January 1959 to the equivalent of 16 per cent applicable to all countries, and it remained at that level until the adoption of the CET in mid-1964. In Italy the tariff on coffee was the equivalent of 10.4 per cent in 1957 and was applied to all countries. With the formation of the EEC, the tariff applicable to the EEC and associated countries was reduced by about 10 per cent each year,20 while that applied to other countries remained at the original level until the CET was adopted in 1964.

Table 10.

EEC: Origin of Coffee Imports, 1959–68

(In millions of U.S. dollars)

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Sources: Organization for Economic Cooperation and Development, Foreign Trade, Series C: Commodity Trade (Paris, 1959–68).

Union Douanière et Economique de l’Afrique Centrale (Central African Customs and Economic Union).

In summary, the tariff advantage enjoyed by AAC coffee in France was reduced with the association, while in the other EEC markets the gain in tariff preference by the AACs was small and was granted in a piecemeal fashion until 1964. Moreover, the world coffee market has been regulated through the International Coffee Agreement since 1963. Between 1959 and 1962 the world supply was managed through export quotas agreed among coffee producers, including African producers. As a result, exportable quantities of coffee were predetermined during the period under review and did not reflect the interplay of market forces.21 With regard to prices, the coffee market describes a situation of oligopoly/oligopsony, with a few large sellers (in Brazil, Ivory Coast, and a few other countries in the Western Hemisphere) and a few large buyers (in the United States and a few European countries), in which most of the AACs are price takers. Furthermore, since coffee produced in the AACs is of the robusta type, while European consumers, except France, prefer arabica coffee 22 (which is of higher quality), the tariff advantage enjoyed by AAC coffee in the EEC would have to be high to produce a shift from arabica to robusta coffee. On the other hand, U. S. demand for robusta coffee rose steeply in the early 1960s owing to the rapid increase in the manufacture of solubles, for which the robusta type has some technical advantage, so that AAC coffee went to that country instead of to EEC countries other than France. In the light of all these factors, the evolution of the AAC share in the EEC’s total imports of coffee is difficult to interpret and should be treated with caution.

Cocoa

The share of the AACs in EEC cocoa imports jumped from 35 per cent during 1959–64 to 48 per cent in the four-year period ending in 1968 (Table 11). This development provides evidence that the AACs have partially displaced competing countries in the EEC cocoa market. As the table shows, practically all AAC cocoa is produced by former French colonies, Ivory Coast and Cameroon being the main producers. The EEC countries levied no tariff duty on cocoa imports except in Germany, where the levy was equivalent to 9 per cent ad valorem. With the formation of the EEC, the member countries other than Germany began to levy customs duties on cocoa imports from nonassociated countries, which were raised gradually to reach the CET of 5.4 per cent in mid-1964. In Germany, the customs duty (9 per cent) was reduced gradually until eliminated for cocoa originating in the AACs, while for nonassociated countries it was maintained at the original level until the CET was adopted. Therefore, the AACs clearly gained preferential treatment for their cocoa exports to EEC countries with the association. As a result, the AACs were able to displace competing countries—Ghana and Nigeria, which recently supplied 25 per cent and 20 per cent, respectively, of EEC cocoa imports. In addition to the tariff preference in cocoa trade, this commodity is not subject to an international agreement limiting the quantity of exports, and it is homogeneous, thus eliminating the problem of taste mentioned in connection with coffee. Moreover, cocoa producers in the AACs seem to be considerably responsive to price changes in the short run, which means that the Governments of the AACs could use the tariff advantage in the EEC to stimulate production in a relatively few years.23

Table 11.

EEC: Origin of Cocoa Imports, 1959–68

{In millions of U.S. dollars)

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Sources: Organization for Economic Cooperation and Development, Foreign Trade, Series C: Commodity Trade (Paris, 1959–68).

Union Douanière et Economiquede l–Afrique Centrale (Central African Customs and Economic Union).

Bananas

EEC banana imports from the AACs, which accounted for 20 per cent of total EEC banana imports in 1959, rose to 32 per cent in 1963 (Table 12). Thereafter, this ratio declined gradually to 21 per cent in 1967–68. AAC bananas are produced mainly by the former French colonies and Somalia. As with coffee, the banana trade has been characterized by a complex system of protection and preferences. Before association, all EEC countries except Germany provided some of the AACs with a preferential tariff when importing from these countries. In France, bananas from the French franc area entered duty-free, while banana imports from other areas were subject to a 20 per cent levy. In Italy, the tariff advantage for Italian Somaliland was 36 per cent; in the Benelux countries, the advantage for Burundi, Rwanda, and Zaïre was 15 per cent. The association sought to harmonize these different regimes into a global tariff advantage for all associated countries (including dependencies and territories) against nonassociated countries. However, this was extremely difficult in view of the important supplier position of the Latin American countries, which provided most of the German import requirement. As a result, although Germany was to levy a tariff of 6 per cent beginning in 1962 (and 12 per cent beginning in 1966) on banana imports from nonassociated countries, it was able to import duty-free predetermined amounts that were about equal to its consumption requirements. Since Germany accounts, on average, for two thirds of the EEC’s banana imports and the remaining EEC market is adequately supplied by the AACs, this special provision had the effect of putting the AACs on an equal footing with nonassociated countries, thus making it difficult for them to capture part of the German market. Moreover, bananas produced in the AACs are not of the type favored by German consumers. Consequently, the evolution of the AAC share in EEC banana imports cannot be interpreted meaningfully in the light of the tariff preference received by the AACs in some EEC markets; institutional factors, such as taste and marketing arrangements, neutralized the impact of the tariff advantage.

Table 12.

EEC: Origin Of Banana Imports, 1963–681

(In millions of U.S. dollars)

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Sources: Organization for Economic Cooperation and Development, Foreign Trade, Series C: Commodity Trade (Paris, 1963–68).

Comparable statistics for 1959–62 are not available.

The three afore-mentioned commodities are the major export products for which the AACs received a tariff advantage in the European Common Market. The AACs also received a tariff advantage for their exports of groundnut oil and palm oil to the EEC, but these products are of marginal importance in total AAC exports to the EEC. Such primary products as groundnuts, palm kernels, and cotton received no tariff preference with the association, although they had benefited from particular arrangements in France for the former French colonies prior to the association.

Groundnut oil

The export of groundnut oil to the EEC rose from $45 million in 1958 to $54 million in 1967 (Table 13). A sharp drop in those exports had been experienced during 1963–65, owing to low production in the AACs and to the need to satisfy domestic demand first. The available statistics indicate that the share of the AACs in EEC groundnut oil imports from all LDCs grew from 39 per cent in 1965 to 82 per cent in 1968. The nominal tariff advantage of 5 per cent for oil originating in the AACs contributed significantly to this development, since the effective rate of protection through this tariff can be estimated at about 15 per cent.24

Table 13.

EEC: Origin of Groundnut Oil Imports, 1963–681

(In millions of U.S. dollars)

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Sources: Organization for Economic Cooperation and Development, Foreign Trade, Series C: Commodity Trade (Paris, 1963–68).

Comparable statistics for 1959–62 are not available.

Palm oil

With rising consumption of palm oil in the associated countries, exports of palm oil, which received a tariff preference of 9 per cent in the EEC, did not expand significantly during the period under review. The share of the AACs in EEC imports of palm oil fluctuated between 56 per cent and 40 per cent during 1963–68, reflecting mostly developments in Zaïre (Table 14).

Table 14.

EEC: Origin of Palm Oil Imports, 1963–68 1

(In millions of U.S. dollars)

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Sources: Organization for Economic Cooperation and Development, Foreign Trade, Series C: Commodity Trade (Paris, 1963–68).

Comparable statistics for 1959–62 are not available.

Union Douanière et Economique de l’Afrique Centrale (Central African Customs and Economic Union).

V. Conclusion

It would be difficult to argue that the association had a significant beneficial impact on trade flows between the AACs and the EEC or a significant adverse impact on the exports of nonassociated LDCs to the EEC. The period immediately following the association arrangement was a transitional one for both the AACs and the EEC. Although the two partners exchanged preferences in this period, it was done gradually and on a limited scale. EEC preferences applied to very few AAC products, and for several of these products the margin of preference in the EEC was lower than the tariff preference they had enjoyed under preassociation arrangements and supply responsiveness to tariff preference was weak; in addition, several important AAC export goods (e.g., minerals and timber) received no preference in the EEC market. Preferences for EEC goods were extended mostly by the former French colonies, but these preferences, mainly in the form of exemptions from the customs duty, were marginal and declined in importance over the years with the growth of other import taxes; moreover, several AACs liberalized their imports from non-EEC countries in this period.

The main impact of the association was to induce a shift in AAC exports and imports from France to other EEC countries. This was explained by the predominance of the former French colonies, which, with the association, received new preferences in the markets of EEC countries other than France; in addition, they dismantled quotas and extended tariff preference to their imports from the Common Market countries other than France. Although the preferences involved were limited, the larger market provided to the AACs by the association should be important for the expansion of their exports and their economic growth.

The association arrangement seems to have resulted in trade diversion, particularly against nonassociated LDCs whose export products are competitive with those of the AACs. However, the extent of trade diversion was limited owing to various institutional factors, including taste and marketing arrangements in the trade of several of the primary products involved and the limited tariff margins that were traded in the arrangement for association. Although the analysis of income elasticities by commodity could not be carried out because of inadequate trade statistics, trade diversion seems to have affected such products as cocoa and groundnut oil where institutional factors are a weak determinant of trade channels.

APPENDICES

I. Development of the Tariff Treatment of Imports from the EEC by the AACs

The Treaty of Rome laid down the principles governing the AACs’ tariff treatment of imports originating in the EEC. These principles, which are also incorporated in Article 3 of the Yaoundé Convention are (1) the AACs will grant equal tariff treatment to imports originating in the Community without any discrimination against any member state and (2) imports from the EEC will benefit from progressive elimination of customs duties or their equivalent. However, the AACs, subject to consultation with the EEC, can maintain or levy these duties related to the requirements of development, industrialization, or government finance.

Before the association came into effect, some AACs extended tariff preferences to imports from France. Equal tariff treatment of imports from other EEC countries, as well as the progressive elimination of customs duties, have been implemented gradually at different stages, as discussed later.

