Gradual Trade Liberalization and Firm Performance in Ethiopia
AbstractWe use firm-level data for the Ethiopian manufacturing sector matched with commodity-level data on tariffs to examine the effect of trade liberalization on firm performance during the 1997-2005 period.� We find relatively large positive effects of tariff reductions on total factor productivity, a result that is robust to treating tariffs as endogenous, and to various generalizations of the baseline model.� This effect is primarily driven by mechanisms operating at high tariff levels, suggesting that excessive tariff levels may be particularly distortionary.� We find some evidence that the reduction of tariffs has resulted in smaller and more capital-intensive domestic firms.� We note that these effects are consistent with the hypothesis that the trade liberalization has increased competition in the domestic market.� We find no significant effect of the trade liberalization on entry or exit rates.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2009-21.
Date of creation: 01 Nov 2009
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Other versions of this item:
- Arne Bigsten & Mulu Gebreeyesus & Mans Soderbom, 2009. "Gradual Trade Liberalization and Firm Performance in Ethiopia," CSAE Working Paper Series 2009-21, Centre for the Study of African Economies, University of Oxford.
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- Yonas Alem and Mans Soderbom, 2010.
"Household-Level Consumption in Urban Ethiopia: The Impact of Food Price Inflation and Idiosyncratic Shocks,"
Economics Series Working Papers
CSAE WPS/2010-24, University of Oxford, Department of Economics.
- Yonas Alem & Måns Söderbom, 2010. "Household-Level Consumption in Urban Ethiopia: The Impact of Food Price Inflation and Idiosyncratic Shocks," CSAE Working Paper Series 2010-24, Centre for the Study of African Economies, University of Oxford.
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