Trade reform, efficiency, and growth
AbstractThe main objective of trade reform is to make markets more competitive and, by introducing competition among previously protected domestic firms, to change the behavior and performance of firms. Efficiency gains are achieved through increased productivity - more efficient use of resources - and a shift in resources from inefficient toefficient sectors. As a result of increased efficiency, output grows. But the transition from a restrictive to an open trade regime can impose short-term adjustment costs for industries newly exposed to external competition. This can be compounded by efforts to restore macroeconomic stabilization, such as reductions in fiscal deficits that could hurt the country's infrastructure. The authors examine the impact of trade reform on productivity and GDP growth, export growth, the diversification of exports, and the trade balance. They also examine whether trade reform affects different reforming countries differently - whether its outcome is related to such factors as the functioning of markets or the level of diversification in production at the time reform is begun. Their findings confirm the link between trade reform and efficiency gains. Reduced average tariffs and quantitative restrictions on imports are associtaed with increased output growth for a given level of investment and capacity use. But the extent to which trade reform helps a country reflects the initial conditions prevailing in the country. Ghana, Indonesia, and Turkey began their trade reform programs under different conditions. Indonesia and Turkey had a more diversified production structure and a better functioning market than Ghana. All three countries carried out intensive trade reform, but Indonesia and Turkey benefited more than Ghana did. In short, countries with well-functioning markets and a better human resource base benefit more from productivity gains resulting from trade reform than countries with less well-functioning markets do.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 1438.
Date of creation: 31 Mar 1995
Date of revision:
Environmental Economics&Policies; Economic Theory&Research; Trade Policy; Labor Policies; Payment Systems&Infrastructure; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Environmental Economics&Policies; Trade Policy; Trade and Regional Integration; Economic Theory&Research;
Find related papers by JEL classification:
- TF0 - - - - - -
- FUN - International Economics - - - - -
- OPE - Economic Development, Technological Change, and Growth - - - - -
- ADM - General Economics and Teaching - - - - -
- FEE - International Economics - - - - -
- INC - Health, Education, and Welfare - - - - -
- AND - General Economics and Teaching - - - - -
- EXP - Macroeconomics and Monetary Economics - - - - -
- ACC - General Economics and Teaching - - - - -
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Jean Habarurema & Abena Oduro & Remco Oostendorp & Catherine Pattillo & Måns Söderbom & Franc, 2000.
"Exports and firm-level efficiency in African manufacturing,"
CSAE Working Paper Series
2000-16, Centre for the Study of African Economies, University of Oxford.
- Paul Collier & Marcel Fafchamps & Francis Teal & Stefan Dercon, 2000. "Exports and Firm - level Efficiency in African Manufacturing," Economics Series Working Papers WPS/2000-16, University of Oxford, Department of Economics.
- Bigsten, A. & Collier, P. & Dercon, S., 2000. "Exports and Firm-Level Efficiency in African Manufacturing," Papers 2000-04, Ecole des Hautes Etudes Commerciales de Montreal-.
- Tecleghiorgis, M.T., 2002. "Market-Oriented Policy Changes and Manufacturing Performance: The Case of Eritrea," Open Access publications from Tilburg University urn:nbn:nl:ui:12-90766, Tilburg University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.