Equal tariff treatment of imports from the EEC

When the Treaty of Rome came into effect, the AACs belonged to two groups: those that granted tariff preference to imports from France, and those that granted no preference according to origin, even to France.

AACs that granted tariff preference to imports from France

This group included only the members of the first West African Customs Union (Union Douaniére entre les Etats de l’Afrique Occidentale), which was transformed into the West African Customs Union (Union Douaniére des Etats de l’Afrique de l’Ouest) in 1966. Members of this Union are Dahomey, Ivory Coast, Mali, Mauritania, Niger, Senegal, and Upper Volta; Togo is not a member although it joins other members (except Mali) in the West African Monetary Union.

The tariff of the first West African Customs Union consisted of two columns, fiscal duties of a revenue nature levied on all imports regardless of origin, including those from France, and customs duties of a discriminatory nature levied on imports outside the franc zone. Therefore, when the association came into effect, imports from members of the Community other than France were subject in the West African Customs Union to customs duties. Complete exemption from these duties was achieved with effect from December 1, 1964, despite the explicit provisions of Article 133 of the Treaty of Rome, which called for equal tariff treatment to imports from the Community. This treatment was completed in the following steps: (1) A 10 per cent reduction of the customs duty was introduced on January 1, 1959, and similar reductions were allowed on July 1, 1960, January 1, 1962, and July 1, 1963. (2) A complete exemption from the remaining 60 per cent was granted on December 1, 1964 after the Yaoundé Convention came into effect. Through this exemption, imports from the other five members of the Community received the same tariff treatment as that granted to imports from France.

The customs duties that were levied on imports outside the franc zone before the association remained unchanged, and they constitute the CET of the West African Customs Union.

AACs that granted no tariff preference to imports according to origin

This group had three sections: (1) members of the Equatorial Customs Union—the Central African Republic, Chad, Congo (Brazzaville), and Gabon; (2) the Malagasy Republic; and (3) other AAC countries including Burundi, Rwanda, Somalia, Togo, and Zaïre. Before the association the tariff of the countries in the first section consisted of a nondiscriminatory fiscal duty applicable to all imports regardless of origin. The nondiscriminatory tariff treatment was in application of the Congo Basin Treaty of 1883. On June 19, 1962, Cameroon joined the Equatorial Customs Union, which adopted a two-column tariff in customs and fiscal duties. Exemptions from the customs duties were granted to imports from France with suspension for imports from the other five members of the Community. On June 1, 1964, this suspension was transferred into a complete exemption. The Malagasy Republic used to levy a customs duty of a discriminatory nature that exempted imports from the franc zone. This duty was suspended in 1943 but was restored on January 1, 1961; since then the Malagasy Republic has granted complete exemption from the customs duty to imports originating in the Community. The countries in the third section extended no tariff preference to imports according to origin. With the exception of Zaïre, these countries were under the trusteeship of the United Nations, and they could not grant any tariff preference according to origin; Zaïre, which was covered by the Congo Basin Treaty, could not grant tariff preference.

Following the association, Burundi and Somalia introduced a two-column tariff and granted exemption from the customs duty to imports from the EEC. Rwanda, through its tariff reform of February 10, 1965, adopted a two-column tariff with the intention of progressively eliminating the customs duties on imports from the EEC. In July 1966, it granted a 15 per cent reduction and proposed another identical reduction in July 1967, but because of budgetary difficulties, the proposed reduction has not been implemented. Zaïre introduced a two-column tariff, but no exemption is accorded to imports from the EEC. Togo continues to levy its single-column tariff, even without a distinction between a minimum tariff (granted to imports from countries exchanging the most-favored-nation treatment) and a general tariff.

II. Test of Equality Between Coefficients (Chow Test)

Suppose that we have m and n observations in the two equations with k variables. To know whether a coefficient changes significantly from one equation to the other, we compute the F ratio.

F⁢=Q3/KQ2/(m+n−2⁢k) with degrees of freedom (k, m + n - 2k)

Q1 = sum of squared residuals from the equation that pools all the m + n observations to compute the least-squares estimate of the coefficient.

Q2 = total of sums of squared residuals from the two equations.

If F, as just defined, is greater than Fk, m+n–2k then the coefficient changes significantly from one relation to the other.25

Intra-area trade

Elasticity coefficient in equations (2) and (3)

(m = 6; n 10; k = 2)

Q1 = (m + n)[(SEE)2 = 16(0.0061) = 0.098

Q2ʹ = (m + n)[(SEE)2] = 6(0.0009) = 0.005

Q2ʹ ʹ (n) [(SEE)2] = 10(0.0015) = 0.015

Q2 = Q2ʹ + Q2ʹ ʹ = 0.020

Q3 = Q1 – Q2 = 0.078

F ⁢ = 0.78 / 2 0.20 / 12 ⁢ = 23.40

Since F0.05k,m+n–2k = 3.88, which is less than F, the coefficient 0.58 in equation (2) is significantly different from the coefficient 0.68 in equation (3).

Elasticity coefficients in equations (4) and (5)

(m = 6; n = 4; k = 2)

Q1 = 0.015

Q2 = 0.009

Q 3 = 0.006

F ⁢ = 0.006 / 2 0.009 / 6 ⁢ = 2.00

Since F0.05 2, 6 = 5.14, which is greater than F, the two coefficients are not significantly different.

Extra-area trade

Elasticity coefficients in equations (7) and (8)

(m = 6; n = 10; k = 2)

Q1 = 0.022

Q2 = 0.013

Q3 = 0.009

F=0.009/20.013/12⁢=4.02 (greater than F0. 05 2, 6)

The two coefficients (0.81 and 0.79) are significantly different.

Elasticity coefficients in equations (9) and (10)

(m = 6; n = 4; k = 2)

Q1 = 0.005

Q2 = 0.004

Q3 = 0.001

F⁢=0.001/20.004/6⁢=0.75 (less than F0. 05 2, 6)

The two coefficients are not significantly different.

Elasticity coefficients in equations (12) and (13)

(m = 6; n = 10; k = 2)

Q1 = 0.097

Q2 = 0.062

Q3 = 0.035

F⁢=0.035/20.062/12⁢=3.38 (less than F0. 05 2, 12)

The two coefficients are not significantly different.

Elasticity coefficients in equations (14) and (15)

(m = 6; n = 4; k = 2)

Q1 = 0.0078

Q2 = 0.0027

Q3 = 0.0051

F ⁢ = 0.0051 / 2 0.0027 / 6 =5.67

The two coefficients (0.61 and 0.29) are significantly different.

STATISTICAL APPENDIX

Table 15.

AACs: Total Exports, 1953–68

{In millions of U.S. dollars)

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Sources: United Nations (Statistical Office), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD), Direction of International Trade, Annual Issue (six volumes), covering the years 1953–57 (New York); IMF and IBRD, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).
Table 16.

AACs: Exports to the EEC, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations (Statistical Office), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD), Direction of International Trade, Annual issue (six volumes), covering the years 1953–57 (New York); IMF and IBRD, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).
Table 17.

North African Countries: Exports to the EEC, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations, Statistical Office, Yearbook of International Trade Statistics (six volumes), covering the years 1953–57 (New York); International Monetary Fund and International Bank for Reconstruction and Development, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).

Author’s estimate.

Table 18.

Competing Aerican Countries: Exports to the EEC, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations, Statistical Office, Yearbook of International Trade Statistics (six volumes), covering the years 1953–57 (New York); International Monetary Fund and International Bank for Reconstruction and Development, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).

Data reported as Kenya-Uganda for these years.

Table 19.

AACs: Total Imports, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations (Statistical Office), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD), Direction of International Trade, Annual Issue (six volumes), covering the years 1953–57 (New York); IMF and IBRD, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).
Table 20.

AACs Imports form the EEC, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations (Statistical Office), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD), Direction of International Trade, Annual Issue (six volumes), covering the years 1953–57 (New York); IMF and IBRD, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).
Table 21.

AACs: Exports to France, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations (Statistical Office), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD), Direction of International Trade, Annual Issue (six volumes), covering the years 1953–57 (New York); IMF and IBRD, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).
Table 22.

AACs: Imports from France, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations (Statistical Office), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD), Direction of International Trade, Annual Issue (six volumes), covering the years 1953-57 (New York); IMF and IBRD, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington).
Table 23.

LDCs: EXPORTS to the EEC, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations, Statistical Office, Yearbook of International Trade Statistics, 1962 (New York, 1964); International Monetary Fund and International Bank for Reconstruction and Development, Direction of Trade, Annual (three volumes), covering the years 1958–68 (Washington); Tables 16, 17, and 18 (in the Statistical Appendix).

Algeria, Libya, Morocco, and Tunisia (see Table 17).

Angola, Ghana, Nigeria, Kenya, Tanzania, and Uganda (see Table 18).

During the period 1953–57, the sum of all areas (Latin America, Asia, the Middle East, and Africa) was greater than the figures for LDCs shown in the first column; the difference has been added to that column.

Table 24.

EEC Expenditure on Gross National Product,1 Intra-Area Trade, and Extra-Area Trade, 1953–68

(In millions of U.S. dollars)

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Sources: United Nations, Statistical Office, Yearbook of National Accounts Statistics, 1969, Vol. II, International Tables (New York, 1970); Tables 16, 20, and 23 (in the Statistical Appendix).

At market prices, converted into U.S. dollars from national currencies at the following rates: Belgium and Luxembourg (1953–68: BF 50 = $1); France (1953–56: F 350 = $1; 1957–58: F420 = $1; 1959–68: F4.937 = $1); Germany (1953–60: DM 4.20 = $1; 1961–68: DM 4.00 = $1); Italy (1953–68: Lit 625 = $1); Netherlands (1953–60: f. 3.80 = $1; 1961–68: f. 3.62 = $1).

Beginning in 1960, data not strictly comparable with those of previous years.

Beginning in 1960, data for Germany include the Saar and West Berlin.

Total gross national product of the EEC countries.

The sum of imports by the AACs from the EEC and exports by the AACs to the EEC.

The sum of imports by the AACs from non-EEC countries and imports by the EEC from LDCs other than the AACs.

ME minus the imports by the EEC from the oil exporters (North Africa and the Middle East).

Table 25.

AACs: Ratio of Customs Receipts to Imports from Countries Outside the EEC, 1964 and 1968

(In per cent)

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Sources: Budget documents for the countries concerned.

