Browsing by Author "Edwards, Lawrence"
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- ItemMetadata onlyA strategic view of South African trade in policy in relation to the future global trading environment(South African Journal of International Affairs, 2015-05-28) Edwards, Lawrence; Robert, Lawrence
- ItemOpen AccessAssessing the price impacts on South African industry and households from a 10% increase in fuel taxes(2003) Loonat, Mohamed; Edwards, LawrenceBibliography: leaves 152-157.
- ItemOpen AccessChallenging Patronage Networks and Corruption in Iraq: A social accounting matrix analysis of citizen-based oil revenue distribution(2018) Moosajee, Muhammad Ali; Edwards, LawrenceIraq is a country with exceptional natural resource wealth, but also consistent political turbulence manifested by high levels of state corruption, patronage networks, weak governance, poor institutional quality, civil unrest and sectarian conflict, all of which have undermined the sovereignty of its vast petroleum wealth and limited its potential for economic prosperity. As a mechanism for reducing the high levels of corruption and patronage networks as well as stimulating economic activity, this dissertation proposes the use of citizen-based direct distribution of oil revenues and studies the economic impacts of this policy using Social Accounting Matrix analysis. The methodology for this analysis includes testing the policy at different levels of per capita distribution, as well as with three variations in the design of the distribution programs. These variations include a universal cash transfer funded by oil revenue surpluses, a targeted cash transfer funded by oil revenue surpluses and a universal cash transfer funded by the reallocation of funding from the existing food subsidy system. The results illustrate that in each of the scenario variations, cash transfers are shown to have a significant positive impact on household incomes, producing activities and aggregate demand in the economy. The results also illustrate a net welfare gain to households when replacing the existing food subsidy system with cash transfers. In the comparison of distribution variations, targeted programs are shown to have the largest effect on the economy, primarily as lower-income households were allocated a greater proportion of income and subsequently also spend a greater proportion of their income on goods with lower leakages. Higher-income households, who are non-recipients in the targeted programs, benefit from targeted programs through the indirect/induced effects, which are largest in comparison to the other distribution variations. The results also show increased consumption on essential goods & services, primarily agricultural produce, which would ease concerns that cash transfers may generate increased consumption on non-essential/temptation goods.
- ItemOpen AccessComplementary and competitive: the impact of Chinese trade on South African manufacturing exports(2016) Chien, Jing-Woei; Edwards, LawrenceThis paper makes use of South African industry level data to identify the effects of Chinese trade on South African manufacturing exports. It contributes to the existing literature by considering the implications of the different channels of exports identified in Kaplinsky et al. (2007) for Chinese exports. In particular, the direct complementary (positive) and indirect competitive (negative) channels are identified as the key channels for China-South Africa export relations. The impact of these channels are looked at, not only in the terms of aggregate export values, but also the extensive margin (product count). Overall, the results suggest a positive effect arising from Chinese exports. This result is, however, dulled by the negative implications of the indirect competitive channel effect on the extensive margin. A breakdown of the manufacturing sector into low and high-wage industries reveals that high-wage industries are the main recipients of benefits from Chinese exports through the direct complementary channel. Furthermore, the marginal effect of China from the rest of the world reveals a significantly positive difference in the high and low-wage industries for the aggregate export value and extensive margins respectively, while other specifications are inconclusive.
