An Empirical Investigation of Trade Liberalization and Trade Patterns in South Africa

  • Sibanisezwe Alwyn Khumalo Rhodes University, Department of Economics and Economic History
  • Asrat Tsegaye University of Fort Hare, Department of Economics East London
DOI: https://doi.org/10.22610/jebs.v10i5(J).2503
Keywords: Gravity model, fixed effects, extensive margins, intensive margins, tariff liberalization

Abstract

The study made use of the gravity model to analyze the behavior of South Africa’s trade patterns at industry level. Using SIC 2-digit level data for the period 1996-2013 based on two sub-samples, 1996-2004 and 2005-2013, the study found that trade liberalization was not universally influential on trade patterns. Some industries did not exhibit significant behavior changes as a result of tariff liberalization. The results show that Agriculture, mining ores, crude oil, machinery and transport are the only industries from the selected sample of nine that are significantly influenced by trade liberalization policy. Furthermore, empirical results indicate that trade liberalization hinders extensive margins and does not encourage intensive margins.  

Downloads

Download data is not yet available.

References

Adenikinju, A. & Chete, L. (2002). Productivity, market structure and Trade liberalization in Nigeria. AERC Research paper, 126. Anderson, J. E. & Wincoop, E. (2003). Gravity with gravitas: A solution to the border puzzle. The American Economic Review, 93, 170-192. Appleyard, D., Field, A. & Cobb, S. (2008). International Economics. New York: McGraw-Hill. Black, A. (2001). Globalization and restructuring in the South African automotive industry. Journal of International Development, 13, 779-769. Buono, I. & Lalanne, G. (2012). The effect of the Uruguay round on the intensive and extensive margins of trade. Journal of International Economics, Elsevier, 86 269-283. Chen, W. (2013). The extensive and Intensive margin of exports: The role of innovation. The World Economy, 36(5), 607-635. Debaere, P. & Mostashari, S. (2010). Do tariffs matter for the extensive margin of international trade: An empirical analysis. Journal of International Economics, 81, 163-169. Fedderke, J. & Vaze, P. (2001). The nature of South Africa’s trade patterns by economic sector and the extent of trade liberalization during the course of the 1990’s. The South African Journal of Economics, 69. Feenstra, R. & Taylor, A. (2014). International Economics, 3rd edition. New York Worth Publishers. Fiestas, I. (2005). The effects of trade liberalization on growth, poverty and inequality. CILAE, nota tecnica. Kanda, P. T. & Jordaan, A. C. (2010). Trade diversion and Trade creation: Augmented Gravity model study for South Africa. Trade & industrial policy strategies paper series 2010. Krugman, P. (1980). Scale Economies, Product Differentiation, and the Pattern of Trade. The American Economic Review, 70, 950-959. Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71, 1695-1725. Stiglitz, J. (2002). Globalization and its Discontents. New York: Penguin group. Twerefu, D. K. (2009). Mineral Exploitation, Environmental sustainability and sustainable development in EAC, SADC and ECOWAS regions. African trade policy centre, work in progress, 79. Van der Westhuizen, C. (2006). Trade and poverty: A case study of SA clothing industry, Trade and poverty project, SALDRU, University of Cape Town.
Published
2018-11-03
How to Cite
Khumalo, S. A., & Tsegaye, A. (2018). An Empirical Investigation of Trade Liberalization and Trade Patterns in South Africa. Journal of Economics and Behavioral Studies, 10(5(J), 125-137. https://doi.org/10.22610/jebs.v10i5(J).2503
Issue
Vol 10 No 5(J) (2018)
Section
Research Paper

Copyright (c) 2018 Sibanisezwe Alwyn Khumalo, Asrat Tsegaye

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of a revised paper in the light of suggestions of the reviewers, editorial team edits and formats manuscripts to bring uniformity and standardization in published material.

This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.