Dissertations, Theses, and Capstone Projects

Date of Degree

6-2016

Document Type

Dissertation

Degree Name

Ph.D.

Program

Economics

Advisor

Wim P.M. Vijverberg

Advisor

Merih A. Uctum

Committee Members

Nadia Doytch

Subject Categories

Econometrics | Growth and Development | Income Distribution | International Economics | Labor Economics | Macroeconomics

Keywords

Globalization, Trade Liberalization, Inequality, South Africa, Labor

Abstract

This dissertation examines how globalization influences selected aspects of an emerging economy, using South Africa as a case study. The dissertation consists of three chapters: two microeconomic studies and one macroeconomic paper on the effects of globalization on some of the factors affecting economic growth. One micro paper explores the impacts of openness on inequality (Chapter 1), another investigates the impacts of trade liberalization on manufacturing sector wages (Chapter 2), and the macro study, which is the final chapter, examines the effects of inflation targeting on exchange rate pass through to domestic prices (Chapter 3).

In 1994, apartheid ended in South Africa and the re-integration of the country into the global economy began. As international sanctions were lifted, South Africa’s development strategy shifted from export promotion with import controls to greater openness through economic and financial liberalization. There is a distinct effect of this integration on South Africa’s economy, judging by the difference between the GDP and the GNP. Many studies in this area of research have focused on developed countries and some emerging and newly industrialized economies. The following three essays highlight the implications of openness on different aspects of South African economy.

The first essay examines the relationship between globalization and income inequality in South Africa. Despite the importance that is often attached to globalization, its impact in developing countries remains poorly understood. To the best of our knowledge, there is as yet no conclusive empirical study of its impact on inequality in South Africa. Although the economic and social progress achieved in South Africa has been impressive, there is a growing concern about the adverse impact of trade liberalization on the country’s industries. Thus, the second essay extends the discussion in the first essay by looking at the impact of a specific aspect of globalization, i.e. trade reforms, on wages in South Africa’s manufacturing sector.

After the currency crashes of the late 1990s, a growing number of emerging economies moved away from exchange rate rigidity to the adoption of a combination of flexible exchange rates and inflation targeting. The third and final essay explores whether the direction and size of changes in the exchange rate have different pass-through effects on import prices. That is, whether the exchange rate pass-through is symmetric or asymmetric.

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