The ‘true protection’ concept ‐ a comment on Greenaway and Milner

Empirical studies estimating shift‐parameters to evaluate the ‘true protection’ especially for developing countries often reach the result that those parameters have very high values. This study is to show that it is not substitutional relationships but much more the very inflationary monetary policy of many developing countries which forces the shift‐parameters towards one. Moreover it is shown that it makes little sense to distinguish between ‘traditional’ and ‘non‐traditional’ exports and that shift‐parameters are not necessarily stable over time.