- ItemOpen AccessDynamics of firm-level export diversification in Botswana(2018) Kebakile, Pinkie Gertrude; Edwards, LawrenceThis thesis investigates the firm-level dynamics of export diversification in Botswana. Botswana is a country characterised by a high level of export concentration, with diamonds dominating its export bundle. With the stock of diamonds expected to be depleted in the near future, Botswana faces the urgent challenge of diversifying its export bundle. While much analysis has focused on the product composition of exports, little focus has been placed on the role that firms play in driving the composition of exports in Botswana over time. This thesis fills this gap in the literature. The analysis draws on various unique and unexplored databases. Firstly, it uses a panel of transaction level data for the period 2003 to 2012 obtained from Statistics Botswana. Second, the transaction data are merged with a panel of manufacturing firm data for the period 2003 to 2012 obtained from Department of Industrial Affairs. Finally, tariff data at the product level (HS8) for the period 2003 to 2012 are obtained from the World Integrated Trade Solution (WITS). Drawing on these databases allows for a detailed firm level analysis of export diversification not previously possible for Botswana. The thesis is comprised of three main chapters in addition to the general introduction and concluding chapters. The first main chapter (chapter 2) uses the transaction data to document the stylized facts associated with Botswana’s firm-level export diversification. Their consistency is assessed with empirical evidence in other countries. The background analysis reveals that a majority of exporting firms (over 70%) export to a single export destination and a small fraction of firms (less than 25%) export to multiple export destinations. However, as found in the international literature, export values are highly concentrated amongst the multi-destination exporters. The analysis also reveals that diamonds dominate Botswana’s export bundle, which are exported to one major destination, being the United Kingdom. An additional focus of the chapter is the relationship between firm size and changes in export diversification, defined in terms of product and destination margins. To study the dynamics between firm export size and diversification, a Multinomial logit regression approach is adopted. This technique is used to estimate the predicted probabilities of moving between different product-destination categories as a firm grows in export value. The results reveal nonlinearities in the evolution of a firm’s diversification path. At low values of exports, firms concentrate on selling a single product to a single destination. As firms grow in export value, they expand the number of products to the destination rather than the number of destinations of that product. This is a striking contrast to results found in other countries whose diversification path has been found to be driven mainly by the expansion of the number of destinations per product (Stirbat et al., 2011; Cadot et al., 2013). Only at higher export values do the multi-product firms transition into exporting to multiple destinations. The contrasting diversification path for Botswana suggests that diversification into new export markets is a key constraint to growth and diversification of Botswana’s export bundle. Therefore, the remaining chapters of the thesis explore firm level factors determining export destination diversification. Chapter 3 looks at the role of firm productivity in driving the diversification of firm exports across destinations. An important component of this analysis is the productivity relationship associated with manufacturing firm’s exporting out of the Southern African Customs Union (SACU). To assess the relationship, the transaction data are merged with the manufacturing database. Given the high number of zero trade flows for many firms, the Zeroinflated Poisson regression model is used to estimate the link between firm productivity and export destination diversification. The results strongly support the prediction that more productive firms enter the export markets. The results also show that upon entering the export market, only the relatively productive firms become multi-destination exporters. The results also confirm the presence of a productivity premium for firms exporting out of the SACU region. Chapter 4 tests the complementary input hypothesis where access to imported intermediate inputs enhance productivity thus enabling firms to access more export destinations. It further assesses whether the impact varies across differentiated inputs or homogenous inputs. Three measures are used to proxy input complementarity, namely: number of product-source country pairs, number of source countries and total import value. Using a poisson model with fixed effects, the results provide strong evidence of a positive association between variety of imported inputs used by a firm and the range of destinations it exports to. The results are robust across all the measures of input complementarity. Given concerns regarding endogeneity of imported input use, the reductions in tariffs under the South Africa – European Union Trade, Development and Cooperation Agreement (TDCA) is used to instrument firm use of imported intermediate inputs. Using the Two-stage Residual Inclusion approach, the results confirm the productivity-enhancing effects of the input complementarity hypothesis on firm export destination diversification. These results, hence, suggest that firms stand to benefit from the productivity-enhancing effects of imported intermediate inputs which can boost their export destination diversification efforts.