Figures are for 1966.

Figures are for 1965.

Figure is for 1967.

SUMMARIES

Stock and Bond Issues and Capital Markets in Less Developed Countries 1

U Tun Wai and Hugh T. Patrick

Stock and bond issues and capital markets in less developed countries (LDCs) have recently received increasing attention from policymakers, and this preliminary study provides a cross-country survey of the actual experience of LDCs in this respect.

Issues of stocks and bonds in relation to gross national product (GNP) in developed countries range between about 11 per cent and less than 4 per cent; among the 13 LDCs with data, the range is from about 8 per cent to less than 3 per cent. In the LDCs the government sector supplies a large and rising share of new securities, accounting for about 60–80 per cent of the total issues in 6 countries. Central banks are the main purchasers, although there is some demand from the commercial banks, induced partly by their legal reserve requirements.

Capital markets in LDCs are markedly underdeveloped, reflecting a combination of historical circumstances, current level of economic and financial development, and government policy—including inflation and low interest rates on government debt. Measures to develop capital markets should aim at establishing an appropriate environment and also specifically encourage suppliers (investors) to issue new securities through the market and demanders (savers) to purchase them. One important means of protecting bonds against inflation, which has been used in only a few LDCs, is to base their redemption value (and interest payments) on some appropriate index of inflation. For a capital market to be effective, the prices for securities must be determined by the free play of demand and supply, but low interest rate policies in many LDCs conflict with this requirement in both principle and practice.

Through its regulatory powers, the government can do much to reduce uncertainty (and, hence, risk). Supervising capital markets has several dimensions: preventing fraud; improving information; reducing transactions costs; and developing capital market techniques and institutions.

A common way to increase the effective yield to buyers is to set lower personal (or corporate) income tax rates on bond interest received, dividends, and capital gains from selling securities. How successful these measures are depends on the effective marginal income tax rates of securities holders (usually in higher income brackets). A more substantial tax benefit is to allow purchasers of securities to deduct part of their purchase from their gross income, or even from their tax liability.

The main benefit of the secondary (trading) market is to provide liquidity for securities, thereby making them more attractive assets. A large secondary market makes it possible for the holder to have liquidity based on marketability rather than an early maturity date and enables issuers to sell financial liabilities of a long maturity. In LDCs, the market value of all securities listed on stock exchanges is about one seventh of GNP and about one half of the money plus quasi-money; the turnover of stocks and bonds typically amounts to less than 3 per cent of GNP. In developed countries, the market value is equivalent to GNP and about double that of money and quasi-money; the turnover is about 20 per cent.

In the most positive sense, by assisting in training, capital subscription, etc., the government can help to create new financial institutions—such as mutual funds—that might hold stocks and bonds in their asset portfolios. The nature of government regulation of those portfolios has historically focused on protecting the holders of an institution’s liabilities, implementing monetary policy, and minimizing the cost of government debt, rather than fostering capital market development. If capital markets are to be encouraged, the government should re-evaluate its goals in regulating the assets of financial institutions.

Information on the Brazilian experience includes the fact that a strong, self-sustained capital market has not yet been established, despite the gains made. Tax incentives do provide a way of promoting capital market development, but the benefits of initial development must be judged in terms of the cost of tax receipts forgone. Policies to establish capital market oriented financial institutions can only slightly lead the growth in market demand for financial services. The experience of LDCs indicates that vigorous capital markets can exist only in a supportive social, political, and legal as well as economic environment.

The Value-Added Tax in Developing Countries 1

George E. Lent, Milka Casanegra, and Michèle Guerard

Choosing a sales tax technique depends on a variety of considerations to be weighed by each country in the light of its own economic and social conditions. Alternative techniques that have proved successful include (1) a single-stage manufacturers’/importers’ tax; (2) a hybrid retail/wholesale tax; (3) a tandem system, including separate taxes on sales by manufacturers or wholesalers and on retail sales; and (4) a value-added tax (VAT).

Most developing countries have general sales taxes only at the manufacturing stage, with compensatory tax on imports. Two techniques can eliminate double taxation. (1) The suspensive technique exempts purchases by licensed manufacturers and importers; however, it offers greater opportunity for evasion and may require greater administrative effort. (2) The value-added technique provides for either a deduction from taxable sales of taxable purchases, or a credit against tax chargeable on sales for tax paid on purchases, and is less subject to tax evasion.

The introduction of the VAT in Western Europe has captured the interest of other countries. Brazil, Ecuador, Ivory Coast, the Malagasy Republic, Morocco, Senegal, and Uruguay are among the countries that have adopted sales taxes based on the value-added principle. All depart, in some respects, from the European model of a comprehensive, uniform, and neutral tax on the consumption of goods and services, thereby illustrating the adaptation of tax structure to different economic and social conditions. Significantly, however, all employ the tax-credit device in applying the value-added principle.

Developing countries are likely to restrict the scope of the VAT by excluding the most troublesome sectors (farmers, retailers, etc.) because of difficult enforcement problems. Most of them exempt farmers as a simple way of granting tax relief to the lowest-income group. In some countries, selective excises on luxury goods increase the tax burden on the higher-income groups, without necessarily resorting to a multiple rate structure for the VAT itself.

Developing countries may be less concerned than industrial countries with removing investment expenditures from the tax base; when they do wish to remove investments from the base, they may choose to exempt producer goods from the tax, rather than use the tax-credit method, since the former is generally easier to apply. Techniques for dealing with small businesses under a VAT include use of forfait and the tax-credit pass-through facility.

Revenue data for the countries covered show that the VAT produces between 10 per cent and 30 per cent of government tax revenue and is among the most productive forms of sales tax. As with sales tax revenue generally, VAT revenues in developing countries can be expected to increase at a faster rate than the rate of growth of the economy.

Efficiently administering a VAT in developing countries depends on many factors, including characteristics of the VAT to be introduced, the country’s economic structure and social environment, the revenue expected from the VAT, and experience with the sales tax that it replaces. A VAT with multiple rates and many exemptions presents greater difficulties of administration and compliance than a single-rate tax with few exemptions.

The Role of Money in Stabilization Policy in Developing Countries 1

Yung Chul Park

The purpose of this paper is to analyze the role of money in stabilization policy in less developed countries (LDCs). The analysis leads to the following conclusions: (1) In the absence of a variety of financial assets, real assets are likely to be a close substitute for money, and hence the demand for money would be sensitive to the nominal rate of return on real assets. (2) The effects of changes in the money supply are transmitted to the real economy in part by portfolio substitution but primarily by credit rationing, which appears to be the most powerful channel of monetary policy. (3) A given change in the money supply will have a larger and quicker effect on spending and income in LDCs than in advanced countries. (4) The stock of money, defined either narrowly or broadly, is an endogenous variable determined by the actions of the central bank as well as the behavior of the public and commercial banks. These conclusions suggest that meaningful monetary analyses in LDCs require a structural model complete with a financial sector that is in the spirit of the Keynesian income/expenditure theory. This paper then develops such a model that incorporates some broad institutional and structural characteristics common to all LDCs.

The Export Promotion System and the Growth of Minor Exports in Colombia 1

José D. Teigeiro and R. Anthony Elson

Over the decade of the 1960s, Colombia’s nontraditional exports grew at an average annual rate of 15 per cent, raising their participation in total export earnings from 11 per cent in 1960 to 34 per cent in 1971. During the same period, the Colombian authorities developed a comprehensive system of export incentives that was implemented primarily through exchange rate policy but also included fiscal incentives, special import-export arrangements, and special credit facilities.

This article attempts to estimate the impact of the export promotion system by calculating an effective exchange rate for nontraditional exports that takes into account the financial value of each component of the system. During the period 1961–71, the effective exchange rate for manufactured exports was about 25 per cent above the nominal exchange rate, while the spread between the rates applicable to other nontraditional exports was about 17 per cent. Also, the spread varied as changes were made in the components of the export promotion system.

Statistical tests, based on regression analysis, showed that the effective exchange rate is significant in explaining the growth of nontraditional exports. Moreover, when each component of the effective exchange rate was considered separately in the regression analysis as explanatory variables, the nominal exchange rate emerged as the most significant regressor.

The effects on resource allocation of the export promotion policy were examined in terms of revenue forgone in the central government budget. Two components were analyzed: the direct fiscal cost, as measured by tax exemptions and customs revenue forgone under import-export systems at prevailing exchange rates, and the indirect fiscal cost, arising from the maintenance of an overvalued exchange rate. The study shows that the combined direct and indirect fiscal cost has amounted, on average, to about 10 per cent of central government revenue and to 30 per cent of the current account surplus. No attempt was made to estimate the benefits derived from the export promotion program, mainly in the form of the additional income of the export sector and its multiplier effect on the rest of the economy, as these are already built into the system and, therefore, are reflected in the Government’s actual operations.

The conclusions of this study raise important questions about the future of the Colombian export promotion system. Because of its substantial fiscal cost, its burden on the budget must be relieved. The most effective solution would seem to be increasing reliance on exchange rate adjustment as the principal instrument for export promotion. This would permit reducing the role of the other components of the system while maintaining the incentive provided by the effective exchange rate. Such a solution seems particularly appropriate in view of the statistical results that show the nominal exchange rate to be the most significant component of the export promotion system in explaining the favorable performance of nontraditional exports. In addition to reducing the fiscal cost without penalizing the growth of nontraditional exports, this solution would also provide for simplifying the exchange rate system. The demands of balanced and efficient resource allocation indicate that both objectives should be pursued.

Theories of the Determinants of Direct Foreign Investment 1

Giorgio Ragazzi

In the past two decades, direct foreign investment has become a main vehicle for international capital movements, while flows of direct investment and portfolio capital have occurred in different and sometimes opposite directions. For example, the large flow of U. S. direct investment into Western Europe has been matched by sizable purchases of U. S. long-term portfolio assets by private European residents. Such interflows of capital cannot be explained by the traditional theory of international capital movements. Under perfectly competitive conditions, markets for securities should provide a more efficient way to transfer capital internationally than direct investment, considering also that national enterprises can presumably operate in their own country at lower costs than can subsidiaries of foreign enterprises. The determinants of direct investment must, therefore, be found in actual deviations from perfectly competitive conditions.

