The Impact of Trade Liberalisation on Enterprises in Small Backward Economies: The Case of Chad and Gabon.

This paper examines the impact of the devaluation of the CFA franc in 1994 and of trade and fiscal reforms on enterprise development in Chad and Gabon. These reforms provide a natural experiment to assess the impact of trade liberalisation in countries with a small and backward manufacturing sector. The empirical analysis is based on a new panel data base covering almost the total population of manufacturing firms in Chad and Gabon, and containing data spanning from the year before to two years after t he reforms. The paper finds that although firms’ response to changing incentives was non-negligible, with a shift of output from non tradables to tradables and an increase in productivity, the reform process was unable to generate a virtuous and self-sustained circle, where export expansion brings a generalized productivity increase which in turn feeds on further export growth.