Trade liberalization and lagged reactions of trade flows, productivity and internal demand: an application to the Australian PMV industry

Journal of Asia-Pacific Business

2014

This article presents an empirical analysis of the trends, patterns, and determinants of the Australian passenger motor vehicle industry trade in the context of policy liberalization. Although export orientation and import penetration ratios have shown rising trends, especially since the early 1990s, faster growth in import penetration has led to a surge in the industry's trade deficit. Econometric results appear to suggest that tariff protection, export incentives, and government assistance have made the industry less competitive, in domestic and world markets. These findings indicate that further liberalization may help improve the Australian passenger motor vehicle industry's trade performance.

Section: Results For the Determinants Of Export Intensitysupporting

confidence: 92%

An Analysis of Trade Performance of the Australian Passenger Motor Vehicle Industry: Trends, Patterns, and Determinants

Bopage¹,

Journal of Asia-Pacific Business

2014

“…This finding is similar to previous studies by Chand (1999), Bloch and McDonald (2002) and Mahadevan (2002), Fleischmann and Prentice (2001) and Dixon and Rimmer (2004, 2008), Jayanthakumaran (2004) Shahbaz and Rahman (2012). In another study, Sanidas and Jayanthakumaran (2008) found that following liberalization the AAI exports, imports and labour productivity increased substantially. They concluded that the reduction of tariffs led a sequential path, where boost in imports led to increased competition, which in turn boosted productivity and exports.…”

Section: Literature Reviewmentioning

confidence: 98%

“…In a study jointly conducted by the Australian Industry Group (AIG), the FAPM and KPMG Australia (2005) it was observed that a relatively small domestic market, the emergence of low production cost countries, rapid appreciation of the Australian dollar, and further reduction in government assistance have affected the AAI's competitiveness. Sanidas and Jayanthakumaran (2006) examined the effects of trade liberalization on the AAI's trade and productivity performance. Their findings indicated that liberalization stimulated not only imports but also exports, and there was some improvement in productivity.…”

Section: Literature Reviewmentioning

confidence: 99%

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Liberalization and Structural Change in Australian Automotive Industry: An Analysis of Trade and Productivity Performance: 1962–2008

Bopage¹,

2014

Global Business Review

This article investigates the effects of policy liberalization on structural change in the Australian automotive industry, with a focus on trade and productivity performance. While there has been a rise in exports and imports, productivity fell significantly following policy liberalization. The absolute fall in productivity appears to have been linked with the excess production capacity and higher production costs. The post-liberalization fall in productivity may signal the beginning of a turnaround, but only if the cost of production is significantly reduced through further reforms.

“…Export growth also brings local industries close to foreign firms, giving opportunities to become familiar with better management practices. In addition, international exposure encourages domestic firms to better train their workers and increase the number of skillintensive jobs, leading to productivity growth (Sanidas and Jayanthakumaran 2007). Hence, a positive relationship between export intensity (XI) and productivity growth may be expected.…”

Section: Trade Liberalization and Productivity Performancementioning

confidence: 98%

Trade Liberalization and Productivity Performance: Evidence from the Australian Passenger Motor Vehicle Industry

Bopage¹,

2014

Glob. Econ. J.

This paper contributes to the ongoing debate about the effects of trade liberalization on productivity performance of the Australian passenger motor vehicle industry, which has experienced significant liberalization over the years. Our analysis indicates that trade liberalization had a negative impact on productivity growth, at least in the immediate post-liberalization period. Empirical results suggest that economies of scale and tariff protection improve productivity, while industry assistance (such as the local content and duty drawback schemes and production subsidies) retards productivity. Policy implications of these findings are that there are dividends in terms of improved productivity by encouraging economies of scale, providing tariff protection and lowering industry assistance.