The paper discusses the main line of modern theory of direct investment, which focuses on advantages of superior “knowledge” that allow a firm to operate a subsidiary in a foreign country at higher rates of return than local competitors. In this context, the superiority of U. S. firms could also be explained according to the theory of the product cycle. Historical patterns of direct investment flows cannot be fully explained, however, by advantages of superior knowledge alone. One aspect that has been relatively neglected in the literature is that of imperfections in stock markets, which cause discrepancies between risks and expected rates of return of control and of portfolio shares of the same enterprise. Since stock markets in Europe are generally much less efficient than in the United States, portfolio shares of European companies may appear less attractive than those of U. S. companies, even if the former have higher rates of return than the latter on investments of equal risk. Portfolio capital flows may internationally equalize the rates of return only for securities of equal risk, while direct investment would tend to equalize rates of return for enterprises of equal risk.

The paper also discusses theories that regard direct investment abroad as a phenomenon related to the drive toward the expansion of enterprises operating in oligopolistic markets. The last section deals mainly with the impact of exchange rates on direct investment. It is argued that exchange risks are likely to stimulate direct investment from a weak toward a strong currency area, contrary to what has been said by other authors. Historical evidence suggests indeed that the overvaluation of the dollar compared with most European currencies may have provided substantial incentive for U. S. direct investment in Europe, during the 1960s.

Trade Effects of the Association of African Countries with the European Economic Community 1

Alassane D. Ouattara

On January 1, 1958, with the formation of the European Economic Community (EEC), 18 African countries that were colonies or territories of Belgium, France, and Italy became associate members. The arrangement for association provided the associated African countries (AACs) with tariff preferences on some of their exports to the EEC and created a special fund (the European Development Fund) to assist then financially in their development effort. In return, the AACs granted certain preferences on their imports from the EEC. Thus, the association established a preferential area between a group of industrial countries and several less developed countries. The present study analyzes the impact of the association on the trade pattern of the AACs and assesses its effects with respect to trade creation and trade diversion.

The statistical analysis shows that the tariff preferences envisaged in the association have had only limited impact on overall trade flows between the AACs and the EEC and on the exports of nonassociated less developed countries to the European Common Market. This impact became more apparent after mid-1964, however, when the EEC imposed common external tariffs on some primary products that were of particular interest to the AACs, and the former French colonies dismantled quotas and extended tariff preference to their imports from the Common Market countries other than France. The association also seems to have induced a shift in the trade of the AACs from France to other countries of the EEC.

One of the main factors behind the slow export performance of the AACs in the European Common Market was the limited tariff preferences that were extended to some of their major exports in this market and the piecemeal fashion in which they were granted during the first years of association; also, the products of the AACs that benefit from tariff preferences in the Common Market are tree crops, where supply responsiveness to tariff preferences is weak. The reverse preferences granted to the EEC by some of the associated countries were also marginal, and their restrictive effect on the imports of the AACs from countries outside the Common Market was diluted by the liberalization of imports in several associated countries. The evolution of the income elasticities of imports suggests that the association has caused some trade diversion, particularly with respect to those countries exporting primary commodities similar to the goods of the AACs that receive tariff preferences in the EEC. The effect of the diversion of trade has been limited, however, owing to institutional factors in the trade of several of the primary commodities involved and the limited tariff margins that were traded in the arrangement for association.

RESUMES

Emissions d’actions et d’obligations et marchés des capitaux dans les pays peu développés 1

U Tun Wai et Hugh Patrick

Les questions des émissions d’actions et d’obligations et des marchés des capitaux dans les pays peu développés ont récemment retenu et retiennent de plus en plus l’attention des dirigeants et la présente étude préliminaire fait le bilan de l’expérience acquise à l’heure actuelle par les pays peu développés à cet égard.

Les émissions d’actions et d’obligations représentent moins de 4 à 11 pour 100 environ du produit national brut des pays développés; dans les 13 pays peu développés qui ont des données, ces émissions représentent entre moins de 3 et 8 pour 100 environ du PNB. Dans les pays en voie de développement le secteur public fournit une part importante et croissante des émissions nouvelles, qui représente environ 60 à 80 pour 100 du volume total des émissions de six pays. Les banques centrales en sont les principaux acheteurs, bien qu’il y ait une demande en provenance de banques commerciales, motivée en partie par les dispositions statutaires concernant les réserves légales.

Dans les pays peu développés les marchés des capitaux sont nettement embryonnaires, ce qui s’explique par un ensemble de circonstances historiques, le niveau de développement économique et financier et la politique gouvernementale—et notamment par l’inflation et les taux d’intérêt peu élevés de la dette publique. Pour développer les marchés des capitaux il faudrait chercher à établir un environnement approprié et aussi à encourager expressément l’offre (les émetteurs) à mettre en vente de nouveaux titres sur le marché et la demande (les épargnants) à les acheter. Un moyen de protéger les titres contre l’inflation, qui n’a été utilisé que dans un petit nombre de pays peu développés, consiste à baser leur valeur de rachat (y compris les paiements d’intérêt) sur un indice d’inflation approprié. Pour qu’un marché des capitaux soit efficace les prix des valeurs doivent être déterminés par le libre jeu de l’offre et de la demande, mais les politiques pratiquées dans bon nombre de pays peu développés tendant à maintenir à un faible niveau le taux d’intérêt entrent en conflit avec cette exigence tant en théorie qu’en pratique.

En usant de ses pouvoirs réglementaires, le Gouvernement peut faire beaucoup pour réduire l’incertitude et, partant, le risque. La surveillance des marchés de capitaux comporte plusieurs aspects : il faut empêcher la fraude, améliorer l’information, réduire les coûts des transactions, et développer les techniques et les institutions de mise en valeur du marché des capitaux.

Une méthode couramment employée pour accroître le rendement effectif des valeurs pour les acheteurs consiste à fixer à un niveau plus bas les taux d’imposition du revenu des personnes ou des sociétés lorsque le revenu consiste en recettes d’intérêt des obligations, de dividendes et de gains de capital réalisés lors de la vente des titres. Le succés de ces mesures dépend des taux marginaux effectifs de l’impôt sur le revenu appliqués aux détenteurs des titres (qui se trouvent normalement dans les tranches supérieures de l’échelle des revenus). Un avantage fiscal plus substantiel consiste à permettre aux acheteurs de titres de déduire de leurs revenus bruts ou même de leur obligation fiscale une partie du prix payé pour leur achat.

Le principal avantage du marché secondaire (“trading”) consiste à assurer la liquidité des valeurs, et à les rendre ainsi plus attrayantes. Un large marché secondaire permet aux détenteurs d’avoir de la liquidité basée sur les possibilités de vente plutôt que sur une échéance prochaine et permet aux émetteurs de placer des obligations financiéres à long terme. Dans les pays peu développés, les cours du marché de toutes les valeurs cotées en bourse représentent environ un septiéme du produit national brut et environ la moitié du total de la masse monétaire et de la quasi-monnaie; le chiffre d’affaires, c’est-à-dire le total des achats et ventes d’actions et d’obligations, représente normalement moins de 3 pour 100 du produit national brut. Dans les pays développés, la valeur de marché, ou la capitalisation boursiére, est l’équivalent du produit national brut et représente environ le double du volume total de la masse monétaire et de la quasi-monnaie; le chiffre d’affaires représente environ 15 pour 100 du PNB.

Au sens le plus positif, en apportant une aide à la formation, à la souscription de capital, et par divers autres moyens, le Gouvernement peut contribuer à créer de nouvelles institutions financiéres — comme les fonds de placement — qui pourraient détenir en portefeuille des actions et des obligations. La nature de la réglementation gouvernementale de ces portefeuilles a consisté principalement, dans le passé, à protéger les détenteurs d’obligations d’une institution financiére, à mettre en oeuvre la politique monétaire, à réduire au minimum le coút de la dette publique — plutôt qu’à favoriser le développement du marché des capitaux. Le Gouvernement, s’il veut encourager le développement des marchés des capitaux, doit réviser ses objectifs lorsqu’il réglemente les avoirs des institutions financiéres.

Les renseignements que l’on posséde sur l’expérience brésilienne indiquent notamment qu’un marché des capitaux vigoureux, capable de se suffire à luimême, n’a pas encore été établi, en dépit des progrés réalisés. Les stimulants fiscaux sont un moyen de promouvoir le développement du marché des capitaux mais les avantages qu’on peut attendre de la phase initiale d’un tel développement doivent étre appréciés en regard du coût des recettes fiscales auxquelles on renonce. L’expérience des pays peu développés montre que les politiques visant à créer des institutions financiéres orientées vers le marché des capitaux ne peuvent favoriser que légérement la croissance de la demande de services financiers par le marché. Un marché des capitaux vigoureux ne peut exister que dans un environnement propice sur le plan social, politique, juridique et économique.

La taxe sur la valeur ajoutée dans les pays en voie de développement 1

George E. Lent, Milka Casanegra et Michéle Guerard

Le choix d’une taxe sur le chiffre d’affaires dépend de diverses considérations que chaque pays doit apprécier à la lumiére de sa situation économique et sociale. Quatre solutions possibles ont fait leur preuve dans ce domaine : 1) une taxe unique production/importation; 2) une taxe hybride détail/gros; 3) une taxe “en tandem”, juxtaposant une taxe sur le chiffre d’affaires des producteurs ou grossistes et une taxe au détail; et 4) une taxe sur la valeur ajoutée (TVA).

La plupart des pays en voie de développement ont limité leur taxe générale sur le chiffre d’affaires au stade de la production, en l’assortissant d’un droit compensatoire sur les importations. Deux techniques peuvent être employées pour éliminer la double imposition : 1) la suspension de taxe qui exonère les achats effectués par les producteurs et importateurs recensés; elle a l’inconvénient d’offrir de plus grandes possibilités d’évasion et, peut-être, d’exiger un effort administratif plus intense; 2) l’imposition de la seule valeur ajoutée, par déduction base sur base ou impôt sur impôt, qui est moins sujette à évasion.

L’introduction de la TVA en Europe occidentale a retenu l’intérêt d’autres pays. Parmi ceux qui ont adopté une taxe sur le chiffre d’affaires fondée sur le principe de la valeur ajoutée figurent le Brésil, l’Equateur, la Côte d’Ivoire, la République Malgache, le Maroc, le Sénégal et l’Uruguay. Tous s’écartent, à divers points de vue, du modéle européen d’un prélévement global, uniforme et neutre sur la consommation des biens et services, illustrant en cela l’adaptation de la structure fiscale aux diverses situations socio-économiques. Il est toutefois significatif que tous ces pays utilisent la technique du crédit d’impôt pour l’application du principe de la valeur ajoutée.

