Like Schmitz (2001), we view our results as less pertinent for rich economies like the United States, where public sector involvement in intermediate good
production is relatively small; rather, we view the results of our model as being applicable mostly to least developed countries (LDCs), such as Egypt, where governments typically play a large role in intermediate goods
The goods are called intermediate goods
and are produced goods which through the production process are transformed into goods of a greater value, whether another intermediate good
or a final good.
It has been shown that in cases where one country has a better technology for producing an intermediate good
than another, commercial policy may be effective in increasing domestic welfare [Spencer and Jones, "Trade and Protection in Vertically Related Markets," Journal of International Economics, 1992].
Assume(1) that in a two country world country 1 has a revealed export preference for good X, (a final good), and country 2 has a revealed export preference for good K (an intermediate good
Industrial producer prices in the euro area in April 2019, compared with March 2019, fell by 1.5 percent in the energy sector, while prices rose by 0.1 percent for intermediate goods
, capital goods and durable consumer goods, and by 0.5 percent for non-durable consumer goods.
The appreciation of the US dollar and other major currencies against rupee has increased the cost of imported raw material and intermediate goods
. The government is considering further enhancement in the regulatory duty on large number of imported items including raw material which would abnormally add to the cost of production, wiping out the minimal comparative advantage of country's exports might still have.
Pakistan Apparel Forum has proposed the government to simplify the export facilitation schemes instead of rationalising tariffs on the raw materials and intermediate goods
Monthly comparison by main industrial grouping and by Member State Industrial producer prices in the euro area in October 2018, compared with September 2018, rose by 2.7% in the energy sector, by 0.2% for capital goods and by 0.1% for intermediate goods
and durable consumer goods, while prices fell by 0.1% for non-durable consumer goods.
The 0.4% increase in industrial producer prices in total industry in the euro area in June 2018, compared with May 2018, is due to rises of 1.1% in the energy sector, of 0.4% for intermediate goods
and of 0.1% for durable consumer goods, while prices remained stable for capital goods and for non-durable consumer goods.
A classification of goods based on different stages of production, for example, raw material, intermediate goods
, consumer goods and capital goods from the World Integrated Trade Solution (WITS) shows evidence of a surge in contribution of capital goods to total imports from 21.36% in 2013 to 31.95% in 2017.
The country's main exports to the United States are intermediate goods
and cars, while China mostly exports consumer and capital goods.
The 0.6% increase in industrial producer prices in total industry in the euro area in May 2016, compared with April 2016, is due to rises of 1.7% in the energy sector, of 0.3% for intermediate goods
and of 0.1% for non-durable consumer goods.