Trade Restrictiveness and Efficiency

This article proposes a trade restrictiveness quantity index (TRQI) to measure the welfare impact of trade restrictions based on a distance functions approach. The TRQI embodies two Farrell measures of efficiency - respectively for producers and consumers - that can be computed using standard efficiency measurement techniques. The TRQI can also be decomposed into a trade distortion and domestic distortion component. In the context of the debate on the interlinkages between openness and economic performance, the TRQI offers a means to disentangle economic inefficiencies induced by trade restrictions alone, from otherwise not directly trade-related economic inefficiencies induced by domestic distortions