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Economic Performance under NAFTA: A Firm-Level Analysis of the Trade-productivity Linkages

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  • De Hoyos, Rafael E.
  • Iacovone, Leonardo

Abstract

Did North American Free Trade Agreement (NAFTA) make Mexican firms more productive? If so, through which channels? This paper addresses these questions by deploying a robust microeconometric approach that disentangles the various channels through which integration with the global markets can affect firm-level productivity. The results show that NAFTA stimulated the productivity of Mexican plants via: (1) increase in import competition and (2) positive effect on access to imported intermediate inputs. Crucially, the impact of trade reforms was not identical for all integrated firms, with fully integrated firms (i.e., firms simultaneously exporting and importing) benefiting more than other integrated firms.

Suggested Citation

  • De Hoyos, Rafael E. & Iacovone, Leonardo, 2013. "Economic Performance under NAFTA: A Firm-Level Analysis of the Trade-productivity Linkages," World Development, Elsevier, vol. 44(C), pages 180-193.
    • Handle: RePEc:eee:wdevel:v:44:y:2013:i:c:p:180-193
    DOI: 10.1016/j.worlddev.2012.09.008
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    4. Marion Dovis & Chahir Zaki, 2018. "Global Value Chains and Business Environment: Which Factors Do Really Matter?," Working Papers 1270, Economic Research Forum, revised 19 Dec 2018.
    5. Rudakovski, Yan (Рудаковский, Ян), 2019. "Estimation of Belarus Trade Policy Liberalization Process Following Customs Union Creation [Оценка Либерализации Нетарифных Барьеров Республики Беларусь После Создания Тc]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 110-131, June.
    6. Iacovone, Leonardo & Rauch, Ferdinand & Winters, L. Alan, 2013. "Trade as an engine of creative destruction: Mexican experience with Chinese competition," Journal of International Economics, Elsevier, vol. 89(2), pages 379-392.
    7. Iacovone, Leonardo, 2012. "The better you are the stronger it makes you: Evidence on the asymmetric impact of liberalization," Journal of Development Economics, Elsevier, vol. 99(2), pages 474-485.
    8. Marion Dovis & Chahir Zaki, 2020. "Global Value Chains and Local Business Environments: Which Factors Really Matter in Developing Countries?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(2), pages 481-513, September.
    9. Piedrahita, N. & Hailu, G., 2018. "Exports and Productivity in Canadian Food Manufacturing," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277322, International Association of Agricultural Economists.
    10. François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications - Books, The World Bank Group, number 6586, December.
    11. Ayuma Ken Kikkawa & Yuan Mei & Pablo Robles Santamarina, 2019. "The Impact of NAFTA on Prices and Competition: Evidence from Mexican Manufacturing Plants," CESifo Working Paper Series 7700, CESifo.
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    13. Jun Hou & Xiaolan Fu & Pierre Mohnen, 2022. "The Impact of China–Africa Trade on the Productivity of African Firms: Evidence from Ghana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(2), pages 869-896, April.
    14. Céspedes, Nikita & Aquije, Maria E. & Sánchez, Alan & Vera-Tudela, Rafael, 2014. "Productividad y tratados de libre comercio a nivel de empresas en Perú," Working Papers 2014-014, Banco Central de Reserva del Perú.
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