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Economic Research Institute Study paper


Utah State University

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The economic rationale of import-substituting strategy of development pursued by the majority of the developing countries has long been questioned. Apart from the familiar argument that tariff tends to discourage exports and hence, can be viewed as an export tax, there is the immiserization argument proposed by Professor Johnson. Within the framework of a two-factor two-commodity model, Johnson has shown that a small tariff-imposing country may suffer a welfare loss from an increase in the stock of resources or technological change if the growth is biased in favor of the importable sector so that it tends to magnify the distortion in production caused by the tariff. The purpose of this paper is to examine the possibility of Johnson-type immiserizing growth for the developing countries characterized by massive unemployment.