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Endogenous Protection In A Trade Liberalizing Economy: The Case Of South Africa

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  • Merle Holden
  • Daniela Casale

Abstract

This article aims to establish the changes that occurred in the institutional structures governing trade policy in South Africa during the period 1990–1998. It also examines the forces that influenced the application of tariff policy by the major tariff‐setting bodies by applying various theories of endogenous protection to their decisions. Using firm‐level data on applications made to the Board on Tariffs and Trade, the study finds that when estimating a probit model, employment considerations rather than capital invested influenced the board's decisions to grant protection. In addition, the board is found to have granted protection even in the face of tariff lines having been bound under the Uruguay Round. The article argues that this should not be interpreted as a reversal of the trade liberalization but rather as an attempt by the board to cushion firms from the acceleration in the tariff rationalization process that occurred after the GATT offer. Finally, it is suggested that the board's response to changes in import penetration ratios between industries that were considered organized provides prima facie evidence of the superior lobbying ability of such industries.

Suggested Citation

  • Merle Holden & Daniela Casale, 2002. "Endogenous Protection In A Trade Liberalizing Economy: The Case Of South Africa," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 479-489, October.
    • Handle: RePEc:bla:coecpo:v:20:y:2002:i:4:p:479-489
    DOI: 10.1093/cep/20.4.479
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    References listed on IDEAS

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    1. Kym Anderson, 1980. "The Political Market for Government Assistance to Australian Manufacturing Industries," The Economic Record, The Economic Society of Australia, vol. 56(153), pages 132-144, June.
    2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    3. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
    4. repec:bla:ecorec:v:56:y:1980:i:153:p:132-44 is not listed on IDEAS
    5. Ronald S. Saunders, 1980. "The Political Economy of Effective Tariff Protection in Canada's Manufacturing Sector," Canadian Journal of Economics, Canadian Economics Association, vol. 13(2), pages 340-348, May.
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    Cited by:

    1. Lawrence Edwards & Robert Lawrence, 2008. "SACU Tariff Policies: Where Should They Go From Here?," Growth Lab Working Papers 14d, Harvard's Growth Lab.
    2. Merle Holden, 2001. "Trade policy in a liberalizing economy," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(6), pages 711-723.
    3. Chad P. Bown, 2011. "The Great Recession and Import Protection : The Role of Temporary Trade Barriers," World Bank Publications - Books, The World Bank Group, number 16359, April.

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