Export-share requirements, trade balances and welfare: a two-period analysis

This paper provides a two-period, three-sector general-equilibrium model for examining the effects of a temporary increase in export-share requirements to foreign-owned firms on the trade balance and national welfare. The analysis suggests that the policy of a temporary rise in export requirements results in increases in the non-tradable prices for both periods as well as intertemporal welfare. The policy also leads to an improvement in the first-period trade balance.