Imports and Reserves

Income, along with price levels, affect a country’s imports. As a country’s income rises, locals increase their consumption of goods and services from both domestic and foreign markets (University of Minnesota 2016, Santos-Paulino and Thirlwall 2004); therefore, as income increases, so do imports. Evidence of a positive relationship between the real level of import spending and real national income (or real GDP) between 1960 and 2011 is provided by the University of Minnesota (2016). Furthermore, changes in relative price levels affect imports. If local prices are generally higher than prices in foreign countries, imports will be high since the goods in international markets will be more attractive.
A study done by Santos-Paulino and Thirlwall (2004) shows that countries with (little to) no protectionist measures have high price and income elasticities (unlike those with high protection). In other words, in places where market participants are free to trade, a decrease in the price level of imports, as well as an increase in income, leads to an increase in imports. Basically, they provide evidence to support the argument that price and income are determinants of import levels.
Protectionist measures, including import duties and import quotas, are used to decrease the import levels in a country (Bahaw 2011, University of Minnesota 2016, Greenlaw and Shapiro 2011). Import duties, commonly referred to as tariffs, are taxes imposed on imported goods. When these tariffs are levied, the prices of the imports increase relative to locally produced goods and therefore, demand for imports falls as consumers switch to domestic products. Import quotas are a lot more direct. Government simply puts a strict limit on the quantity of a good that can enter a country, almost immediately reducing imports.
Nontariff barriers refer to other protectionist measures where government introduces rules, inspections, and/or paperwork to make it costly or difficult to import products (Greenlaw and Shapiro 2011). These consist of exchange controls and administrative regulations (Bahaw 2011). Exchange controls restrict locals from legally acquiring foreign currencies and therefore, take away their ability to pay for imports. On the other hand, administrative regulations allow governments to disfavor or discriminate against imports which have certain characteristics or are from certain counties. For example, regulations could be put in place regarding health and safety (Bahaw 2011), where the importation of goods not meeting these standards would then be prevented. Rules-of-origin regulations could also be introduced (Greenlaw and Shapiro 2011). These discriminations eventually lead to a reduction in imports.
According to Greenlaw and Shapiro (2011), the level of economic integration in a country affects its imports. They claim that the quantity of goods imported by a nation is somewhat dependent on their involvement with free trade agreements, common markets, and economic unions (Caribbean examples include Caribbean Free Trade Association (CARIFTA) and CARIFORUM). These agreements would determine the tariffs, quotas, etc. implemented in that country which would, in turn, determine the level of imports.