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Testing creative destruction in an opening economy

Published on Jul 1, 2013in Economics of Transition0.735
· DOI :10.1111/ecot.12015
Philippe Aghion88
Estimated H-index: 88
(Harvard University),
Johannes Fedderke25
Estimated H-index: 25
(PSU: Pennsylvania State University)
+ 1 AuthorsNicola Viegi12
Estimated H-index: 12
(University of Pretoria)
Abstract
This paper analyses the relationship between trade liberalization and economic growth using a Schumpeterian framework of technological innovation and applies it to sector‐level South African data. The framework examines direct and indirect effects of trade liberalization on productivity growth. Indirect impacts operate through a differential impact of trade liberalization on firms conditional on their distance from the international technological frontier. Results confirm positive direct impacts of trade liberalization. Results confirm also that the greatest positive impact of trade liberalization will be on sectors that are close to the international technological frontier and that experienced a low level of product market competition before liberalization.
  • References (24)
  • Citations (10)
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References24
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#1Johannes Fedderke (UCT: University of Cape Town)H-Index: 25
#2Dietmar Naumann (UCT: University of Cape Town)H-Index: 1
This article examines industry concentration for the South African manufacturing sector over the 1972-2001 period, for the three-digit industry classification. The article notes both the high level of industry concentration in South African manufacturing and a rising trend in concentration across a wide range of industries as measured by the Gini and Rosenbluth coefficients. The article examines the impact of concentration on investment rates using a dynamic heterogeneous panel estimation method...
19 CitationsSource
#1Johannes Fedderke (UCT: University of Cape Town)H-Index: 25
#2Gábor SzalontaiH-Index: 3
This paper examines industry concentration for the South African manufacturing sector over the 1972-1996 period, for the three digit industry classification. The paper notes both the high level of industry concentration in South African manufacturing, and a rising trend in concentration across a wide range of industries. The paper further explores the impact that industry concentration has on a wide range of indicators of industry performance. We find that increased concentration serves to lower...
33 CitationsSource
#1Dani Rodrik (Harvard University)H-Index: 91
South Africa has undergone a remarkable transformation since its democratic transition in 1994, but economic growth and employment generation have been disappointing. Most worryingly, unemployment is currently among the highest in the world. While the proximate cause of high unemployment is that prevailing wages levels are too high, the deeper cause lies elsewhere, and is intimately connected to the inability of the South African to generate much growth momentum in the past decade. High unemploy...
172 CitationsSource
#1Philippe Aghion (Harvard University)H-Index: 88
#2Matías Braun (UAI: Adolfo Ibáñez University)H-Index: 10
Last. Johannes Fedderke (UCT: University of Cape Town)H-Index: 25
view all 3 authors...
This article shows that mark-ups are significantly higher in South African manufacturing industries than they are in corresponding industries worldwide. We test for the consequences of this low-level of product market competition on productivity growth. The results of the paper are that high mark-ups have a large negative impact on productivity growth in South African manufacturing industry. Our results are robust to three different data sources, two alternative measures of productivity growth, ...
92 CitationsSource
#1Johannes Fedderke (University of the Witwatersrand)H-Index: 25
#2Chandana Kularatne (UCT: University of Cape Town)H-Index: 3
Last. Martine MariottiH-Index: 6
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This paper investigates the extent of the mark-up of the South African manufacturing sector, taking into account a number of characteristics of its component industries. We find significant mark-ups to be present in the South African manufacturing sector. In comparative terms, the mark-up is approximately twice that found for the US manufacturing sector. We find that industry concentration exerts a positive influence on the mark-up over marginal cost while an indicator of competitiveness suggest...
67 CitationsSource
This 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-...
80 CitationsSource
#1Johannes Fedderke (University of the Witwatersrand)H-Index: 25
#2P. Vaze (University of the Witwatersrand)H-Index: 2
We explore changing trade protection of the South African economy by means of E¤ective Protection Rates (EPR’s). Results on EPR’s for 28 manufacturing sectors over the 1988-98 period are presented. Findings suggest that trade liberalization of the South African economy has been less dramatic than is popularly thought. Analyzers proceed to suggest that trade liberalization is di¢cult to associate with increased import penetration of the SA economy, though liberalized sectors do appear to have dem...
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#2Chris Harmse (University of Pretoria)H-Index: 4
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#1Lawrence Edwards (UCT: University of Cape Town)H-Index: 19
#2Volker Schöer (UCT: University of Cape Town)H-Index: 8
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#1Philippe Aghion (Harvard University)H-Index: 88
#2Nicholas Bloom (Centre for Economic Performance)H-Index: 44
Last. Peter Howitt (Brown University)H-Index: 46
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This paper investigates the relationship between product market competition and innovation. We find strong evidence of an inverted-U relationship using panel data. We develop a model where competition discourages laggard firms from innovating but encourages neck-and-neck firms to innovate. Together with the effect of competition on the equilibrium industry structure, these generate an inverted-U. Two additional predictions of the model—that the average technological distance between leaders and ...
2,198 CitationsSource
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#1Evguenia Bessonova (HSE: National Research University – Higher School of Economics)H-Index: 1
#2Ksenia Gonchar (HSE: National Research University – Higher School of Economics)H-Index: 4
Abstract The paper studies the effects of competition on innovation in various technology groups of mature Russian manufacturing firms. The purpose of the research is to establish whether more intense competition is good or bad for innovation, and to learn how the response to competition varies between technology leaders, followers and laggards. The study uses the 2014 survey data, which includes 1920 manufacturing firms from 19 sectors and size groups between 10 and 10,000 employees. The findin...
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#1Daniel Schwab (College of the Holy Cross)H-Index: 2
#2Eric Werker (SFU: Simon Fraser University)H-Index: 13
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#1Johannes Fedderke (PSU: Pennsylvania State University)H-Index: 25
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#2Yang Liu (PKU: Peking University)H-Index: 1
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