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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:On income distribution and economic sanctions
Author:Cooper, J.H.
Periodical:South African Journal of Economics
Geographic term:South Africa
Subjects:income distribution
economic sanctions
External link:https://doi.org/10.1111/j.1813-6982.1989.tb00174.x
Abstract:The purpose of this paper is to present the outline of one possible means of analysis that can be fruitfully employed to investigate the impact of economic sanctions on the distribution of income in South Africa. The approach employed is based on the orthodox neoclassical trade theorem developed by W. Stolper and P. Samuelson (1941). This theorem argues that a tariff imposed on imports favours the factor used intensively in the import-competing sector, because the tariff raises import prices. As the demand for the factor used intensively in the import-competing industry rises, its return increases, causing the income distribution to change in its favour. The present author elaborates this model, assuming that the impact of sanctions imposed externally is analogous to an internally imposed prohibitive, i.e. trade-eliminating, tariff. He shows that the position of capital is likely to be strengthened, not weakened, by sanctions. In contrast, wages and the share of labour in the national income will decline. The trend towards greater equality of incomes evident during the 1970s will certainly be reversed. Bibliogr., notes, ref.