Short-run Effects of Tariff Reform in Zimbabwe: Applied General Equilibrium Analysis

This paper applies a short‐run computable general equilibrium model for Zimbabwe to analyse how tariff reform could have modified the effects of the actual trade liberalisation that took place in the 1990s. This is important because the trade liberalisation removed quantitative restrictions but left tariff rates intact. The results show that tariffs on intermediates have held back production in traded sectors. Thus, the nature of the trade reform taken contributed to more deindustrialisation than necessary. The results also show the tradeoff with respect to the fiscal balance, which points to the need to ensure that an alternative tax system is in place before removing customs tax revenue.