Il est probable que les pays en voie de développement réduiront en général le champ d’application de la TVA en excluant les secteurs les plus critiques (agriculture, commerce de détail, etc.), à cause des problémes délicats du contrôle qu’ils soulévent. Dans la plupart de ces pays, l’exonération des agriculteurs constitue une façon simple d’accorder un allégement fiscal à la classe à plus faible revenu. Dans certains pays, l’imposition de droits sélectifs sur les produits de luxe permet d’accroître la charge fiscale des classes à revenu élevé sans devoir recourir à une TVA à taux multiples.

Les pays en voie de développement se préoccupent parfois moins que les pays industrialisés d’exclure les dépenses d’investissement de la base imposable; cependant, s’ils désirent le faire, il y a des chances pour qu’ils préférent exonérer les biens de production plutôt que d’appliquer la méthode du crédit d’impôt qui peut être plus complexe. Dans le régime de la TVA, le cas des petites entreprises peut être réglé par la technique du forfait ou du transfert du crédit d’impôt.

Les données sur les recettes publiques des pays étudiés indiquent que la TVA rapporte entre 10 et 30 pour 100 du total et constitue l’une des taxes sur le chiffre d’affaires les plus productives. Comme pour les taxes sur le chiffre d’affaires en général, on peut escompter que les recettes de la TVA augmenteront dans les pays en voie de développement à un rythme supérieur au taux de croissance de l’économie.

L’administration efficace de la TVA dans un pays en voie de développement est tributaire d’un grand nombre de facteurs, notamment des caractéristiques de cette nouvelle taxe, des structures économiques et du climat social du pays, des recettes que l’on attend de la TVA et de l’expérience acquise avec la taxe sur le chiffre d’affaires qu’elle remplace. Une TVA à taux multiples et comportant de nombreuses exemptions présente de plus grandes difficultés d’administration et de contrôle qu’une taxe à taux unique assortie de rares exonérations.

Le rôle de la monnaie dans la politique de stabilisation des pays en voie de développement 1

Yung Chul Park

Cette étude a pour objet d’analyser le rôle de la monnaie dans la politique de stabilisation des pays en voie de développement. L’analyse aboutit aux conclusions suivantes. 1) Faute d’une large gamme d’avoirs financiers, les avoirs réels tendent à se substituer à la monnaie et la demande de monnaie tend à être sensible au taux nominal de rémunération des avoirs réels. 2) Les effets des variations de l’offre de monnaie se répercutent sur l’économie réelle, en partie par des modifications de la composition des portefeuilles, mais essentiellement par des restrictions sur le crédit, qui semblent constituer le plus puissant instrument de la politique monétaire. 3) L’effet d’une variation donnée de l’offre de monnaie sur les dépenses et les recettes sera plus fort et plus rapide dans les pays en voie de développement que dans les pays développés. 4) La masse monétaire, au sens large ou étroit du terme, est une variable endogéne, déterminée à la fois par les mesures de la banque centrale et par le comportement des organismes bancaires publics et commerciaux. Ces conclusions donnent à penser que toute analyse significative concernant les pays en voie de développement exige un modèle structurel qui comporte un secteur financier inspiré de la théorie keynésienne du revenu et des dépenses. L’auteur propose un modèle de ce type, qui inclut certaines caractéristiques générales institutionnelles et structurelles, communes aux pays en voie de développement.

Le systéme de promotion des exportations et la croissance des exportations secondaires en Colombie 1

José D. Teigeiro et R. Anthony Elson

Tout au long des années soixante, les exportations non traditionnelles de la Colombie se sont développées à un taux annuel moyen de 15 pour 100, leur part dans le total des recettes d’exportation passant de 11 pour 100 en 1960 à 34 pour 100 en 1971. Pendant la même période, les autorités colombiennes ont mis au point un systéme complet d’encouragements à l’exportation, qui a été mis en oeuvre essentiellement grâce à une politique de taux de change mais qui prévoyait aussi des stimulants fiscaux, des arrangements spéciaux d’importation-exportation, et des facilités spéciales de crédit.

Dans le présent article, les auteurs s’efforcent de mesurer l’incidence du systéme de promotion des exportations en calculant pour les exportations non traditionnelles un taux de change effectif, compte tenu de la valeur financiére de chaque composante du systéme. Pendant la période 1961–71, le taux de change effectif pour les exportations de produits manufacturés a été supérieur d’environ 25 pour 100 au taux de change nominal, alors que l’écart maximum entre les taux applicables aux autres exportations non traditionnelles était d’environ 17 pour 100. Cet écart a varié en fonction des modifications apportées aux composantes du systéme de promotion des exportations.

Des tests statistiques, fondés sur une analyse de régression, ont fait apparaître l’importance du taux de change effectif en tant que facteur de croissance des exportations non traditionnelles. D’autre part, lorsque dans l’analyse de régression on considère séparément chaque composante du taux de change effectif en tant que variable explicative, le taux de change nominal apparaît comme le facteur régressif le plus important.

Les effets de la politique de promotion des exportations sur la répartition des ressources ont été examinés en fonction des diminutions de recettes dans le budget de l’Etat. Deux composantes ont été analysées: le coût fiscal direct, mesuré d’aprés les dégrévements d’impôt et les diminutions de recettes fiscales rèsultant du systéme d’importation et d’exportation aux taux de change en vigueur, et le coût fiscal indirect, rèsultant du maintien d’un taux de change surévalué. L’étude fait ressortir que le coût fiscal combiné, direct et indirect, s’est élevé, en moyenne, à environ 10 pour 100 des recettes de l’Etat et à 30 pour 100 de l’excédent courant. Les auteurs n’ont pas cherché à estimer les avantages du programme de promotion des exportations, c’est-à-dire essentiellement l’accroissement du revenu du secteur des exportations et son effet multiplicateur sur le reste de l’économie, puisque ces avantages sont incorporés dans le systéme, et se reflétent donc dans les opérations effectives de l’Etat.

Les conclusions de la présente étude soulévent d’importantes questions quant à l’avenir du systéme colombien de promotion des exportations. En raison de son coût fiscal important, il importe d’en atténuer l’incidence sur le budget. Il semblerait que la solution la plus efficace consisterait à recourir de plus en plus à l’ajustement des taux de change comme principal instrument de promotion des exportations. On pourrait alors réduire le rôle des autres composantes du systéme tout en main-tenant le stimulant fourni par le taux de change effectif. Considérant que, d’aprés les résultats statistiques, le taux de change nominal est la composante du systéme de promotion des exportations la plus importante pour le comportement favorable des exportations non traditionnelles, cette solution semble particuliérement appropriée. Outre qu’elle diminuerait le coût fiscal sans pénaliser la croissance des exportations non traditionnelles, elle permettrait également de simplifier le systéme des taux de change. Les exigences d’une répartition équilibrée et rationnelle des ressources font apparaître l’utilité de poursuivre ces deux objectifs.

Théorie des facteurs qui déterminent l’investissement étranger direct 1

Giorgio Ragazzi

Au cours des vingt derniéres années, l’investissement étranger direct est devenu un des véhicules principaux des mouvements internationaux de capitaux, tandis que les flux d’investissement direct et les mouvements de capitaux destinés à s’investir en portefeuille se sont produits dans des directions différentes et parfois opposées. Par exemple, l’afflux massif de capitaux s’investissant directement des Etats-Unis en Europe occidentale a été compensé par des achats notables d’investissement à long terme de portefeuille par des personnes privées résidant en Europe. Ces courants de capitaux s’entrecroisant ne peuvent s’expliquer par la théorie traditionnelle des mouvements internationaux de capitaux. Dans des conditions de concurrence parfaite, les marchés des valeurs devraient offrir un moyen plus efficace de transférer internationalement des capitaux que l’investissement direct, surtout si l’on considere également que les entreprises nationales sont censées fonctionner dans leur propre pays à un coût moindre que les filiales des entreprises étrangéres. Les facteurs déterminants de l’investissement direct doivent donc être trouvés dans des déviations effectives des conditions de concurrence parfaite.

La théorie moderne de l’investissement direct que le présent mémoire expose dans ses grandes lignes met l’accent sur les avantages de la “connaissance” supérieure qui permet à une entreprise d’exploiter une filiale dans un pays étranger avec un meilleur rendement que ses concurrents locaux. Dans ce contexte la théorie du cycle du produit pourrait également expliquer la supériorité des entreprises des Etats-Unis. La structure historique des mouvements de capitaux d’investissement direct ne peut cependant être entiérement expliquée par les seuls avantages de la connaissance supérieure. Un facteur qui a été relativement négligé dans les publications est l’imperfection des marchés des valeurs qui entraîne des écarts entre les risques et le rendement attendu du controle et de la possession des actions de portefeuille de la même entreprise. Comme les marchés des valeurs en Europe sont en général beaucoup moins efficients qu’aux Etats-Unis, les valeurs de portefeuille d’entreprises européennes peuvent sembler moins attrayantes que les titres d’entreprises des Etats-Unis, alors méme que les premiùres auraient des taux de rendement plus élevés que les secondes pour des investissements comportant des risques égaux. Les mouvements de capitaux s’investissant en valeurs de portefeuille ne peuvent internationalement égaliser les taux de rendement que pour des actions comportant des risques égaux, alors que l’investissement direct tend à égaliser les taux de rendement pour des entreprises dont l’exploitation présente des risques égaux.

Le présent mémoire expose également des théories qui concernent l’investissement direct à l’étranger considéré comme un phénoméne lié à la tendance à l’expansion des entreprises qui opérent sur des marchés oligopolistiques. La derniére section du mémoire traite principalement de l’impact des taux de change sur l’investissement direct. L’auteur y soutient que les risques de change sont, selon toute vraisemblance, propres à stimuler l’investissement direct d’une zone à monnaie faible vers une zone à monnaie forte, contrairement à l’opinion exprimée par d’autres auteurs. L’expérience des années récentes semble avoir montré que la surévaluation du dollar, par comparaison avec la plupart des monnaies européennes, a peutêtre stimulé efficacement l’investissement direct des Etats-Unis en Europe au cours de la décennie qui a commencé en 1960.

