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The impact of trade liberalisation on South African agricultural productivity

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  • Teweldemedhin, M.Y.
  • van Schalkwyk, Herman D.
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    Abstract

    This study attempts to examine the empirical relationship between trade and total factor productivity (TFP) in the agricultural sector using both cross -sectiona, (across nine agricultural commodities), and time -series analysis. The Error Correction Model of ordinary least square (OLS) results from the cross -sectional analysis confirm that export shares and capital formation were found to be positive and significant; whereas, import shares and real exchange rate were found to be related negatively. However, the net effect of export and import shares had a positive effect. This implies that trade liberalisation causes productivity gains. Moreover, the time -series analysis goes in the same direction as the cross -sectional results, showing that there is a robust relationship among TFP, degree of openness, and capital formation. Whereas, debt was found to be inversely related, this implies that agricultural industries / farmers lack debt management skills.

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    Bibliographic Info

    Paper provided by African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA) in its series 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa with number 95963.

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    Date of creation: Sep 2010
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    Handle: RePEc:ags:aaae10:95963

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    Keywords: TFP; OLS; Trade liberalization or degree of openness; capital formation; International Relations/Trade;

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    1. David T. Coe & Reza Moghadam, 1993. "Capital and Trade as Engines of Growth in France: An Application of Johansen's Cointegration Methodology," IMF Staff Papers, Palgrave Macmillan, vol. 40(3), pages 542-566, September.
    2. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: a Skeptic's Guide to the Cross-National Evidence," Working Papers 9912, Economic Research Forum, revised Apr 1999.
    3. Nigel James Miller & Christopher Tsoukis, 2001. "On the optimality of public capital for long-run economic growth: evidence from panel data," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1117-1129.
    4. Srinivasan. T.N., 1997. "As the Century Turns: Analytics, Empirics and Politics of Development," Papers 783, Yale - Economic Growth Center.
    5. De Loo,Ivo & Soete,Luc, 1999. "The Impact of Technology on Economic Growth: Some New Ideas and Empirical Considerations," Research Memorandum 017, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    6. Ramirez, Miguel D., 1998. "Does public investment enhance labor productivity growth in Chile? A cointegration analysis," The North American Journal of Economics and Finance, Elsevier, vol. 9(1), pages 45-65.
    7. T. N. Srinivasan, 1997. "As the Century Turns: Analytics, Empirics and Politics of Development," Working Papers 783, Economic Growth Center, Yale University.
    8. Athanasios Vamvakidis, 1999. "Regional Trade Agreements or Broad Liberalization: Which Path Leads to Faster Growth?," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 3.
    9. Dani Rodrik, 1998. "Trade Policy and Economic Performance in Sub-Saharan Africa," NBER Working Papers 6562, National Bureau of Economic Research, Inc.
    10. David T. Coe & Reza Moghadam, 1993. "Capital and Trade As Engines of Growth in France," IMF Working Papers 93/11, International Monetary Fund.
    11. Bakucs, Lajos Zoltan & Ferto, Imre, 2005. "Monetary Impacts and Overshooting of Agricultural Prices in a Transition Economy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24711, European Association of Agricultural Economists.
    12. By Gunnar Jonsson & Arvind Subramanian, 2001. "Dynamic Gains from Trade: Evidence from South Africa," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 8.
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