This study shows the longrun relationship between trade liberalization and economic growth of developing countries using a time series data covering 32 years from 1981 to 2014. Trade liberalization has long been said to influence economic growth favorably in the long run. Impact of trade liberalization on economic growth of. F, f14, f15 dan ciuriak is a consulting economist and former deputy chief economist at foreign affairs and international trade canada. Trade liberalization in developing countries has therefore often been implemented with the expectation of growth stimulation.
Trade policy reform measures included import liberalization through rationalization of the tariff structure and reduction of quantitative restrictions, simplified licensing procedures, the introduction of marketoriented and more transparent allocation of foreign. Claudius preville is project director and senior trade economist for the european commissionfunded. Degit2017conferencepaperpreliminaryandincomplete trade liberalization, infrastructure and firm performance. Exploring the relationship between trade liberalization and. Starting in 1997, ethiopia implemented large investments in infrastructure with the road sector development programme. Trade liberalization of economies via the reduction or complete elimination of trade barriers has become the most popular economic. Exploring the relationship between trade liberalization. For example, trade liberalization could lead to a large decline in the price of computer chips relative to most other goods. Trade liberalization, productivity, and firm exit in manufacturing firms in ethiopia dawit zenebe university of wisconsin madison preliminary and incomplete. Sukar and others published the effect of trade liberalization on economic growth. Globalization is currently a popular and controversial issue, though often remaining a loose and poorlydefined concept. The sap restructured the ethiopian economy through reducing tariff and nontariff barriers. Request pdf the impact of trade liberalization on the ethiopias trade balance this study examines the impact of trade liberalization on.
The investigation, conducted under section 332g of the tariff act of 1930, is in response to a request from the united states trade representative ustr see appendix a. Introduction pressure has been building for the developed countries to extend greater trade benefits to the least developed countries ldcs. The impact of trade liberalization on the ethiopia s trade balance. Impact of trade liberalization on poverty in ethiopia international. Pdf using a cge model, this study analyses the impact of trade liberalization on poverty at the household level taking ethiopia as a case. Trade strategies trade liberalization trade liberalization, the removal or reduction of goods and services, in ethiopia started in 1992 when the structural adjustment program sap was implemented. The socioeconomic indicators in the ldcs are very low. We conceive of a framework where intermediaries transport.
This study examines the impact of trade liberalization on the ethiopias trade balance using the data over the period 1974 to 2009 from nbe national bank of ethiopia. Obeng abstract studies have shown that free trade is better. Ethiopia trade and investment priorities claudius preville. But trade has been an engine of growth for much longer. The paper finds that trade liberalization boosts economic growth and reduces poverty in the long run while it has small. The main focus of section five is how the implementation of the trade liberalization of the major trade groupings in africa and the world trade. Nbe, national bank of ethiopia 200809 developments in the external sector, annual report. Among many policies that most countries including ethiopia have decided to optfor is trade liberalization of economies herath, 2010. Economic growth nexus trade liberalization in ethiopia ijlret. However those studies did not directly linked the impact of trade liberalization to the ethiopian economic growth. Trade liberalization, productivity, and resource allocation in.
The object of this paper is, firstly, to assess the impact of trade liberalization on employment and wages in south africa. Pdf the impact of trade liberalization in trade balance. Stotsky, and asegedech woldemariam1 authorized for distribution by michael keen and armando linde september 2004 abstract this working paper should not be reported as representing the views of the imf. Impacts of trade liberalization on growth and poverty in. The main findings of the paper can be summarized as follows. This study shows the longrun relationship between trade liberalization and economic growth of developing countries using a time series data covering 32. More specifically, trade openness has had a positive and significant impact on the economic growth of ethiopia. The paper finds that trade liberalization boosts economic growth and reduces poverty in the long run while it has small effects in the short run. Two scenarios complete tariff cut and uniform tariff scheme.
Kebede4 january, 2011 1 this research is financed by the aid of a grant from poverty and economic policy pep research network, financed by. Shimeless 5 the literature on trade policy invariably trade liberalization and growth has emphasized the notion that trade liberalizationopenness strongly impacts growth. Reductions in import prices of textiles and leather products increase imports of these goods implying that trade liberalization is likely to dampen domestic. The country has undertaken serious trade reforms, either as a part of major macroeconomic reforms and commitments with international regulations, or by decisions driven by a process of internal adjustment for the last two decades. Using a cge model, this study analyses the impact of trade liberalization on poverty at the household level taking ethiopia as a case. The impact of trade liberalization on the ethiopias trade balance. According to the world bank 2001, trade liberalization is defined as i the removal of or reduction in the trade. Pdf the economic impact of globalization for ethiopia.
Trade liberalization, poverty and inequality in ethiopia. The impact of trade liberalization in trade balance of ethiopia. Economic growth nexus trade liberalization in ethiopia. Ethiopia, trade policy, liberalization, trade costs, facilitation jel codes.
Sometimes too comprehensively, the term is used to encompass increases in trade and liberalization policies as well as reductions in transportation costs and technology transfer. Using census data on ethiopian manufacturing rms from 1998 through 2009. Globalization, the impact of trade liberalization, and. It is also about the changing linkages among these flows. Trade liberalization, productivity, and firm exit in. Trade policy in ethiopia, 19912016 oxford handbooks.
Trade liberalization, exchange rate changes, and tax. The social impact of globalization in the developing countries. Therefore, the government of ethiopia should integrate and open the economy. The case of south africa presents south africa as a case study and adopts a more sociological perspective. Evidence from ethiopia matteo fiorini marco san lippo asha sundaram august 19, 2017 abstract we investigate the role of infrastructure in shaping the e ects of trade liberalization on rm performance. The effect of trade liberalization on economic growth. In section four, we take a look at the revenue impact of trade liberalization drawing on available empirical evidences. Global trade liberalization and the developing countries.
Two scenarios complete tariff cut and uniform tariff scheme suggest that further liberalization of trade has little shortrun effect on the overall economy. Trade liberalization, exchange rate changes, and tax revenue in subsaharan africa prepared by terence agbeyegbe, janet g. Kebede4 january, 2011 1 this research is financed by the aid of a grant from poverty and economic policy pep research network, financed by the international development research center idrc. Dejene aredo2 belay fekadu3 sindu workneh4 may 2007 1 this research work is financed by the aid of a grant from poverty and economic policy pep research network, financed by the international development research center idrc.
In an attempt to confirm this theory in the context of ethiopian economy, we adopted the johnsons approach for cointegration to test the long run. Exploring the relationship between trade liberalization and ethiopian economic growth. This means that trade liberalization affects the relative prices of various goods. The relative impact of trade liberalization on developing. This followed a wave of trade reforms aimed at reducing tariff barriers that occurred between 1996 and 2003. The impact of trade liberalization on economic growth of nigeria, download the full project work with reference and abstract. The impact of trade liberalization on poverty in ghana. Trade liberalization and the least developed countries. The impact of trade liberalization on the ethiopias trade. Trade liberalization can also force governments to commit to reform programs under the pressure of international competition, thus enhancing economic growth sachs and warner, 1995, rajan and zingales, 2003. Trade liberalization, productivity, and resource allocation in manufacturing firms in ethiopia dawit zenebe university of wisconsin madison preliminary and incomplete. The case for financial sector liberalization in ethiopia. The impact of trade liberalization on ethiopian export, import and gdp. Trade liberalization has long been said to influence favorably in the long run.
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