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Cumulative Benefits from Trade Liberalization for the South African Economy

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  • Matthias Bauer

    (Friedrich Schiller University Jena)

  • Andreas Freytag

    ()
    (Friedrich-Schiller-University Jena and University of Stellenbosch)

Abstract

South Africa's trade barriers are still relatively high compared to other emerging market economies, and its industrial policy still preferentially treats certain industries. Based on a static GTAP model, we estimate the economic impact of further trade liberalization on the South African economy. We particularly take into account core NTB's on tradable commodities and the costs imposed by cross-border trade facilitation, which is particularly inefficient in South Africa. Our results indicate that a full liberalization package, including a reduction of core NTB's as well as a substantial increase in the efficiency of cross-border trade facilitation to the levels of Singapore, would cause the South African GDP to rise by up to 4.51 per cent. This implies an increase in aggregate welfare of up to 21 billion US Dollars. This sum is the equivalent of what should be given to the South African economy in order to leave citizens as well of as after the implementation of a full liberalization package, given South African policy-makers abstain from further trade liberalization policies.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2013-036.

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Date of creation: 19 Sep 2013
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Handle: RePEc:jrp:jrpwrp:2013-036

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Keywords: South Africa; trade policy; international trade; non-tariff trade barriers; GTAP;

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  1. John C. Beghin, 2006. "Nontariff Barriers," Food and Agricultural Policy Research Institute (FAPRI) Publications 06-wp438, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  2. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating Trade Restrictiveness Indices," CEPR Discussion Papers 5576, C.E.P.R. Discussion Papers.
  3. Simeon Djankov & Caroline Freund & Cong S. Pham, 2010. "Trading on Time," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 166-173, February.
  4. James A. Brander, 1995. "Strategic Trade Policy," NBER Working Papers 5020, National Bureau of Economic Research, Inc.
  5. Fugazza, Marco & Maur, Jean-Christophe, 2008. "Non-tariff barriers in CGE models: How useful for policy?," Journal of Policy Modeling, Elsevier, vol. 30(3), pages 475-490.
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  7. Shandre Mugan Thangavelu & Gulasekaran Rajaguru, 2004. "Is there an export or import-led productivity growth in rapidly developing Asian countries? a multivariate VAR analysis," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1083-1093.
  8. Philip D. Adams & J. Mark Horridge, 2004. "The Effects of a Free Trade Agreement Between the USA and the South African Customs Union (SACU)," Centre of Policy Studies/IMPACT Centre Working Papers g-147, Victoria University, Centre of Policy Studies/IMPACT Centre.
  9. Jean Fouré & Agnès Bénassy-Quéré & Lionel Fontagné, 2012. "The Great Shift: Macroeconomic projections for the world economy at the 2050 horizon," Working Papers 2012-03, CEPII research center.
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