Blyde, Juan (2010): Trade, Resource Reallocation and Industry Heterogeneity.
Download (302kB) | Preview
Recent trade models with heterogeneous firms (Bernard et al., 2003 and Melitz, 2003) show how lower trade costs can spur aggregate productivity by forcing lower productivity firms out of the market, cutting off the lower tail of the productivity distribution. In this paper we find significant heterogeneity regarding this impact across different industries. In particular, we find that the exit of inefficient plants due to stronger import competition is very prominent in light industries, that is, in industries in which only a limited amount of capital is needed and where most plants are of small-scale. In contrast, we find no significant effects of import competition on the exit of plants in heavy industries. The result has important policy implications regarding the role of trade reform in boosting aggregate productivity, particularly in industries with high levels of distortions.
|Item Type:||MPRA Paper|
|Original Title:||Trade, Resource Reallocation and Industry Heterogeneity|
|Keywords:||Trade costs, productivity, resource reallocation|
|Subjects:||F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations
F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
|Depositing User:||Juan Blyde|
|Date Deposited:||04. Sep 2010 01:58|
|Last Modified:||22. Feb 2015 10:35|
Ai, Chunrong, and Edward C. Norton (2003). “Interaction Terms in Logit and Probit Models”. Economics Letters. Vol 80: 123-129.
Alvarez, Roberto, and Ricardo López. (2005). “Exporting and Performance: Evidence from Chilean Plants”. Canadian Journal of Economics. Vol 38, No.4, pp. 1385-1400.
Aw, B., S., Chung, and M. Roberts (2000). “Productivity and turnover in the export market: micro-level evidence from the Republic of Korea and Taiwan (China), World Bank Economic Review, 14, pp. 65-90
Bartelsman, E., J. Haltiwanger, and S. Scarpetta (2004). "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," IZA Discussion Papers 1374, Institute for the Study of Labor (IZA)
Bernard, A. B., Eaton, J., Jensen, J. B., Kortum, S. S. (2003). “Plants and Productivity in International Trade” American Economic Review 93 (4), pp. 1268-1290.
Bernard, A. B., and B. Jensen (1999). "Exceptional Exporter Performance: Cause, Effect, or Both?" Journal of International Economics, 47(1), pp. 1-25
Bernard, A. B., and B. Jensen (2004). "Exporting and Productivity in the USA", Oxford Review of Economic Policy, Vol. 20, No. 3
Bernard, A. B., B. Jensen, J. Bradford and P. Schott (2006). “Trade costs, firms and productivity”. Journal of Monetary Economics 53, pp. 917-937.
Clerides, S., S. Lach, and J. Tybout (1998). “Is Learning by Exporting Important? Micro-dynamic Evidence from Colombia, Mexico and Morocco”, Quarterly Journal of Economics, 113.
Eslava, M., J. Haltiwanger, A. Kugler, and M. Kugler (2009) “Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia”, NBER working Paper 14935.
Fernandes, Ana. 2007. “Trade Policy, Trade Volumes and Plant Level Productivity in Colombian Manufacturing Industries”. Journal of International Economics. Vol 71, No 1: 52-71
Harrison, Ann (1994). “Productivity, Imperfect Competition and Trade Reform: Theory and Evidence” Journal of International Economics, 36.
Levinsohn, James and Petrin, Ariel (2003). “Estimating production functions using imputs to control for unobservables” Review of Economics Studies 70, 317-341.
Liu, L. (1993) “Entry-Exit, Learning and Productivity Change: Evidence from Chile” Journal of Development Economics, 42: 217-42
Liu, L. and J. Tybout (1996) “Productivity Growth in Colombia and Chile: Panel-Based Evidence on the Role of Entry, Exit and Learning” in marke Roberts and James Tybout, (eds), Industrial Evolution in Developing Countries, New York: Oxford University Press.
Melitz, M.J. (2003) “The impact of trade on intra-industry reallocations and aggregate industry productivity” Econometrica 71, 1695-1725
Nicita, A. and M. Ollarreaga (2006) “Trade, Production and Protection 1976-2004”, World Bank document.
Olley, A. Pakes (1996) “The Dynamics of Productivity in the Telecommunications Equipment Industry”. Econometrica, 64.
Pavcnik, N. (2002). “Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants” Review of Economic Studies, 69
Tybout, J. (1991) “Linking Trade and Productivity: New Research Directions” World Bank Economic Review 6: 189-212