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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.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 44 (2013)
Issue (Month): C ()
Pages: 180-193

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Handle: RePEc:eee:wdevel:v:44:y:2013:i:c:p:180-193

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: firm-level productivity; trade reforms; Latin America; Mexico;

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Cited by:
  1. Leonardo Iacovone & Ferdinand Rauch & L. Alan Winters, 2010. "Trade as an Engine of Creative Destruction Mexico experience with Chinese competition," Working Paper Series 0510, Department of Economics, University of Sussex.
  2. 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.
  3. 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, The World Bank, number 6586, October.

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