Analysis of trade structure and pattern of wool and mohair export of Lesotho

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Date
2015-01
Authors
Mokhethi, Nkhala Isdorinah
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Publisher
University of the Free State
Abstract
Lesotho has been a Southern African Custom Union (SACU) member from the inception of SACU, and most of its trade policies have been shaped at the SACU level. Lesotho’s trade related policies are mainly the responsibility of the Ministry of Trade and Industry, Co-operatives and Marketing. Lesotho is a founding member of the World Trade Organization (WTO); as such it took commitments on trade at the multi-lateral level for the first time during the Uruguay Round. Lesotho agreed to undertake very extensive commitments for the trade liberalization. The main objective of this study is to analyze trade structure and pattern of wool and mohair export commodities of Lesotho. The study set out to determine whether the trade policies has more protection on the agricultural products than needed and whether the policy provides more trade openness. The study further indicated trade performance of wool and mohair in the international markets. Most of the data collected were the secondary data. For the analysis of this study, different sources of data and methodologies have been used to achieve the objectives of this study, it includes: Revealed Comparative Advantage Index, Hirschman Index, Effective Rate of Protection, Nominal Rate of Protection and Trade Map. Findings from the Revealed Comparative Advantage Index indicated clearly that Lesotho enjoys Revealed Comparative Advantage of wool and mohair during the study period 2003 to 2012. The results also revealed that Lesotho is specializing with these agricultural commodities in the agricultural industry. The results indicated that market concentration of wool and mohair is low meaning that Lesotho is having few trade partners as indicated in the Hirschman Index theory. A country with few trade partners has low index values. All the values of wool and mohair are closed to zero. Lower concentration reduces the impact of international trade risk due to the possibility of price fluctuation of wool and mohair products. Trade Map results revealed that Lesotho’s wool and mohair are distributed to a couple of large trade partner countries which is China, South Africa and India. This indicates that there is low market concentration for Lesotho’s wool and mohair, therefore Lesotho needs to diversify the geographical destination of its trade. The study also shows that Effective Rate of Protection calculation is lower than the Nominal Rate of Protection for both wool and mohair in Lesotho. This means that the protection for input is higher than that of the output in both wool and mohair. The sub-sector is not subsidized by the government, but it is taxed by the government tariff policies.
Lesotho is ′n Suider-Afrikaanse Custom-Unie (SACU) lid van die ontstaan van SACU, en die meeste van sy handelbeleid is geyorm op die SACU-vlak. Lesotho se handel- verwante beleide is hoopsaaklik die verantwoordelikheid van die Ministerie van Handel en Nywerheid, Koöperasies en Bemarking. Lesotho is 'n stigterslid van die Wereld Handel Organisasie (WTO); as sodanig het dit verpligtinge op die handel by die multi-laterale vlak vir die eerste keer tydens die Uruguay-ronde. Lesotho oorengekom baie uitgebreide verbintenisse te onderneem vir die liberalisering van die handel. Die hoofdoel van hierdie studie is die handel struktuur en patron van wol en sybokhaar uitvoerkommoditeite van Lesotho, te ontleed. Die studie uiteengesit om te bepaal of die handel beleid het meer beskerming op die landbou produkteas wat nodig is en of die beleid verskaf meer handel openheid. Die studie het verder handel prestasie van wol en sybokhaar in die internasional market aangedui. Die meeste van die data wat ingesamel is, was die sekodêre data. Vir die analise van wierdie studie, verskillende brome van data gebruik, methodologieë gebruik is om die doelwitte van die studie te bereik, sluit, in Revealed Vergelykende Voordeel Indeks, Hirschman-Indeks, Effektiewe en Koers Beskerming, Nominale Koers van Beskerming en Handel Kaart. Bevindinge van die lig gebring vergelykende voordeel indeks duidelik aangedui dat Lesotho geniet geopenbaar vergelykende voordeel van wol en sybokhaar tydens die studie tydperk 2003 tot 2012. Die resultate het ook getoon dat Lesotho spesialiseer met hierdie landboukommoditeite in die landboubedryf. Die resultate dui daarop dat mark konsentrasie van wol en sybokhaar is lag betekenis dat Lesotho is met min handelsvennote soos aangedui in die Hirschman Indeks teorie, land met min handelsvennote het 'n lae-indeks waarde. Al die waardes van wol en sybokhaar is gesluit op nul. Handel Kaart ook aagedui dat slegs is China is die grooste mark vir Lesotho se wol gevolg deur 'n paar ander lande en Suid-Africa en India.Terwyl Suid-Afrika is die enigste van die mark vir sybokhaar van Lesotho. Die resultate van die Handel Kaart ook die groei van Lesotho se uitvoer in die hoeveelheid aangedui en waardes wat beteken dat Effektiewe Koers van Beskerming berekening is laer as die Nominale Koers van Beskerming vir beide wol en sybokhaar in Lesotho. Dit betekendat die beskerming vir insette is hoër as die van die uitsette in beide gevallevan wol en sybokhaar. Die sub-sektor nie deur diestaat gesubsidieer.
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Keywords
Trade structure, SACU, Revealed comparative advantage index, Hirschman index, Effective rate of protection, Nominal rate of protection and trade map, Wool industry -- Lesotho, Exports, Wool -- Lesotho, Mohair -- Lesotho, Dissertation (M.Agric. (Agriculutural Economics))--University of the Free State, 2015, Wool, Mohair
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