- ItemOpen AccessEconomic reforms and product market integration in developing countries : an empirical investigation using retail prices in Zambia(2016) Mudenda, Dale Siamulandabala; Edwards, LawrenceIn spite of extensive trade reforms, markets for goods and services are not fully integrated across countries. Less appreciated also is that product markets within countries are frequently not integrated. Barriers to trade within countries are shown to be as important in preventing product market from integrating as barriers between countries. This evidence of withincountry market segmentation is largely based on data from developed countries. Yet market segmentation is likely to be greater between and within developing countries that face large infrastructure, trade facilitation, tariff and other regulatory barriers than between and within developed countries. This thesis uses newly obtained micro-price and tariff data to extend the price-based empirical evidence of product market integration in a developing country, namely Zambia, by examining the influence of trade costs, tariff reform and tradability on internal price dispersion. The main aim of this thesis is to examine how internal trade costs and exposure to external competition affect domestic prices and internal product market integration using Zambia as a case study of a developing country in Sub-Saharan Africa. The empirical analysis is conducted in four inter-related papers. The thesis chapters are organised as follows: The first chapter provides the general introduction of the thesis. The second Chapter documents the background to the International Monetary Fund and World Bank initiated stabilisation and structural adjustment reforms implemented by Zambia since the late 1980s. The focus of the chapter is on documenting in detail the trade liberalisation programme adopted over the period 1987 to 2011 using a highly disaggregated product-level tariff dataset constructed from primary sources, such as the Government Gazettes. This data is then used to document the extent to which the country opened up to external competition initially through multilateral reform and later through regional trade agreements. This chapter sets the scene and foundation for the later chapters, which unpack the link between tariff reform and domestic prices. The third chapter empirically investigates the extent of internal market integration in Zambia across districts, products and time using the law of one price as a theoretical benchmark. It draws on a unique product level database of monthly regional prices from 1993 to 2011 that are collected from the Central Statistics Office of Zambia. The chapter presents a descriptive iii analysis of this data. In addition, it presents a cursory assessment of how trade reforms are associated with the observed trends in internal price dispersion using simple econometric estimates.
- ItemOpen AccessThe effect of exchange rate volatility on the volume of South African exports(2008) Redford, Siobhan; Edwards, LawrenceThe purpose of this paper is to investigate whether a relationship between export volumes and exchange rate volatility exists as suggested in the ASGISA document. It goes about this by first investigating the theoretical channels that predict the relationship between export volumes and exchange rate volatility. The theoretical prediction though is ambiguous depending on the justification used to get to the result. Furthermore, the paper provides evidence that the empirical results are ambiguous as well as some countries tend to exhibit a negative relationship and others a positive relationship. Thus the paper goes on to estimate two measures of exchange rate volatility using the real effective exchange rate.
- ItemOpen AccessThe effect of the exchange rate on the trade balance : the case of the South African mining sector(2003) Willcox, Owen; Edwards, LawrenceThe rationale for the study is based on the significance of the mining sector and the recent history of the Rand. During the 1990s and the early part of this century, the Rand has often been the subject of speculative attacks. Added to this is the long-term trend of depreciation against the US Dollar. In a world of infinitely mobile capital and increasing globalization, the possibility of more exchange rate crises is very real. This affects the mining industry more than most other sectors because of the fact that the majority of its production is exported and the majority of the capital inputs are imported. The effect a depreciation will have on the sector is therefore critical. In terms of exports, depreciation leads to a higher price for exporters. However, it often also leads to an increase in costs. On the import side, higher prices may not lead to higher revenue as consumers may substitute away from imports as their prices rise. In addition, elasticities of demand and supply change over time. Thus, the end result of a depreciation of the currency on the mining sector trade balance is not straightforward. Under certain circumstances it could be positive or negative. This project aims to find what the end result would be but also to find out why such results occur.
- ItemOpen AccessThe effects of subsidized housing on the property values of neighbourhoods within its vicinity(2018) Malgas, Shannon M; Edwards, LawrenceOver time neighbourhoods have shown opposition to Government subsidized housing programmes being developed within their neighbourhoods. This is due to the perceived negative impacts that these housing developments have on the neighbourhood. Opposition has grown since implementation of the Housing Code of 2009. The Code aims to integrate low income households into more affluent areas, in order to provide these households with greater access to economic and social opportunities, which they were previously denied having been placed on the urban periphery. Opponents to subsidized housing developments have nevertheless expressed concerns with a possible decline in property values. These concerns are however based on perception, rather than factual evidence to this effect. There is a paucity of studies on the topic within the South African context. While there are a number of studies on the topic within other countries, the results cannot be generalized due to the difference in demographics, housing subsidy programmes and structure of the City of Cape Town. An analysis of the impact within the City of Cape Town context may thus be beneficial. This paper analysed the impacts of Residential Development Programme (RDP) housing and Social Housing (rental) projects, as these are the subsidized housing developments that have received the most opposition. The paper has thus used a Difference-in-Difference Hedonic Pricing Model analysis to determine the neighbourhood impacts of subsidized housing on the property values of surrounding neighbourhoods. RDP housing was estimated to have a negative effect on proximate property values, while Social Housing was estimated to have no effect. It is recommended that future developments are aesthetically appealing, have landscaping, are well maintained and are well integrated with the surrounding community. These efforts should also be well communicated to the host communities during the public participation events. Further analysis is required to determine the cause of the negative effects of the RDP development to ensure that these are mitigated in future RDP projects. These may allow the State to provide the much-needed housing opportunities, with limited opposition from the host communities.
