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The paper examines the implications of lower trade barriers for sectoral diversification and macroeconomic stability in developing economies with a large primary goods sector. It shows that lower trade barriers can have ambiguous effects on macroeconomic stability. It shows also that diversification, in the form of equal distribution of resources between nonprimary sectors, may be counterproductive. In fact, investment in the nonprimary sector with lower trade barriers unambiguously enhances macroeconomic stability in a developing economy that is subject to substantial primary shocks.

Developing countries -- Commercial policy -- Econometric models. --- Electronic books. -- local. --- Non-tariff trade barriers -- Developing countries -- Econometric models. --- Commerce --- Business & Economics --- International Commerce --- Non-tariff trade barriers --- Econometric models. --- Developing countries --- Commercial policy --- Non-tariff distortions of trade --- Nontariff trade barriers --- Emerging nations --- Fourth World --- Global South --- LDC's --- Least developed countries --- Less developed countries --- Newly industrialized countries --- Newly industrializing countries --- NICs (Newly industrialized countries) --- Third World --- Underdeveloped areas --- Underdeveloped countries --- Protectionism --- Tariff --- Exports and Imports --- Labor --- Macroeconomics --- Monetary Policy --- Economic Integration --- Open Economy Macroeconomics --- Trade Policy --- International Trade Organizations --- Wages, Compensation, and Labor Costs: General --- Aggregate Factor Income Distribution --- Trade: General --- International economics --- Labour --- income economics --- Trade barriers --- Wages --- Real wages --- Income --- Exports

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Tariff --- Tariff preferences --- Non-tariff trade barriers --- Duty-free importation --- Econometric models --- Developing countries --- Commercial policy --- Foreign economic relations --- 339 --- -Non-tariff trade barriers --- -Tariff --- -Tariff preferences --- -Developing Countries --- Developing Countries --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- Ad valorem tariff --- Border taxes --- Customs (Tariff) --- Customs duties --- Duties --- Fees, Import --- Import controls --- Import fees --- Tariff on raw materials --- Indirect taxation --- Revenue --- Customs administration --- Favored nation clause --- Reciprocity (Commerce) --- Non-tariff distortions of trade --- Nontariff trade barriers --- Protectionism --- Customs exemptions --- Duty-free entry --- Tariff, Exemption from --- Tariff exemptions --- Cross-border shopping --- Handel. Internationale economische betrekkingen. Wereldeconomie --binnenlandse als buitenlandse handel; zie ook {339.3} en {339.5} --- -Econometric models. --- Foreign economic relations. --- Econometric models. --- 339 Handel. Internationale economische betrekkingen. Wereldeconomie --binnenlandse als buitenlandse handel; zie ook {339.3} en {339.5} --- Emerging nations --- Fourth World --- Global South --- LDC's --- Least developed countries --- Less developed countries --- Newly industrialized countries --- Newly industrializing countries --- NICs (Newly industrialized countries) --- Third World --- Underdeveloped areas --- Underdeveloped countries --- Tariff - Developing countries - Econometric models --- Tariff preferences - Developing countries - Econometric models --- Non-tariff trade barriers - Developing countries - Econometric models --- Duty-free importation - Developing countries - Econometric models --- Developing countries - Commercial policy - Econometric models --- Developing countries - Foreign economic relations