where DS is a surplus generated in market segment for domestic cars;
FS is a surplus generated in market segment for foreign cars;
TR is a tariff revenue.
As it is clear from the formula above, the tariff does not contribute to the domestic welfare, since the purchasing price of the foreign cars for the dealers is assumed to be flat (and that is a very realistic assumption for the case of Ukraine). However, the tariff does induce a shift in reaction curve of the foreign car sector to the right, thereby substantially raising the prices for foreign cars and less dramatically — for domestic ones. Therefore, one can imagine a demand system where the imposition of a tariff can be welfare enhancing. In fact, under the most reasonable settings there is a positive tariff that could improve welfare. But the calculation of the optimal tariff magnitude requires the demand for the both market segments to be empirically estimated. Such study is forthcoming and should have been completed by the time of the conference presentation.
Reference: 1. www.autoconsulting.com.ua.
The Spot of the Central Asian Region in
a Brand-New World, a World of Globalization
Ancient folks of Central Asia, when quarreling and cursing each other, used to say: ‘May you live in times of changes!’ Well, today these words sound quite innocent, and probably no one would understand what exactly you have meant to say, but not in those times. Then that curse was something like today’s ‘May you burn in hell!’ But what’s the connection, you may ask. Their (ancient folks’) answer was simple: ‘There is nothing worse than to go to bed today, not knowing what changes and challenges the future holds in store for you.’
It sounds strange, no doubt, but wise as well. And if what our ancestries thought is right, than the whole humanity seems to have been damned by some creature for something really, really horrible, as the times of changes are here, there and they are everywhere on the whole Earth. Moreover, these times of changes are blowing with a great power and engine, which runs it, seemingly just in its first gear.
No one can say for sure when exactly that wind of changes began to blow, and where its sources are, anyway, my line is not to research the origin, but to find out its possible directions and the ways it will affect the Central Asian countries.
So, as you have already understood, the wind of changes I have mentioned above is Globalization, which day by day is debated all over the world, and the Central Asian region is not an exception.
But before getting down to the core of my essay, let me give just a general review of the last historic events that are relevant to the topic and to which I shall be addressing both directly and indirectly. So,…
… dramatic changes, which occurred within the last decade in geopolitical situation of the Globe, are mainly the consequences of evolutional collapse of socialistic block, followed by disintegration of the USSR and emergence of new independent states. In other words, once one of the most powerful countries — the USSR, the power that ‘created’ the political climate of the World, became nothing but 15 independent states, each trying to survive in the competitive world of capitalism. Among these states were, and still are: Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan, which constitute the ‘political region’ of Central Asia. Each of those countries, after obtaining sovereignty planned their own economic and political strategies, determined their political partners, established various alliances etc.
Economic models of the states are significantly different, hence the after-effects of their implementation are giving different results. Those differences are apparent in the degrees of currency relations’ and foreign trade’s liberalization, share of foreign capital (FDI) in local economies and economic legislation, participation in international economic organizations, blocs, integrations etc. In short, nowadays there are five absolutely different in economic terms states which can be described as rivals to each other, rather than allies.
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