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Trade liberalization and productivity dynamics: evidence from Canada

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Author Info
Alla Lileeva
Abstract

The paper investigates the productivity effects of the Canada-U.S. Free Trade Agreement on Canadian manufacturing. It finds that Canadian tariff cuts increased exit rates among moderately productive non-exporting plants. This led to the reallocation of market share towards highly productive plants, which explains the aggregate productivity gains observed when Canadian tariffs were reduced. The U.S. tariff cuts led to the within-plant productivity gains in exporters and, especially, new entrants into the export market. Any lack of output responses and labour-shedding as a consequence of the FTA was experienced by non-exporting plants, while exporters captured the gains from the FTA.

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File URL: http://economics.ca/cgi/xms?jab=v41n2/CJEv41n2p0360.pdf
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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 41 (2008)
Issue (Month): 2 (May)
Pages: 360-390
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Handle: RePEc:cje:issued:v:41:y:2008:i:2:p:360-390

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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office CIREQ-C.R.D.E., Université de Montréal C.P. 6128, succursale Centre-ville Montréal, Québec, H3C 3J7, Canada
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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
L6 - Industrial Organization - - Industry Studies: Manufacturing
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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This page was last updated on 2008-9-30.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.