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Essay Details:
Essay text:
While the industrial
countries of today rely primarily upon the usage of relatively low tariffs,
developing countries apply high tariffs or quantitative restrictions which
either limit or completely exclude competition from their imports. Protection
like that - high protection - discriminates against exports through the
explicit/implicit taxation of the export activities.
Explicit taxation can take the form of export taxes whereas implicit
taxation occurs as a result of the effects of protection on the exchange rate.
As your protection level increases, your exchange rate level will decrease in
order to ensure the necessary equilibrium of the balance of payments and the
lower the amount of domestic currency exporters receive per unit of foreign
exchange earned...
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