CoPS/IMPACT Working Paper Number G-139

Title: Effects of Reducing Tariffs and Endogenous Productivity Growth

Author: Yin Hua Mai


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 draws the attention of policy makers to a different regional employment outcome when trade-liberalisation induced productivity improvements are taken into account. Trade-liberalisation induced productivity improvements occur when local producers survive import competition by seeking (most likely importing) input-saving technologies and production practice. Such endogenous productivity improvements, based on empirical estimates, are endogenously represented in the model.

JEL Classification: D58, F14, O53

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