ABSTRACT
This chapter investigates the hypothesis that imports are separable from primary factors of production in Jamaica, and to do so, a three input—two output translog cost function is estimated. It examines the translog model as well as the data requirements. The chapter discusses the results with those of a number of similar studies. The chapter explores a translog cost function to estimate the demand for imports over the period 1972 to 1998 in Jamaica. Burgess who modelled imports as a primary factor of production for the United States, has argued that the approach that views imports as final goods with no close domestic substitutes, rules out any income distribution effects resulting from changes in import prices. The reduction in imports clearly will have an impact on the level of output; adjustments in the trade balance require a careful disaggregation of imports to determine what areas of imports may not be necessary for output expansion.
