Share This Article:

Tariffs and Total Factor Productivity: The Case of Ghanaian Manufacturing Firms

Abstract Full-Text HTML Download Download as PDF (Size:156KB) PP. 275-283
DOI: 10.4236/me.2012.33037    4,828 Downloads   7,350 Views   Citations

ABSTRACT

This paper investigates the effects of trade liberalization on firm productivity in Ghana. We examine Ghanaian trade policy from 1993 to 2002, a period during which trade liberalization deepened with intermittent protection in a number of ways across industries, to investigate the effects of trade policy reforms and firm productivity. We find a strong negative impact of nominal tariffs on firm productivity, controlling for observed and unobserved firm characteristics and industry heterogeneity, a result that is robust to various alterations of the base model, including treating tariffs as endogenous and employing different estimation techniques. These results indicate that firms that are overprotected have a lower level of Total Factor Productivity than firms that are exposed to import competition. The estimated coefficients on both tariffs and its squared term confirm that higher tariffs are particularly distortionary.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

C. Ackah, E. Ernest Aryeetey and O. Morrissey, "Tariffs and Total Factor Productivity: The Case of Ghanaian Manufacturing Firms," Modern Economy, Vol. 3 No. 3, 2012, pp. 275-283. doi: 10.4236/me.2012.33037.

References

[1] A. M. Fernandes, “Trade Policy, Trade Volumes and Plant-Level Productivity in Columbian Manufacturing Industries,” Journal of International Economics, Vol. 71, No. 1, 2007, pp. 52-71. doi:10.1016/j.jinteco.2006.03.003
[2] M. Melitz, “The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity,” Econometrica, Vol. 71, No. 6, 2003, pp. 1695-1725. doi:10.1111/1468-0262.00467
[3] G. Grossman and E. Helpman, “Innovation and Growth in the Global Economy,” MIT Press, Cambridge, 1991.
[4] N. Pavcnik, “Trade Liberalization, Exit and Productivity Improvements: Evidence from Chilean Plants,” Review of Economic Studies, Vol. 69, No. 1, 2002, pp. 245-276. doi:10.1111/1467-937X.00205
[5] P. Topalova, “Trade Liberalization and Firm Productivity: The Case of India,” IMF Working Paper, 28 April 2004.
[6] M. Amiti and J. Konings, “Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia,” American Economic Review, Vol. 97, No. 5, 2007, pp. 1611- 1638. doi:10.1257/aer.97.5.1611
[7] G. S. Olley and A. Pakes, “The Dynamics of Productivity in the Telecommunications Equipment Industry,” Econometrica, Vol. 64, No. 6, 1996, pp. 1263-1297. doi:10.2307/2171831
[8] M. Arrelano and S. Bond, “Some Tests of Specification in Panel Data: Monte Carlo Evidence and Application to Employment Equations,” Review of Economic Studies, Vol. 58, No. 2, 1991, pp. 277-297. doi:10.2307/2297968
[9] J. Marschak and W. Andrews, “Random Simultaneous Equations and the Theory of Production,” Econometrica, Vol. 12, No. 3-4, 1944, pp. 143-205. doi:10.2307/1905432
[10] J. Levinsohn and A. Petrin, “Estimating Production Functions Using Inputs to Control for Unobservables,” Review of Economic Studies, Vol. 70, No. 2, 2003, pp. 317-341. doi:10.1111/1467-937X.00246
[11] A. Bigsten, M. Gebreeyesus and M. Soderbom, “Gradual Trade Liberalization and Firm Response in Ethiopia,” Oxford Centre for the Studies of African Economies (CSAE), Working Paper, University of Oxford, Oxford, 2009.
[12] A. Bigsten and M. Gebreeyesus, “Firm Productivity and Exports: Evidence from Ethiopian Manufacturing,” Journal of Development Studies, Vol. 45, No. 10, 2009, pp. 1594- 1614. doi:10.1080/00220380902953058
[13] M. Dovis and Milgram-Baleix, “Trade, Tariffs and Total Factor Productivity: The Case of Spanish Firms,” The World Economy, Vol. 32, No. 4, 2009, pp. 575-605. doi:10.1111/j.1467-9701.2009.01169.x
[14] R. Blundell and S. Bond, “Initial Conditions and Moments Restrictions in Dynamic Panel Data Models,” Journal of Econometrics, Vol. 87, No. 1, 1998, pp. 115-143. doi:10.1016/S0304-4076(98)00009-8
[15] A. Petrin, B. P. Poi and J. Levinsohn, “Production Function Estimation in Stata Using Inputs to Control for Unobservables,” The Stata Journal, Vol. 4, No. 2, 2004, pp. 113-123.
[16] D. Greenaway and R. Kneller, “Exporting and Productivity in the United Kingdom,” Oxford Review of Economic Policy, Vol. 20, No. 3, 2004, pp. 358-371. doi:10.1093/oxrep/grh021
[17] A. Bigsten, P. Collier, S. Dercon, M. Fafchamps, B. Gauthier, J. Gunning, A. Oduro, R. Oostendorp, C. Pattillo, M. Soderbom, F. Teal and A. Zeufack, “Do African Manufacturing Firms Learn from Exporting?” Journal of Development Stu- dies, Vol. 40, No. 3, 2004, pp. 115-141. doi:10.1080/0022038042000213229

  
comments powered by Disqus

Copyright © 2019 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.