Gradual Trade Liberalization and Firm Performance in Ethiopia
We 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.
|Date of creation:||01 Nov 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Manor Rd. Building, Oxford, OX1 3UQ|
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:csae-wps/2009-21. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Birds)
If references are entirely missing, you can add them using this form.