Industrial labor productivities and tariffs in South Africa: identification based on WTO liberalization reform

Harding, Torfinn and Rattsø, Jørn (2010) Industrial labor productivities and tariffs in South Africa: identification based on WTO liberalization reform. Economics of Transition, 18 (3). pp. 459-485. ISSN 1468-0351

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Abstract

The analysis of the effect of tariffs for labour productivity faces the challenge of tariff policy endogeneity. Tariff policy is designed to promote economic development and the industrial sector tariff structure may reflect characteristics of the industries protected. We seek to identify the effect of tariffs by taking advantage of multilateral tariff liberalization using reductions in industrial sector tariffs in other world regions as instruments for sectoral tariff reductions in South Africa. The data cover 28 manufacturing sectors over the period 1988–2003. We find that tariff reductions have stimulated labour productivity when instrumented by multilateral tariffs. The ordinary least-squares estimates show downward bias and this confirms the endogeneity of tariffs. Investigation of channels of effects shows some support for the importance of competitive pressure and technology spillover from trade liberalization.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences
Depositing User: Torfinn Harding
Date Deposited: 29 Oct 2012 15:20
Last Modified: 29 Oct 2012 15:20
URI: http://sro.sussex.ac.uk/id/eprint/41662
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