The Effects on Industrial Profitability of Globalization and Accession to WTO


This paper investigates the effects of globalization, (export+import)/gdp, tariffs, total factor productivity and per capita capital stock on industrial profitability. We employ the price-wage gap as a proxy for profitability. Data used has been made of pooled mean group estimation of dynamic heterogeneous panel, a technique recently developed in dynamic panel data literature. Our results show that the signs of all four variables are positive, tariffs have greatest and globalization has lowest impact on industrial profit. Therefore the implication of tariff reduction in the case of accession to WTO is that profitability will be reduced, while increased volume of trade (globalization) has lowest impact on it.
JEL classification: F13, F15, C01, C23