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Tariffs and Firm Performance in Ethiopia

Journal article
Authors Arne Bigsten
Mulu G Gebreeyesus
Måns Söderbom
Published in Journal of Development Studies
Volume 52
Issue 7
Pages 986-1001
ISSN 0022-0388
Publication year 2016
Published at Department of Economics
Pages 986-1001
Language en
Links dx.doi.org/10.1080/00220388.2016.11...
Keywords african manufacturing firms, plant-level productivity, trade, liberalization, panel-data, international-trade, competition, efficiency, countries, growth, models, Business & Economics, Public Administration
Subject categories Economics and Business, Public Administration Studies

Abstract

We use data on Ethiopian manufacturing firms and commodity-level data on tariffs to examine the effects of trade liberalisation on firm performance. We distinguish the productivity gains that arise from reducing final goods tariffs from those that arise from reducing tariffs on intermediate inputs. We find no evidence that output tariff reduction improves productivity, but we find large positive effects of input tariff reductions. These are robust to alternative productivity measures, treating tariffs as endogenous, and various generalisations of the model. We conclude that policy measures designed to facilitate access to inputs produced abroad may lead to productivity gains.

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