Who Pays for Protection in Malaysia?

A New General Equilibrium Approach

This paper uses a simple general equilibrium model to isolate the transfer effects resulting from protection in Malaysia. Ignoring the deadweight losses associated with protection, the model uses the concept of true protection to construct a transfer matrix which shows how income is transferred among various sectors of the economy. The evidence suggests that it is only the exporters who pay for protection. The cost to Malaysian exporters was about 2.56 percent of GDP in 1989.