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Industrial labour productivities and tariffs in South Africa

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  • Torfinn Harding
  • Jørn Rattsø

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.

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  • Torfinn Harding & Jørn Rattsø, 2010. "Industrial labour productivities and tariffs in South Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 459-485, July.
    • Handle: RePEc:bla:etrans:v:18:y:2010:i:3:p:459-485
    DOI: 10.1111/j.1468-0351.2009.00386.x
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    1. Marjan Petreski & Branimir Jovanovic & Igor Velickovski, 2017. "Tariff-Induced (De)industrialization: An Empirical Analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 345-381, September.
    2. Branimir Jovanović & Marjan Petreski & Igor Velickovski, 2015. "Tariff-induced (de)industrialization in transition economies: A comparative analysis," wiiw Balkan Observatory Working Papers 116, The Vienna Institute for International Economic Studies, wiiw.

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