Imported inputs and export growth: Evidence from Tunisia

Abstract

This paper studies the role of imported inputs in improving Tunisian export growth during the 1980's. Exporting firms might have improved their competitiveness as a result of significant reductions in average cost that, in turn, were caused by favourdble changes in relative imported inputs' prices. A pooled time-series model is set up in order to estimate the effects of changes in effective rate of tariff protection on exports as a proportion of GDP. The attention is focused on the impact of the dismantling of tariff barriers for four product categories: all goods, manufactured products, machinery and electrical, and textile. Empirical results suggest that several factors, including the dinar's real devaluation and the removal of import restrictions, which since the mid-80's have accompanied the process of trade liberalisation in Tunisia exerted a strong positive influence on export growth.