Trade reform and trade flows in South Africa: a product level analysis
This thesis investigates the impact of tariff liberalisation on South African trade flows and product quality. The thesis addresses four objectives. First, various measures of trade margins (extensive and intensive) are discussed and calculated for exports and imports. Second, focusing on the European Union-South African Free Trade Agreement, the study investigates the impact of tariff liberalisation on South Africa’s export intensive and extensive trade margins. Third, the impact of tariff liberalisation on the intensive and extensive import margins is investigated focusing on South Africa major trading partners. Lastly, the study examines the impact of tariff liberalisation on product quality of South African exports. In addressing these objectives, the study uses panel data exploiting variations across product, time and countries. The results (in Chapter 2) show that South Africa generally exports more varieties to developed countries and trade more at the intensive margin with China. For imports, the results show that South Africa imported more varieties from developed than developing countries. These results are consistent across different measures of trade margins. In general, the results shows that trade agreements have been important in shaping South Africa’s trade patterns. The study also finds differential impacts of tariff reduction across product groups exported (Chapter 3). Disaggregated results largely confirm that tariff reductions are associated with an increase in the number of destinations of South African exports, except for consumer goods. Homogenous products show a weaker relationship with tariff reduction suggesting that homogeneous products are not easily traded even if there is tariff reduction. This implies the need for South African exporters to differentiate their products to increase trade with the European Union. The results also show differential impacts of tariff reduction across different product groups imported (Chapter 4). Capital, intermediate and consumer products show greater responsiveness to changes in tariffs suggesting that trade policy should be targeted, especially to those sectors that aid production. Finally, results show a positive relationship between tariff changes and product quality (Chapter 5). The results suggest that tariff declines are associated with a decline in quality upgrading.
Thesis (Ph.D. (Economics))--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Economic & Business Sciences.