The impact of trade liberalisation on mining sector total factor productivity: Evidence from developing countries

Abstract

While the paradox of plenty is given much weight on raging debates on resource endowment and growth path of the Southern Africa Development Community (SADC) countries. The study seeks to establish the effect of trade liberalisation on mining total factor productivity. The study employed panel data of selected seven countries from the SADC for the period 1990–2017. The countries in the sample include Botswana, South Africa, Tanzania, Namibia, Zimbabwe, the Democratic Republic of the Congo (DRC), and Zambia, and were chosen based on data availability. Hicks-Moorsteen productivity index was applied to generate the total factor productivity change. A panel auto regressive distributed lag model (PARDL) and pooled mean group (PMG) are the estimation techniques used. The inquiry is crucial to SADC because mining production is a source of foreign exchange that directly contributes to economic growth. However, with open economies of SADC study expects the easy flow and diffusion of technology to aid productivity in the mining sector (Griffith, Redding, & Van Reenen, 2014). Results indicate a positive and statistically significant long-run relationship between trade openness and total factor productivity change in the mining sector. The study recommends progressive trade openness in the mining sector, human capital development, research and development to augment technology transfer.