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Comment by floxy | Hacker News Reader

> Yet, the list price of new vehicles is easily 1.5x - 2x that in the US

I'm assuming this is because of taxes or import tariffs, or something similarly self-imposed?

Yes. Substantial taxes on imports for vehicles from outside Mercosur, also taxes based on engine size and a few other parameters.

Genius. Incentivize economic production in industries where you have less comparative advantage. A common story of contribution to poverty in SA, although to be fair Uruguay is better than most others on the continent.

How do you build that comparative advantage though? You think Japan or South Korea didn't have protectionist policies until they figured out how to produce such things competitively?

Precisely. The theory of comparative advantage literally says "you can't finance e.g. industrialization by the market means, it's strictly and highly unprofitable, no entrepreneur in their right mind would (or even could) do this", yet somehow people routinely tout it as a decisive argument for laissez-faire.

And Japan's history of the state support for its automotive industry is quite something.

This got to be negligible next to corruption and the cost of being small countries (more prone to market failures, small import/export traffic, brain drain).

I'm Uruguayan and this drives me crazy. Specially for products that are also tools for industries where we can and do compete. Buying a computer in Uruguay costs about twice as much as in the US.

If this is all self imposed by tariffs, which as far as I know it is, what industry are the tariffs really defending? Certainly not Uruguayan electronics manufacturers, there aren't any. The only people that I imagine benefit are customs officers and companies that import stuff to sell in Uruguay. There isn't any new capability to build things that the country gets in return. We learn from exporting talent instead.

And if we want to compete we need to do it globally. Our market is too small, the population is ~3M.

>The only people that I imagine benefit are customs officers and companies that import stuff to sell in Uruguay.

How do high tariffs help importing companies? Wouldn't they be able to sell more (and thus import more) if the end prices to the consumer were lower?

Fair point, I might be mistaken. But I think there are lots of small resellers that wouldn't exist if buying online from abroad was as seamless and risk free as buying online locally through mercado libre. The real problem is the requirement of contacting a customs officer to import anything above 200usd, and the risk of having the product stopped by customs. The resellers value is in saving you that bureaucracy by doing it in bulk. And in practice, because of the small market, it greatly reduces the variety of products on offer.

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