- ItemOpen AccessEnvironmental regulation as a determinant of trade: an empirical investigation of the "Pollution Haven Hypothesis" in the context of international trade(2016) Ellis Brown, Rupert; Edwards, LawrenceThis paper applies an augmented version of the Heckscher-Ohlin-Vanek model to a broad cross section of countries for the period 2001 to 2011, providing evidence that a country's environmental regulatory regime has an influence on the energy content of trade. These results conform to predictions made under the "Pollution Haven Hypothesis" and the notion of "Carbon Leakage", reiterating the importance of incorporating these issues to some extent in the formulation of future trade and climate policy.
- ItemOpen AccessEstimating elasticities of demand and supply for South African manufactured exports using a vector error correction model(2002) Behar, Alberto; Edwards, LawrenceElasticities of demand and supply for South African manufactured exports are estimated using the co-integrating vector autoregression / vector error correction model approach in order toaddress simultaneity and non-stationarity issues. Demand is highly price-elastic, ranging from-3 to -6. The price elasticity of supply is 1. Competitors' prices and world income are an important determinant of demand, but domestic capacity utilization is not an important determinant of export supply.
- ItemOpen AccessAn evaluation of the employment trends in the clothing & textile industry(2006) Edwards, Lawrence; Morris, MikeA primary justification for the proposed quotas is the claim that 63 000 to 67 000 jobs have been lost over the past three and a half years (and that 1000 jobs are being lost per month)1 and that these losses are directly related to the significant growth in imports from China over this period. Further, it is argued that the imposition of quotas, will not only reverse this decline, but will raise employment in clothing and textiles by 50 000 to 60 000.
- ItemOpen AccessAn evaluation of the employment trends in the clothing & textile industry(2006) Edwards, Lawrence; Morris, MikeA primary justification for the proposed quotas is the claim that 63 000 to 67 000 jobs have been lost over the past three and a half years (and that 1000 jobs are being lost per month)1 and that these losses are directly related to the significant growth in imports from China over this period. Further, it is argued that the imposition of quotas, will not only reverse this decline, but will raise employment in clothing and textiles by 50 000 to 60 000.
- ItemOpen AccessFirm level export dynamics and market access costs: evidence from Kenya(2018) Chacha, Peter Wankuru; Edwards, LawrenceThis thesis examines the process through which firms contribute to variation in Kenya's exports and how a shock to market access costs influences firm dynamics of entry, exit and survival in export markets. The analysis draws on several firm level datasets including: a unique and unexplored panel of transaction level data over the period 2004-2013; a recent census of manufacturing firms; and firms' access to a duty exemptions scheme on imported intermediate inputs over the period 2004-2013. The thesis consists of four main chapters in addition to the general introduction and concluding chapters. The first main chapter (chapter 2) presents the micro level picture of Kenya's exports and unpacks the patterns of export trade for her exporters. The analysis reveals a high degree of exporter heterogeneity in terms of export sales, number of products and number of destinations per exporter as well as a skewed distribution of export sales towards multi-product and multi-destination exporters. A decomposition framework is used to assess the contributions of firm level export adjustments along the extensive and the intensive margins to Kenya's aggregate export growth per year. We find that continuing exporters (firm intensive margin) dominate in contributions to average export growth per year. The contribution of net entry (firm extensive margin) is very small, although at the gross entry level, new entrants outperform exiters. While the overall growth in exports is dominated by the continuing exporters, their export activity is underpinned by significant churning of destinations and products in export portfolios. In particular, there is a lot of experimentation in added and dropped destinations and products. The final section of the chapter examines the performance difference between manufacturing firms that export compared to non-exporters in Kenya. We find that manufacturing exporters are larger in terms of productivity, use more capital per worker, employ more workers, and pay higher wages compared to non-exporters, which is consistent with the findings in the literature from the rest of the world. This provides evidence in support of the fact that exporters contribute to economic growth and improvement of welfare of their workers. The second