Effets commerciaux de l’association des pays africains avec la Communauté Economique Européenne 1

Alassane D. Ouattara

Au 1er janvier 1958, date de l’entrée en vigueur du traité instituant la Communauté Economique Européenne (CEE), 18 pays et territoires africains dépendant de la Belgique, de la France et de l’Italie se voyaient accorder le statut de membres associés à la Communauté. La convention d’association prévoyait certaines préférences tarifaires aux exportations des pays africains associés à destination de la CEE et la création d’un fonds spécial (Fonds Européen de Développement) destiné à promouvoir une aide financiére au développement de ces pays. Les pays africains associés accordaient en échange certaines préférences aux importations en provenance de la CEE. On assistait ainsi à la formation d’une zone d’échanges privilégiée liant un ensemble de pays industrialisés à plusieurs pays en voie de développement. La présente étude a pour but d’examiner les répercussions de cette association sur les échanges commerciaux des pays africains en cause et d’évaluer les effets dits de “creation” et de “détournement” de ces échanges.

L’analyse statistique montre que les préférences tarifaires envisagées dans le cadre de l’association ont eu une influence limitée sur les échanges commerciaux entre la CEE et les pays africains associés et sur les exportations des pays en voie de développement non associés à destination de celle-ci. Cette influence a commencé à se faire sentir vers le milieu de l’année 1964, à la suite de la mise en vigueur par la CEE de tarifs extérieurs communs sur certains produits primaires d’un intérêt particulier pour les pays africains associés et de l’abolition par les anciennes colonies françaises du régime des quotas et l’extension par celles-ci du systéme de préférences tarifaires aux importations en provenance des pays du Marché Commun. L’association semble en outre avoir réorienté une partie des échanges extérieurs des pays africains, traditionnellement effectués avec la France, vers les autres états de la CEE.

La croissance modeste des exportations des pays africains associés vers la Communauté Européenne est principalement due au caractére limité des préférences tarifaires accordées à certaines exportations essentielles de ces pays et à l’absence d’une politique cohérente à cet égard pendant les premieres années de l’association. D’autre part, les produits des pays africains associés bénéficiant de préférences tarifaires dans le Marché Commun sont ceux de l’arboriculture, dont l’offre n’est pas suffisamment élastique pour profiter de ces préférences. Les préférences accordées à titre de réciprocité à la CEE par certains des états associés ont, quant à elles, été marginales et leur effet restrictif sur les importations des pays africains associés en provenance de pays extérieurs au Marché Commun a été affaibli par la libéralisation des importations de plusieurs de ces pays. L’évolution des élasticités d’importation par rapport au revenu semble indiquer que l’association a provoqué un certain détournement des échanges commerciaux, affectant plus particuliérement les pays exportateurs de produits primaires analogues à ceux des pays africains associés qui bénéficient de préférences tarifaires auprés de la CEE. Ce détournement n’a eu toutefois qu’une portée limitée, en raison de l’intervention de facteurs institutionnels dans les échanges de certains de ces produits primaires et des marges tarifaires restreintes adoptées par la convention d’association.

RESUMENES

Las emisiones de acciones y bonos y los mercados del capital en los países menos desarrollados 1

U Tun Wai y Hugh Patrick

Las emisiones de acciones y bonos y los mercados del capital estàn siendo objeto en los últimos tiempos de atención cada vez mayor por las autoridades de política en los países menos desarrollados (PMD), y este estudio preliminar constituye una encuesta representativa acerca de la experiencia de los PMD a este respecto.

Las emisiones de acciones y bonos fluctúan entre el 11 por ciento y menos del 4 por ciento del producto nacional bruto (PNB) en los países desarrollados; entre los 13 PMD para los que hay datos, la proporción varía entre un 8 por ciento y menos del 3 por ciento. En los PMD el sector del gobierno emite una proporción grande y creciente de nuevos valores, que en 6 países representa un 60 u 80 por ciento de las emisiones totales. Los bancos centrales son los principales compradores, aunque hay también cierta demanda de los bancos comerciales, inducida en parte por los requisitos de reserva obligatoria.

Los mercados del capital de los PMD estàn notablemente subdesarrollados, como consecuencia de una combinación de circunstancias históricas, el nivel actual de desarrollo económico y financiero y la política del gobierno—incluso la inflación y los bajos tipos de interés de la deuda del gobierno. Las medidas para promover la formación de mercados del capital deberían tratar de crear un medio apropiado y también, concretamente, de estimular a los oferentes (inversionistas) de nuevos valores en el mercado y a los demandantes (ahorristas) de los mismos. Un medio de proteger los bonos contra la inflación, que sólo han empleado unos pocos PMD, es basar su valor de amortización (y el pago de intereses) en un índice apropiado de inflación. Para que un mercado del capital sea eficaz, los precios de los valores deben estar determinados por el libre juego de la oferta y la demanda, pero la política de tipos de interés bajos de muchos PMD se opone a ello, tanto en principio como en la pràctica.

Mediante sus facultades reguladoras, el gobierno puede hacer mucho por reducir la incertidumbre (y, así, el riesgo). La vigilancia de los mercados del capital tiene varias facetas: impedir el fraude, difundir información, reducir el costo de las transacciones y crear técnicas e instituciones para los mercados del capital.

Una manera usual de aumentar la rentabilidad efectiva para los compradores es fijar tasas màs bajas del impuesto sobre la renta personal (o de las sociedades) de intereses, bonos, dividendos y ganancias de capital por venta de valores. El grado de eficacia de estas medidas depende de las tasas marginales efectivas del impuesto sobre la renta de los tenedores de valores (generalmente de los grupos de ingreso màs alto). La deducción de parte de las compras de valores de la renta bruta de sus adquirentes, incluso de sus obligaciones tributarias, representa una bonificación impositiva todavía mayor.

La principal ventaja del mercado secundario (de negociación) es que proporciona liquidez a los valores, haciéndolos màs atractivos. Un amplio mercado secundario da al tenedor una liquidez basada en la negociabilidad en vez de una fecha de vencimiento próxima, y permite a los emisores vender pasivos financieros con largo vencimiento. En los PMD, el valor de mercado de todos los valores cotizados en las bolsas es de un séptimo del PNB y màs o menos la mitad del dinero y cuasidinero; el volumen de negociación de acciones y bonos suele representar menos del 3 por ciento del PNB. En los países desarrollados el valor de mercado es equivalente al PNB y aproximadamente el doble del dinero y cuasidinero; el volumen de negociación es del 15 por ciento màs o menos.

En el sentido màs positivo, el gobierno, proporcionando asistencia en materia de capacitación, suscripción de capital, etc., puede ayudar a crear nuevas instituciones financieras—como fondos de inversión mobiliaria—que podrían mantener acciones y bonos en sus carteras de activos. Históricamente la reglamentación gubernamental de estas carteras se ha centrado en la protección de los tenedores de pasivos de las instituciones, la ejecución de una política monetaria o la minimización del costo de la deuda del gobierno—en lugar de promover la formación de mercados del capital. Para fomentar estos mercados, el gobierno tendrà que revisar sus objetivos al reglamentar los activos de las instituciones financieras.

La información de que se dispone sobre el Brasil indica, entre otras cosas, que a pesar de los adelantos todavía no se ha establecido un mercado del capital firme y autosostenido. Los incentivos fiscales sí ofrecen un medio de promover el desarrollo de los mercados del capital, pero los beneficios del crecimiento inicial del mercado del capital deben evaluarse en función del costo que representan los ingresos tributarios a que se renuncia. La experiencia de los PMD indica que las medidas tendentes a establecer instituciones financieras orientadas hacia el mercado del capital no pueden adelantarse mucho al crecimiento en la demanda de servicios financieros en el mercado. Sólo puede haber mercados firmes del capital en un medio propicio social, político y jurídico, así como económico.

El impuesto al valor agregado en los países en desarrollo 1

George E. Lent, Milka Casanegra y Michéle Guerard

La elección de una técnica de impuesto sobre las ventas depende de una gran variedad de circunstancias que todo país debe ponderar según sus propias condiciones económicas y sociales. Entre las distintas técnicas de probado éxito se cuentan: 1) el impuesto de una sola etapa sobre fabricantes/importadores, 2) el impuesto híbrido sobre menudeo/mayoreo, 3) el sistema tàndem, que incluye impuestos separados sobre las ventas de fabricantes o mayoristas y sobre las ventas al por menor, y 4) el impuesto al valor agregado (IVA).

Casi todos los países en desarrollo han limitado sus impuestos generales sobre las ventas a la etapa manufacturera, con un impuesto compensatorio sobre las importaciones. Para eliminar la doble imposición pueden utilizarse dos técnicas: 1) la técnica suspensiva, que exime las compras de fabricantes e importadores autorizados, pero que, en cambio, hace màs fàcil la evasión y puede requerir un mayor esfuerzo administrativo, y 2) la técnica del valor agregado, que permite deducir las compras gravables de las ventas gravables, o un crédito contra el impuesto pagadero sobre las ventas por el impuesto pagado en las compras, método que se presta menos a la evasión.

La introducción del IVA en Europa occidental ha captado el interés de otros países. Brasil, Costa de Marfil, Ecuador, Marruecos, la República Malgache, Senegal y Uruguay se cuentan entre los países que han adoptado impuestos sobre las ventas basados en el principio del valor agregado. En ciertos aspectos, todos ellos se apartan del modelo europeo de impuesto global, uniforme y neutral sobre el consumo de bienes y servicios, lo que sirve de ejemplo de la adaptación de la estructura tributaria a las diferentes condiciones económicas y sociales. Sin embargo, es significativo que todos utilicen el procedimiento del crédito tributario al aplicar el principio del valor agregado.

Es probable que los países en desarrollo limiten el alcance del IVA excluyendo los sectores màs problemàticos (agricultores, minoristas, etc.) porque plantean difíciles problemas de aplicación. La mayoría de estos países exime a los agricultores como medio sencillo de conceder alivio fiscal al grupo de màs bajo ingreso. En algunos países, los impuestos selectivos sobre los bienes de tipo suntuario aumentan la carga fiscal de los grupos de màs alto ingreso, sin recurrir necesariamente a una estructura de tasas múltiples para el propio IVA.

