Explaining regional export performance in a developing country: The role of geography and relative factor endowments
World Institute for Development Economics Research, United Nations University, FIN-00160 Helsinki, Finland; North-West University, Potchefstroom 2520, South Africa; Department of Economics, University of Paderborn, D-33098 Paderborn, Germany
NAUDÉ W. and GRIES T. Explaining regional export performance in a developing country: the role of geography and relative factor endowments, Regional Studies. This paper investigates the role of geography in explaining trade. It estimates and contrasts two models, a so-called 'Skills-to-Land Heckscher-Ohlin Model' following the work of WOOD and BERGE (1997) and a 'Geography Heckscher-Ohlin-Von Thunen model' following that of REDDING and VENABLES (2004). Using panel data across 354 South African magisterial districts over the period 1996 to 2000, it was found that only 22 magisterial districts in South Africa were responsible for 85% of the country's manufacturing exports. While the geography model (with distance, market effects, fixed costs and institutions) offers an overall better explanation for the manufactured export performance of the country's magisterial districts, evidence was also found to support the Skills-to-Land Heckscher-Ohlin model. The empirical evidence suggests that regions that are larger in terms of economic size, with good foreign market access and know-how of foreign markets, with competitive transport costs, good local institutions and higher proportions of skilled workers, will be more successful in exporting manufactured goods. © 2009 Regional Studies Association.
developing world; econometrics; economic development; economic geography; manufactured export; panel data; regional trade; skilled labor; Africa