main chapter (chapter 3) examines the patterns of entry, exit and survival of new exporters in foreign markets, along with the factors associated with their survival in export markets. We find that over the period 2005-2013, the average entry, exit and survival rates for the Kenya's exporters in international markets are 41, 38, and 62%, respectively. These rates are comparable to those documented for exporters in developing countries and represent substantial churning of Kenyan firms through entry and exit from export markets. Looking at the trade characteristics for the exiters, we find that, on average, they are small in export value compared to new entrants and continuing exporters. Furthermore, each cohort of entering firms exhibits a very high exit rate of between 62 and 79% in the first year of entry. Both the proportional hazard approach and panel logit with fixed effects that control for unobserved firm heterogeneity are used in the analysis. Export survival is found to be higher amongst firms with larger product scope; wider geographic scope of exports and larger current export value. This suggests that a firm's own initiative as well as policy interventions to alter these determinants may foster survival and the growth of Kenya's exports. The broad aim in the third main chapter (chapter 4) is to analyse the effect of a specific market access cost, using fragility of a destination market as an exogenous shock resulting in additional costs of entry into markets in Africa and how this alters firm's export behaviour. In particular, we examine the effect of fragility on a Kenyan firm's decision to export to a given destination market in Africa and the role of firm size in mediating the effect of fragility. Our empirical strategy controls for endogeneity of destination choice by the firm through firm-destination country fixed effects such that the effect of destination country fragility on a firm's export decision is identified entirely along the time dimension. The analysis reveals that fragility negatively affects a firms' decision to enter a given destination market, reducing Kenya's bilateral trade through the number of firms willing to export to fragile states in Africa. An increase in a firm's size (or productivity) is found to be key mediation to market access costs, including destination fragility for the Kenyan firms. The results show that larger firms are less adversely affected by fragility and are more likely to become multi-destination exporters to the region compared to small exporters. The chapter ends with an assessment of the effect of fragility on Kenya's export trade margins and shows that the overall effect on Kenya's total exports to a given destination country is negative but insignificant. Fragility reduces the number of exporters and products traded but it increases the average export value for the continuing firms. This latter result is driven by pure selection effect as fragility causes exit of firms that are relatively small. Finally, the fourth main chapter (chapter 5) evaluates the effectiveness of a trade policy incentive provided by the government of Kenya that promotes the use of imported intermediate inputs. Specifically, we examine the performance differences in firm export outcomes for the beneficiaries (treated) relative to the non-beneficiaries (control). Using fixed effects to address potential endogeneity, we find a positive and significant performance premium for the importer-exporters that import intermediate inputs through the scheme relative to the control group. In particular, the importer-exporters who benefit from the incentive outperform non-beneficiaries in export value and geographic scope of exports, but there is no significant difference in the number of products exported. This result suggests that reducing the costs of inputs can help firms overcome market access costs and potentially expand the destination scope of exports that are in turn, positively correlated with survival of firms in international markets.
- ItemRestrictedHas South Africa liberalised its trade?(Wiley, 2005) Edwards, LawrenceThis paper uses new tariff data to re-evaluate the extent to which South Africa has liberalised its trade from the late 1980s. The paper finds that significant progress has been made in simplifying South Africa's tariff structure and reducing tariff protection, but further progress can be made in removing tariff peaks, reducing tariff dispersion, and lowering the anti-export bias arising from protection. Further, although protection has fallen, the decline has been no faster than in other lower-middle-income economies. The paper also finds that estimates of the level of nominal and effective protection, and their rate of change, are sensitive to the choice of tariff measure (collection duties or scheduled tariff rates) and Input-Output or Supply-Use table, but that the sectoral structure of protection is largely unaffected.
