working-paper-41

Determinants of Export Pricing at the Firm-Level: Evidence from Egypt

Yasmine Kamal
26/08/2020
The study explains the export pricing behaviour of Egyptian firms using detailed customs data. Firstly, it finds that more productive firms (as proxied by their importation of intermediate inputs and capital goods) charge higher export prices, which are correlated with higher revenues. This provides evidence of competition in quality, rather than price, amongst firms. Secondly, firms with more destination markets charge a higher price, on average, for their exported products and a wider price range across markets. Thirdly, firms charge higher prices for more distant and richer markets, whereas they charge lower prices for larger and more remote ones, with the effect of significant remoteness being confined to the richer subset of markets. This could be explained by variable mark-ups across destination markets, where higher mark-ups are set for more distant, richer, smaller (less competitive), and more central markets. It could also indicate that higher quality products are sent to more distant markets (Alchian-Allen or selection effects) and richer ones (demand effect). Lastly, firms charge higher prices in markets where there is a larger prevalence of technical measures or in those that impose specific, restrictive measures, reflecting a potentially adverse effect of these measures on a number of exporters, allowing the most successful firms to charge higher mark-ups. Alternatively, this could arise from firms upgrading quality, in compliance with such measures.
working-paper-40

Global Value Chains and Service Liberalisation: Do They Matter for Skill-Upgrading?

Marina Ehab, Chahir Zaki
13/08/2020

This study attempts to assess the effect of Global Value Chains (GVCs) and service liberalisation on skill-upgrading. It provides a bridge between two active literatures on GVCs and service liberalisation. Using comprehensive firm-level data from the World Bank Enterprise Survey, the contribution of this paper is twofold. First, it focusses on the effect of GVC integration on skill-upgrading in the presence of service restrictions. Second, it uses firm-level data on 141 developing economies. Our main findings suggest that integration in GVCs results in skill-upgrading, whilst service trade restrictions are associated with skill-downgrading. We argue that more restricted services weaken the channels by which GVCs stimulate the process of skill-upgrading. Therefore, skill-upgrading resulting from GVC participation is more pronounced when services are liberalised. Our results remain robust to any change in the measure of service protection, the measure of skill-upgrading and when we allow for the endogeneity of GVCs.

working-paper-39

The asymmetric effects of twenty years of tariff reforms on Egyptian workers

Giorgia Giovannetti , Enrico Marvasi , Arianna Vivoli
29/07/2020

After more than two decades of trade liberalisation, faced with deep structural problems, which were exacerbated by the 2008 financial crisis and culminated in the 2011 Spring Revolution and change of government, in 2016 Egypt started to protect some sectors from foreign competition. This paper assesses how tariff reforms during the 1998-2018 period affected the Egyptian labour market, by focussing on real wages and job stability (i.e. having a permanent position). The empirical analysis is carried out on worker-level data from the available four waves of Egyptian Labour Market Panel Survey (ELMPS), including the recently released 2018 wave. We find that higher tariff protection tends to deteriorate labour market conditions, both lowering real wages and decreasing the probability of finding a stable job. Furthermore, tariff changes show remarkable asymmetries. There is a negative and significant correlation between tariff increases and real wages, whilst the positive impact of tariff reductions turns out to be negligible and insignificant. Our findings support the view that, in Egypt, protectionism hampered working conditions, contributing to inequality, whilst liberalisation produced minor average effects.

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