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GTAP Resources: Resource Display

GTAP Resource #1441

"Effects of Tariff Reductions and Endogenous Productivity Growth"
by Yinhua, Mai


Abstract
In this study, the effects of China’s WTO commitments of reducing tariff and non-tariff barriers are analysed using a Computable General Equilibrium (CGE) model of China. In particular, this study compares the effects of the tariff reductions with and without endogenous productivity growth.

Endogenous productivity growth occurs when local producers survive import competition by seeking input-saving technologies and production practices. A liberalising industry has a good chance to experience endogenous productivity growth when it has existing economies of scale (especially in exporting) and when it resides in a country that lies far from technology frontiers. The latter factor enables it to import advanced technologies that are readily available in the rest of the world. The trade-liberalisation induced productivity growth, based on empirical estimates, is endogenously represented in the model.

This study draws the attention of policy makers to a different regional employment outcome when trade-liberalisation induced productivity improvements are taken into account. This study shows that China’s tariff reductions for its WTO entry lead to a much larger increase in real GDP if firms seek to improve their productivities when confronted with import competition. However, the regions that achieve larger (than national average) increases in output may not generate more employment as firms in these regions seek to use inputs (including labour) more efficiently.


Resource Details (Export Citation) GTAP Keywords
Category: 2004 Conference Paper
Status: Published
By/In: Presented at the 7th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2004
Version:
Created: Yinhua, M. (4/27/2004)
Updated: Yinhua, M. (4/27/2004)
Visits: 2,292
No keywords have been specified.


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