Optimization of customs and tariff policy instruments in the system of import substitution in the agricultural sector

Alexander Kotenev,Larisa Ustinova,Galina Zakharova,Natalya Kryzhevskaya,Alim Otarov,A Zheltenkov,A Mottaeva

doi:10.1051/e3sconf/202016411040

Abstract

In this research authors carried out economic and mathematical modeling of foreign trade activity in order to analyze an impact of applied tariff regulation measures on a level of state economic security taking into account its food component. By formalizing the Grossman-Helpman model, the specifics of interaction between consumers, producers and a state (as participants in the import substitution process) were assessed. The structural components of the model are implemented. A decentralized analysis of the regions was carried out. Algorithmic approaches to the development of regions are formulated. Thus, on the basis of the applied model, differentiation of the regions of the Southern Federal District and North Caucasian Federal District according to the level of import substitution potential, as well as fragmentation of the foreign trade policy applied by the state has been established.

Highlights

One of the basic directions of improving of food security level is an organizational and economic transformation of the mechanism of customs and tariff regulation of foreign trade activities of agricultural producers
Estimating the need to use Fee policy instruments in the context of improving food security in the foreign trade policy, we have conducted an empirical testing of the modified equation of the Grossman-Helpman model relating to the hypothesis that the industrial potential of import substitution, the share of imports in food markets, the level of dependence on imported technologies, as well as the investment activity of agricultural producers should be taken into account when establishing import customs duties for agricultural products
"The Grossman-Helpman model restrictions are connected with the fact that the least spreads method was used to parameterize it, which assumes a linear relationship between factor and efficient index" [1,2,3]

Summary

Introduction

One of the basic directions of improving of food security level is an organizational and economic transformation of the mechanism of customs and tariff regulation of foreign trade activities of agricultural producers. The high level of technical and technological dependence of domestic agricultural sector on foreign technologies requires selective use of fee policy instruments, as it is impossible to develop agricultural sector without them. In this regard the improvement of food security requires, on the one hand, improvement of food availability for the population whose standard of living has stoppped to grow, and, on the other hand, adopting a policy of supporting domestic agricultural producer and. All of these demand a balanced and deliberated customs and tariff policy in order to achieve a sustainable pattern of economic growth of the national agricultural sector. Specific nature of agricultural industries makes it necessary to take into account a set of factors of a long-term and short-term nature: economic interests of business entities; consumer welfare; import-substituting potential of territorial agricultural sector, etc

Target setting

Model building

Formalization of model

Model estimating

Findings

Conclusion