Efficient Government Trade Behavior and Its Implication for Small Developing Economy: The Case of Ukraine
Efficient Government Trade Behavior and Its Implication for Small Developing Economy: The Case of Ukraine

Summary/Abstract: The article deals with problem of optimization of government behavior in trade policy decision-making in small open developing economy.Based on conceptual model of government behavior we define main elements of effective trade policy. We found both their conformity to certain economic framework and conditions of their changes with each other. The analysis of advantages and disadvantages of government patterns of trade behavior showed that in order to regulate the small open developing economy its government should provide policy, based on applying of tax instruments, notably, tariffs; non-tariff measures in such conditions are as auxiliary tools. Systemic non-tariff restrictions could be regarded as an effective tool for developed innovative economies.The originality of the paper consists in developing of model of efficient government behavior in trade policy decision-making depending on the framework of national economy; also both conditions of untimely changes of government behavior patterns and ineffective frameworks appeared as consequence of these changes, were defined. We provide an econometric analysis in order to determine whether commodity exports are sensitive to reduction or elimination of tariffs (as in the case of Ukrainian exports and EU import duties). This analysis showed that now in Ukrainian economy there are commodities which are both sensitive and resistant to tariff changes.

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