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Industrial labor productivities and tariffs in South Africa. Identification based on multilateral liberalization reform

The analysis of the effect of tariffs for labor productivity faces the challenge of tariff policy endogeneity. Tariff policy is designed to promote economic development and the industrial sector tariff structure may reflect characteristics of the industries protected. We seek to identify the effect of tariffs by taking advantage of multilateral tariff liberalization using reductions in industrial sector tariffs in other world regions as instruments for sectoral tariff reductions in South Africa. The data cover 28 manufacturing sectors over the period 1988-2003. We find that tariff reductions have stimulated labor productivity when instrumented by multilateral tariffs. The OLS estimates show downward bias and supports the understanding that the government has given priority to tariff reductions in sectors with slow productivity growth.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 585.

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Date of creation: May 2009
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Handle: RePEc:ssb:dispap:585
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  18. Pedro Cavalcanti Ferreira & JosÈ Luiz Rossi, 2003. "New Evidence from Brazil on Trade Liberalization and Productivity Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1383-1405, November.
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