Es posible que a los países en desarrollo les preocupe menos que a los industriales eliminar de la base imponible los gastos de inversión; sin embargo, en los casos en que deciden eliminar de la base imponible a los bienes de producción, probablemente prefieren utilizar el método de eximir del impuesto a dichos bienes en lugar de otorgar un crédito tributario, debido al hecho de que el método de la exención es màs sencillo de aplicar. Como régimen para los pequeños negocios, el IVA puede incluir métodos de tributación de tipo forfait o una modalidad de traslación del crédito tributario.

Los datos de ingresos tributarios para los países incluidos en este estudio indican que el IVA produce entre el 10 y el 30 por ciento de los ingresos tributarios del gobierno y es una de las formas màs productivas del impuesto sobre las ventas. Como occurre en general con los ingresos del impuesto sobre las ventas, es de prever que los ingresos por el IVA en los países en desarrollo aumenten con mayor rapidez que la tasa de crecimiento de la economía.

La administración eficaz del IVA en los países en desarrollo depende de muchos factores, incluso las características del IVA que se pretenda aplicar, la estructura económica y el medio social del país, el ingreso que se prevea del IVA y la experiencia obtenida con el impuesto sobre las ventas que sustituya. Un IVA con tasas múltiples y muchas exenciones presenta màs problemas de administración y aplicación que un impuesto de una sola etapa con pocas exenciones.

La función del dinero en la política de estabilización de los países en desarrollo 1

Yung Chul Park

La finalidad de este trabajo es analizar la función del dinero en la política de estabilización de los países menos desarrollados (PMD). Del anàlisis se deducen las siguientes conclusiones: 1) de no haber una variedad de activos financieros, es probable que los activos reales sirvan de sustitutivos del dinero y que, por tanto, la demanda de dinero sea sensible a la tasa nominal de rendimiento de los activos reales; 2) los efectos de las variaciones de la oferta de dinero se transmiten parcialmente a la economía real por sustituciones de cartera, pero principalmente mediante el racionamiento del crédito, que parece ser el instrumento màs potente de la política monetaria; 3) una variación dada de la oferta de dinero tendrà un efecto mayor y màs ràpido en los gastos e ingresos en los PMD que en los países avanzados; 4) la masa de dinero, en términos estrictos o latos, es una variable endógena determinada tanto por la acción del banco central como por el comportamiento del público y de los bancos comerciales. Estas conclusiones indican que a fin de realizar un anàlisis monetario vàlido para los PMD se requiere un modelo estructural completo con un sector financiero, según los principios de la teoría keynesiana de ingreso/gasto. En este artículo se formula después un modelo de esta clase que incorpora algunas de las características institucionales y estructurales generales comunes a todos los PMD.

El sistema de fomento de la exportación y el crecimiento de las exportaciones menores de Colombia 1

José D. Teigeiro y R. Anthony Elson

Durante el decenio de 1960, las exportaciones no tradicionales de Colombia aumentaron a un promedio anual del 15 por ciento, lo que elevó su participación en los ingresos totales de exportación del 11 por ciento en 1960 al 34 por ciento en 1971. En este mismo período, las autoridades colombianas formularon un sistema completo de incentivos a la exportación que se puso en pràctica fundamentalmente por medio de la política de tipos de cambio, pero que también incluía incentivos fiscales, sistemas especiales de importación-exportación y servicios especiales de crédito.

En este artículo se intenta estimar el impacto del sistema de promoción de las exportaciones calculando un tipo de cambio efectivo para las exportaciones no tradicionales que tenga en cuenta el valor financiero de cada uno de los componentes del sistema. Durante el período de 1961–71, el tipo de cambio efectivo para la exportación de manufacturas fue un 25 por ciento màs alto que el tipo de cambio nominal, mientras que la diferencia de los tipos de cambio para las demàs exportaciones no tradicionales fue de un 17 por ciento. Esta diferencia varió al modificarse los elementos del sistema de fomento de la exportación.

Las pruebas estadísticas, basadas en el anàlisis de regresión, pusieron de manifiesto que el tipo de cambio efectivo es muy significativo para explicar el crecimiento de las exportaciones no tradicionales. Es màs, cuando cada uno de los componentes del tipo de cambio efectivo se consideró por separado como variable explicativa en el anàlisis de regresión, el tipo de cambio nominal resultó ser el regresor màs importante.

Los efectos de la política de promoción de exportaciones en cuanto a la asignación de recursos fueron examinados según el ingreso que el presupuesto del gobierno central deja de recibir. Se analizaron dos componentes: el costo fiscal directo, medido por las exenciones tribu-tarias y los ingresos de aduanas no recibidos en virtud de los sistemas de importación-exportación a tipos de cambio vigentes, y el costo fiscal indirecto, debido al mantenimiento de un tipo de cambio sobrevaluado. El estudio indica que el costo fiscal combinado, directo e indirecto, ha representado en promedio un 10 por ciento de los ingresos del gobierno central y un 30 por ciento del superàvit en cuenta corriente. No se intentó estimar los beneficios obtenidos del programa de fomento de la exportación, principalmente en forma de ingresos adicionales del sector de exportación y su efecto multiplicador en el resto de la economía, porque estos aspectos ya estàn incorporados al sistema y, por tanto, reflejados en las operaciones efectivas del Gobierno.

Las conclusiones de este estudio plantean importantes cuestiones sobre el futuro del sistema de promoción de las exportaciones en Colombia. En vista del considerable costo fiscal del sistema, tendrà que encontrarse la forma de aliviar la carga sobre el presupuesto. La solución màs efectiva parecería ser recurrir màs a ajustes del tipo de cambio como principal instrumento de fomento de la exportación. Esto permitiría reducir la función de los otros componentes del sistema, a la vez que se mantiene el incentivo que ofrece el tipo de cambio efectivo. Esta solución parece especialmente apropiada en vista de los resultados estadísticos que indican que el tipo de cambio nominal es el componente màs significativo del sistema de fomento de la exportación para explicar la evolución favorable de las exportaciones no tradicionales. Ademàs de reducir el costo fiscal sin obrar en menoscabo del crecimiento de las exportaciones no tradicionales, con esta solución se lograría también simplificar el sistema de tipos de cambio. Las exigencias de una asignación equilibrada y eficiente de recursos indican que se debería tratar de lograr ambos objetivos.

Teorías de los determinantes de la inversión extranjera directa 1

Giorgio Ragazzi

Durante los dos últimos decenios la inversión extranjera directa se ha convertido en un importante vehículo de los movimientos de capital internacionales, y los flujos de inversión directa y de capital de cartera han seguido direcciones distintas, a veces opuestas. Por ejemplo, el gran flujo de inversión directa de EE.UU. hacia Europa occidental tuvo por contrapartida compras considerables de activos de cartera a largo plazo de EE.UU. por residentes europeos particulares. La teoría tradicional de los movimientos de capital internacionales no pueden explicar estos interflujos de capital. En condiciones perfectamente competitivas, los mercados de valores deberían constituir un medio màs eficiente de transferir capital internacionalmente que la inversión directa, habida cuenta también que las empresas nacionales deberían poder funcionar en su propio país a costos màs bajos que los de las filiales de empresas extranjeras. Por consiguiente, los determinantes de la inversión directa deben consistir en desviaciones efectivas con respecto a las condiciones perfectamente competitivas.

En el artículo se analiza el principal argumento de la teoría moderna de la inversión directa, que se centra en las ventajas de los mayores “conocimientos” con los cuales una empresa hace que una filial en un país extranjero funcione con tasas de rentabilidad màs altas que las de los competidores locales. En este contexto, la superioridad de las empresas de EE.UU. también podría explicarse de acuerdo con la teoría del ciclo del producto. Sin embargo, las ventajas de los mayores conocimientos no explican por sí solas la trayectoria histórica de los flujos de inversión directa. Un aspecto relativamente descuidado por la literatura es el de las imperfecciones de las bolsas de valores, que crean diferencias entre los riesgos y las tasas de rentabilidad previstas de las acciones de control y de las acciones de cartera de una misma empresa. Como en Europa las bolsas de valores son generalmente mucho menos eficientes que en Estados Unidos, las acciones de cartera de las empresas europeas podrían parecer menos atractivas que las de compañías de EE.UU., aunque las primeras tuvieran tasas màs altas de rentabilidad en inversiones de igual riesgo. Los flujos de capital de cartera sólo pueden igualar internacionalmente las tasas de rentabilidad de los valores de igual riesgo, mientras que la inversión directa tendería a igualar las tasas de rentabilidad de empresas de igual riesgo.

En el trabajo se examinan también teorías que consideran la inversión directa en el extranjero como un fenómeno relacionado con la tendencia a la expansión de las empresas que operan en mercados oligopolísticos. La última sección trata sobre todo del impacto de los tipos de cambio en la inversión directa. Se aduce que los riesgos cam-biarios pueden estimular la inversión directa de una zona de moneda débil en una de moneda fuerte, contrariamente a lo que afirman otros autores. En efecto, los datos históricos indican que la sobrevaloración del dólar con respecto a la mayoría de las monedas europeas puede haber constituido un considerable incentivo para la inversión directa de EE.UU. en Europa durante el decenio de 1960.

Efectos comerciales de la asociación de países africanos con la Comunidad Económica Europea 1

Alassane D. Ouattara

El 1 de enero de 1958, al constituirse la Comunidad Económica Europea (CEE), 18 países africanos que eran colonias o territorios de Bélgica, Francia e Italia pasaron a ser miembros asociados. En el arreglo de asociación se instituyeron preferencias arancelarias para algunas de las exportaciones de los países africanos asociados (PAA) a la CEE y un fondo especial (el Fondo Europeo de Desarrollo) para ayudarlos financieramente en sus esfuerzos de desarrollo. A su vez, los PAA otorgaron ciertas preferencias para sus importaciones de la CEE. Así, la asociación estableció una zona preferencial entre un grupo de países industriales y varios países menos desarrollados. En este estudio se analiza el impacto de dicha asociación en la estructura del comercio de los PAA y se evalúan sus efectos en lo que respecta a la creación y el desplazamiento del comercio.