- ItemOpen AccessHas South Africa liberalised its trade?(2005) Edwards, LawrenceThis paper uses new tariff data to re-evaluate the extent to which South Africa has liberalised its trade from the late 1980s. The paper finds that significant progress has been made in simplifying South Africa's tariff structure and reducing tariff protection, but further progress can be made in removing tariff peaks, reducing tariff dispersion, and lowering the anti-export bias arising from protection. Further, although protection has fallen, the decline has been no faster than in other lower-middle-income economies. The paper also finds that estimates of the level of nominal and effective protection, and their rate of change, are sensitive to the choice of tariff measure (collection duties or scheduled tariff rates) and Input-Output or Supply-Use table, but that the sectoral structure of protection is largely unaffected.
- ItemOpen AccessHave falling tariffs raised wage inequality in South Africa?(2004) Pieterse, Duncan E; Edwards, LawrenceThis paper comments on a possible relationship between wage inequality and trade liberalisation in South Africa. Several unique contributions are made here: first, the above-mentioned relationship is tested using mandated-wage regressions that were based on the zero-profit condition; second, the impact of falling tariffs on factor returns is analysed directly; and third, the indirect impact of trade liberalisation on factor returns, through its effect on technology, is examined.
- ItemOpen AccessHetrogenous impact of interest rates on retail firm prices : a product-level analysis using micro-data from Lesotho(2016) Mzezewa, Lerato; Edwards, Lawrence; Leibbrandt, MurrayPrice-setting behaviour plays an important role in the transmission mechanism of monetary policy as pricing decisions of firms in the private sector determine how changes in the official rate affect prices. Several recent studies using micro price data have highlighted the importance of the variation in firm characteristics on pricing decisions. This study investigates whether firms adjust their prices in response to higher interest rates and whether this response differs for firms that have credit. We estimate multinomial logistic regression models using highly disaggregated panel data on monthly product prices of 131 retail outlets in Lesotho over the period 2002-2009. In general, our results suggest that firms are more likely to adjust their prices in response to an interest rate shock. Firms will either revise their prices upwards or downwards compared to keeping their prices constant. This ambiguity occurs when a firm's price is a function of price elasticity of demand and costs. A firm has to balance the need to pass on increased cost of the higher interest cost onto prices against the demand-side sensitivity to price increases. On the contrary, when comparing firms with credit to those without, our findings show that firms with credit are more likely to keep their prices constant than to revise them. Furthermore, the study finds asymmetric results in the direction of the price adjustments. Prices are more likely to increase or decrease in the presence of both a demand and a cost shock, whereas prices are more likely to remain constant in the presence of a cost shock only. No evidence was found that credit owing firms pass the higher cost of credit onto their prices, suggesting that firms with credit finance have access to cheaper financing options than firms without credit.
- ItemOpen AccessThe impact of the European Union-South Africa free trade area agreement on factor returns in South Africa : much ado about nothing?(2007) Chauke, J Thabo; Edwards, LawrenceIncludes bibliographical references (leaves 35-38).
- ItemOpen AccessThe impact of trade liberalisation on wages in the South African manufacturing sector between 2000 and 2007(2009) Jhaveri, Yaseen N; Edwards, LawrenceThis study investigates the impact of trade liberalization on wages in the manufacturing sector in South Africa between 2000 and 2007. The Stolper - Samuelson theorem predicts that trade liberalisation decreases the relative return of workers employed most intensively in the liberalising industries. We estimate the relationship between trade liberalisation and wages using expanded Mincerian wage regressions that contain measures of protection. In addition, we go beyond the Heckscher - Ohlin - Samuelson framework and investigate whether or not the impact of union bargaining power on wages in a given industry is conditional upon the level of protection. The analysis is conducted using LFS household survey data in combination with average industry tariffs and effective rates of protection. Our findings suggest that trade liberalisation has resulted in a decrease in wages. In addition, we find that the impact of trade liberalisation on wages is dependent on the level of education of a worker. Our findings suggest that relatively unskilled individuals have suffered more from trade liberalisation than those who are relatively skilled. Finally, we find that the impact of union bargaining power on wages in a given industry, is dependent upon the level of protection.