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Objectives

The Trade and Poverty project is an on-going research project studying the effect of international trade on poverty in Africa. The project focuses on two key channels through which international trade affects poverty:

  1. The trade-price linkage through which international trade affects price setting and consumption expenditure
  2. The trade-employment linkage through which international trade affects employment and wages

Currently, the main focus of the project is on the trade-price linkage.

 

Activities

Sub-project 1: Microeconomic evidence on price-setting behavior

The transmission of border prices to consumers is a key link in the impact of international trade on poverty.  This project draws on highly disaggregated retail price data to analyse product market integration within and between African countries. The sample of countries includes South Africa, Botswana, Lesotho, Zambia, Tanzania and Malawi. The project focuses on the collection of data, the impact of borders on prices and the influence of trade policy on product market integration and product prices.

Team members include: Neil Rankin (University of Witwatersrand), Asha Sundaram, Mamello Nchake (UCT post-doctoral fellow), Dale Mudenda (UCT PhD candidate) and Neil Balchin (UCT PhD candidate).

 

Sub-project 2:Price integration in low-income countries: market structure and retail price setting behaviour in Lesotho

Widespread empirical evidence of price discrimination in markets for manufactured goods suggests that national markets should be viewed as segmented rather than integrated. This research is almost entirely driven by studies of price setting behaviour in developed countries. Yet market segmentation is likely to be of greater relevance for developing countries where weak infrastructure, poor distribution networks and ‘thin’ markets create frictions that prevent price arbitrage. This study intends to fill the gap in the literature by considering the case of Lesotho, a low-income country. The primary focus of this proposal is the collection of new data to build on a unique dataset of monthly product prices at the retail level obtained from the Lesotho Bureau of Statistics (BOS).

The research that feeds off this database will

  1. analyse price setting behaviour of retail outlets in Lesotho, covering the frequency of price change and the size of price change;
  2. analyse price differences across products and locations within Lesotho;
  3. analyse factors that drive price setting behaviour and price differences between retailers, drawing attention to market structure and trade impediments. 

Phase 1 of the project involved a number of different people from various institutions:

  • Lawrence Edwards (UCT)
  • Murray Leibbrandt (UCT)
  • John Paul Dunne (now at UCT)
  • Reza Daniels (UCT)
  • Niki Cattaneo, (Rhodes University)
  • Samantha Dodd (then a student at Rhodes University)
  • Ralitza Dobreva (UKZN)
  • Matthew Stern (DNA Economics)
  • Frank Flatters (Queens University)
  • James Thurlow (IFPRI)
  • Chris Stevens (ODI)
  • Stephen Hobson
  • Sten Dieden
  • Christi van der Westhuizen
  • Taz Chaponda
  • Eric Schaling
  • Nnzeni Netshitomboni

 

Phase 2 involved the following people:

South Africa: AGOA Rules - the Intended and Unintended Consequences of Special Fabric Provisions Featured

All Africa | 12 December 2013

Preferential import policies that allow developing markets to export to advanced economies are intended to dynamically promote development rather than just provide basic gains from trade. This column argues that the Africa Growth and Opportunities Act achieves the latter but not the former, distorting incentives along the value-added chain. While beneficial, preferential trade deals are not a panacea and are certainly not a replacement for pro-development policies. Read more or see here for the full paper on which the article is based.

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