Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/328097 
Year of Publication: 
2020
Citation: 
[Journal:] Review of Economic Analysis (REA) [ISSN:] 1973-3909 [Volume:] 12 [Issue:] 4 [Year:] 2020 [Pages:] 439-460
Publisher: 
International Centre for Economic Analysis (ICEA), Waterloo (Ontario)
Abstract: 
We analyze the impact of trade liberalization on firm productivity growth in Kenya’s manufacturing sector, using a panel spanning 8 years; 1992-1999. Our analysis reveals that liberalizing trade generates high productivity improvements in the manufacturing sector. We find that a one-unit reduction in import duties as a percentage of total imports significantly increases firm-level productivity in the manufacturing sector by 5.7%. When we examine this effect on the firm’s share of exported output, we find that lowering of import duties significantly increases the share of output exported by 0.7%. Further, we sought to assess how the effect of import duties varied across the different industries in our sample. Examining the effect of import duties on industrial performance, we find a negative and statistically significant relationship in some of the industries. Our results show heterogeneous effect of reduction of import duties on industrial performance. Not all industries benefited from the lowering of import duties, especially the food and bakery, and garment industry, where productivity did not increase. These findings have important policy implications for improving the manufacturing sector. Consequently, formulating policies that effectively relax restrictive barriers to trade in the economy could speed up firm-level productivity in the manufacturing sector.
Subjects: 
Firm-Level
Productivity
Productivity growth
Trade
Trade Liberalization
JEL: 
D20
D24
F14
O24
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.