El anàlisis estadístico indica que las preferencias arancelarias de la asociación sólo han tenido un impacto limitado en los flujos comerciales globales entre los PAA y la CEE y en las exportaciones de los países menos desarrollados no asociados al Mercado Común Europeo. No obstante, este impacto se hizo màs patente después de mediados de 1964, cuando la CEE impuso aranceles exteriores comunes para algunos productos primarios de especial interés para los PAA, y las antiguas colonias francesas abolieron el sistema de cuotas y otorgaron preferencias arancelarias a sus importaciones de países del Mercado Común distintos de Francia. La asociación también parece haber inducido un desplazamiento del comercio de los PAA de Francia a otros países de la CEE.

Uno de los principales factores de la lenta marcha de las exportaciones de los PAA en el Mercado Común Europeo consistió en las limitadas preferencias arancelarias que se concedieron en este mercado para algunas de sus principales exportaciones y en la forma fragmentaria en que se otorgaron durante los primeros años de asociación; ademàs, la oferta de casi todos los productos de los PAA que gozan de preferencias arancelarias en el Mercado Común reacciona débilmente ante ellas. Las preferencias inversas concedidas a la CEE por algunos países asociados también fueron marginales, y su efecto restrictivo sobre las importaciones de los PAA de países que no pertenecen al Mercado Común se diluyó, debido a la liberalization de la importación en varios países asociados. La evolución de la elasticidad-ingreso de las importaciones sugiere que la asociación ha causado un cierto desplazamiento del comercio, especialmente en lo que respecta a los países que exportan productos primarios similares a los bienes de los PAA que gozan de preferencias arancelarias en la CEE. Sin embargo, el efecto del desplazamiento ha sido limitado, debido a factores institucionales del comercio de varios de los productos primarios de que se trata y a los reducidos màrgenes arancelarios que se intercambiaron en el arreglo de asociación.

In statistical matter (except in the résumés and resúmenes) throughout this issue,

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SURVEYS OF AFRICAN ECONOMIES

Volume 5: Botswana, Lesotho, Swaziland, Burundi, Equatorial Guinea, and Rwanda

Pp. xxiv + 471 Maps, Index, Statistical Tables

This volume is the fifth in the International Monetary Fund’s surveys of the economies of the countries of Africa. It covers six countries that became independent states during the 1960s and joined the Fund between 1963 and 1969. Five countries are landlocked; only Equatorial Guinea is on the coast. Five are also relatively small in area—Botswana has an area of over 200,000 square miles, but the area of the others ranges from 12,000 to less than 7,000 square miles—and the population of the six countries taken together was less than 10 million in 1970.

Botswana, Lesotho, and Swaziland are linked by customs and monetary arrangements with South Africa. The others—Burundi, Equatorial Guinea, and Rwanda—have no links of this kind.

An introductory chapter deals in broad terms with the principal characteristics of these countries, points out current problems, and notes prospects for the future. A second chapter summarizing the arrangements common to Botswana, Lesotho, and Swaziland is followed by chapters dealing with the economy of each country separately.

In general, the years 1966–71 are covered, although information for 1972 is given where available. The subjects dealt with include production; economic development and planning; investment; prices, wages, and employment; government finance; money and banking; balance of payments, trade, and foreign debt; and exchange and trade controls. Detailed statistical tables supplement the text, and the volume contains a map for each country and an index.

Previous volumes in this series are as follows:

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Volumes 1, 2, 3, and 4 are also available in French, and the French edition of Volume 5 is in preparation.

Prices: US$5.00 a volume; US$2.50 to libraries, faculty members, and students of universities. Information on making payments in currencies other than U. S. dollars may be obtained by writing to the Fund at the address given below. Please state whether the English or the French edition is desired.

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Washington, D.C. 20431 U.S.A.

*

Mr. Ouattara, economist in the African Department of the Fund, is a graduate of Drexel Institute of Technology and of the University of Pennsylvania. This paper is adapted from the author’s unpublished doctoral dissertation submitted to the University of Pennsylvania. He wishes to express his gratitude for helpful comments received from A.I. Bloomfield, J.R. Behrman, I.B. Kravis, and W.J. Ethier of the University of Pennsylvania.

1

Guinea, a former French colony, is not associated with the EEC.

2

Details of the provisions of association can be found in Communauté Economique Européenne, Convention d’Association entre la Communauté Economique Européenne et les Etats Africains et Malgache Associés à cette Communauté (64/346/CEE), or the unofficial translation into English by the Royal Institute of International Affairs, Convention of Association Between the European Economic Community and the African and Malagasy States Associated with that Community (Oxford University Press, 1963).

3

Royal Institute of International Affairs, Convention of Association (cited in footnote 2), Article 3, section 2, paragraph 2 (p. 5).

4

Global quota means a single quota for all EEC countries taken as a unit, in contrast to separate quotas for each EEC member country.

5

Coffee, from 9.6 per cent to 7 per cent; cocoa, from 5.4 per cent to 4 per cent; and palm oil, from 9 per cent to 6 per cent.

6

Details on the development of the tariff treatment of imports from the EEC by the AACs can be found in Appendix I.

7

International Monetary Fund, Twentieth Annual Report on Exchange Restrictions (Washington, 1969).

8

To show the impact of the association on EEC-AAC trade flows, comparisons can be made between actual and hypothetical flows. The hypothetical trade flows can be calculated under the assumption that the structure of world trade indicated by the world trade matrix of a year prior to the association has remained unchanged. This method has been used in studying the impact of the EEC by J. Waelbroeck, “Le Commerce de la Communauté Européenne avec les Pays Tiers,”Intégration Européenne et Réalité Economique, College d’Europe (Bruges, 1964), pp. 139–64. However, because the associated countries are statistically insignificant in EEC trade, and therefore in world trade, an analysis of a world trade matrix would prove completely inconclusive here.

9

See Roger Lawrence, “Primary Products, Preferences, and Economic Welfare: The EEC and Africa,” in The Open Economy, ed. by Peter B. Kenen and Roger Lawrence (Columbia University Press, 1968), pp. 240–45.

10

CFA denoted “Colonies Francaises d’Afrique”; after the independence of the former French colonies in Africa in 1960, it was changed to “Communauté Financière Africaine.”

11

These taxes include a fiscal import duty, the turnover tax on imports, a statistical tax, and other import taxes known under different names in different AACs. Thus, the margin of tariff preference received by the EEC on a given product is the difference between the percentage rate of import taxes paid when the product originates outside the EEC and that paid when the product is imported from the EEC.

12

This margin of preference would be even lower if the value of imports includes all import duties and taxes, but this would be more relevant in assessing competitive power. For a detailed analysis of calculating tariff preference, see Donald MacDougall and Rosemary Hutt, “Imperial Preference: A Quantitative Analysis,” The Economic Journal, Vol. LXIV (1954), p. 235.

13

R. G. Lipsey, “The Theory of Customs Unions: A General Survey,” The Economic Journal, Vol. LXX (1960), pp. 496–513.

14

For a summary of these investigations, see Bela Balassa, “Trade Creation and Trade Diversion in the European Common Market,” The Economic Journal, Vol. LXXVII (1967), pp. 1–4.

15

Bela Balassa, “European Integration: Problems and Issues,” American Economic Association, Papers and Proceedings of the Seventy-fifth Annual Meeting (The American Economic Review, Vol. LIII, May 1963), pp. 175–84, and “Trade Creation and Trade Diversion in the European Common Market” (cited in footnote 14).

16

Balassa distinguishes between “gross trade creation” and “trade creation proper.” The former refers to increases in intra-area trade, irrespective of whether this is due to substitution for domestic or foreign sources of supply, and the latter is trade creation in the Vinerian sense, that is, newly created trade owing to a shift from domestic to partner sources of supply. The concept used in the statistical analysis that follows is that of gross trade creation. The concept of trade creation proper, which is measured by a rise in the income elasticity of demand for imports from all sources of supply, is not relevant here, since most of the EEC trade is not with the AACs.

17

For comparative growth performance of LDCs, see Partners in Development: Report of the Commission on International Development, Lester B. Pearson, Chairman (New York, 1969), p. 28.

18

The tests of equality between coefficients in two relations can be found in J. Johnston, Econometric Methods (New York, 1963), pp. 136–37.

19

Details of tariff developments for all primary products analyzed here can be found in Commission des Communautés Européennes, Evolution du Régime Douanier, Fiscal et Contingentaire des Principaux Produits Tropicaux Importés dans les Etats Membres de la Communauté Economique Européenne de 1958 a 1968 (Brussels, 1968).

20

The 10 per cent reduction among EEC countries (and applicable to the AACs) in the initial tariff was scheduled to take place on January 1, 1959 and every 18 months thereafter until January 1, 1965, and on January 1, 1966.

21

A detailed description of these arrangements can be found in Gertrud Lovasy and Lorette Boissonneault, “The International Coffee Market,” Staff Papers, Vol. XI (1964), pp. 367–88.

22

Communauté Economique Européenne, Le Marché du Café, du Cacao et des Bananes dans les Pays de la C.E.E., Série Développement de l’Outre-Mer, No. 1 (Brussels, 1963).

23

See Jere R. Behrman, “Monopolistic Cocoa Pricing,” American Journal of Agricultural Economics, Vol. 50 (1968), p. 704. Behrman shows that short-run and long-run price elasticities of the cocoa supply are higher in Cameroon and Ivory Coast than in Ghana and Nigeria.

24

For an explanation of the notion of effective protection, that is, protection on value added, see Harry G. Johnson, Economic Policies Toward Less Developed Countries (The Brookings Institution, Washington, 1967), pp. 90–91. The effective rate of protection of 15 per cent for A AC groundnut oil in the EEC is obtained by using the following formula:

g⁢ = t−m⁢tm1−m where g = the effective rate of protection; t = the nominal tariff on groundnut oil (0.05); tm = the nominal tariff on groundnuts (zero); and m = the share of groundnuts in the cost of groundnut oil in the absence of tariffs (estimated at about 0.66), Senegal, Ministère du Développement Industriel, Rapport Annuel de la Direction de l’Industrie, Année 1969, p. 31.

25

A detailed explanation of the econometric proof and practical application of the test of equality between coefficients in two relations can be found in Johnston, Econometric Methods (cited in footnote 18), pp. 136–37.

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Cover IMF Staff Papers
IMF Staff papers: Volume 20 No. 2
Author:
International Monetary Fund. Research Dept.
Volume/Issue:
Volume 1973: Issue 002
Publisher:
International Monetary Fund
ISBN:
9781451947403
ISSN:
1020-7635
Pages:
328
DOI:
https://doi.org/10.5089/9781451947403.024