PR - TRADE STRUCTURE AND PATTERN OF WOOL AND MOHAIR EXPORT OF LESOTHO

Abstract:

Trade structure and pattern of Lesotho’s wool and mohair sub-sector were analyzed using 4 digits Standard International Trade Classification (SITC) of wool and Mohair and different trade indicators from 2003-2012. Revealed Comparative Advantage (RCA), Hirschman Index (HI), Effective Rate of Protection (ERP) and Nominal Rate of Protection (NRP) were calculated. Trade map was also used to assess the diversification of wool and mohair markets. The study revealed that Lesotho have a Revealed Comparative Advantage (RCA) of wool and mohair sub-sector from 2003 to 2012. Hirschman Index (HI) indicated that wool and mohair sub-sectors shows low concentration from 2003 to 2012. Lower concentration reduces the impact of international trade risk due to the possibility of price fluctuation of wool and mohair products. ERP and NRP were also calculated, using an enterprise budget of Lesotho for wool and mohair production. The result shows that the ERP and NRP shows negative which indicate that the weighted input tariffs on wool and mohair inputs amount are more than the output tariffs, this implies that the sub-sector is taxed by the government tariff policies. The NRP is higher than the ERP; this implies that tariff applied on the output is higher than the tariff applied on the inputs. The results from the trade map indicated that Lesotho’s wool and mohair have high degree of concentration in China and South Africa. The structure of the tariff schedule may have an important bearing on efficiency. Thus, the study recommended that the tariff structure of the input sector for wool and mohair should be reinvestigated and Lesotho should be diversifying its market of wool and mohair.

Keywords: Wool and Mohair, Revealed comparative advantage index, Hirschman index, Effective rate of protection, Nominal rate of protection