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The Determinants of Regional Manufactured Exports from a Developing Country

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Author Info
Matthee, Marianne
Naude, Wim

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Abstract

In this paper, the question of the location of exporters of manufactured goods within a country is investigated. Based on insights from new trade theory, the new economic geography (NEG) and gravity-equation modelling, an empirical model is specified with agglomeration and increasing returns (the home market effect) and transport costs (proxied by distance) as major determinants of the location decision of exporters. Data from 354 magisterial districts in South Africa are used with a variety of estimators (OLS, Tobit, RE-Tobit) and allowances for data shortcomings (bootstrapped standard errors and analytical weights) to identify the determinants of regional manufactured exports. It is found that the home-market effect (measured by the size of local GDP) and distance (measured as the distance in km to the nearest port) are significant determinants of regional manufactured exports. This paper contributes to the literature by using developing country data, and by adding to the small literature on this topic. This paper complements recent work on the determinants of exports from European regions and finds that the home market effect is relatively more important in the developing country context (South Africa), a finding consistent with theoretical NEG model.

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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Papers with number UNU-WIDER Research Paper RP2007/10.

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Length: 24 pages
Date of creation: 2007
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Handle: RePEc:unu:wpaper:rp2007-10

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Related research
Keywords: South Africa; manufactured exports; home market effect; domestic transport costs;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James Heintz, 2003. "Out of Gear? Economic Policy and Performance in Post-Apartheid South Africa," Research Briefs rb2003-1, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
  2. Naude, Wim & Matthee, Marianne, 2007. "The Geographical Location of Manufacturing Exporters in South Africa," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  3. F. Cribari-Neto & S. G. Zarkos, 1999. "Bootstrap methods for heteroskedastic regression models: evidence on estimation and testing," Econometric Reviews, Taylor and Francis Journals, vol. 18(2), pages 211-228. [Downloadable!] (restricted)
  4. W.A. NaudÈ & W.F. Krugell, 2003. "An Inquiry into Cities and their Role in Subnational Economic Growth in South Africa," Journal of African Economies, Oxford University Press, vol. 12(4), pages 476-499, December.
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  5. Anthony J. Venables, 2005. "Spatial disparities in developing countries: cities, regions, and international trade," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 3-21, January. [Downloadable!] (restricted)
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  6. Ximena Clark & David Dollar & Alejandro Micco, 2004. "Port Efficiency, Maritime Transport Costs and Bilateral Trade," NBER Working Papers 10353, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  8. Fosu, Augustin Kwasi, 1990. "Exports and economic growth: The African case," World Development, Elsevier, vol. 18(6), pages 831-835, June. [Downloadable!] (restricted)
  9. Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Redding, Stephen & Schott, Peter K., 2003. "Distance, skill deepening and development: will peripheral countries ever get rich?," Journal of Development Economics, Elsevier, vol. 72(2), pages 515-541, December. [Downloadable!] (restricted)
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  11. Philip McCann, 2005. "Transport costs and new economic geography," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 305-318, June. [Downloadable!] (restricted)
  12. Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61. [Downloadable!] (restricted)
  13. Deardoff, A.V., 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," Working Papers 382, Research Seminar in International Economics, University of Michigan.
  14. Bougheas, Spiros & Demetriades, Panicos O. & Morgenroth, Edgar L. W., 1999. "Infrastructure, transport costs and trade," Journal of International Economics, Elsevier, vol. 47(1), pages 169-189, February. [Downloadable!] (restricted)
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  15. Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-21, May. [Downloadable!] (restricted)
  17. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. [Downloadable!] (restricted)
  18. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
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  1. Matthee, Marianne & Naude, Wim, 2007. "Export Diversity and Regional Growth: Empirical Evidence from South Africa," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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