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The NAFTA tide: Lifting the larger and better boats

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  • Angel Calderon-Madrid
  • Alexandru Voicu

Abstract

We use panel data on Mexican manufacturing plants to study the connection between plants' responses to changes in the economic environment and their contributions to aggregate total factor productivity growth, in the period following the implementation of the North American Trade Agreement. An overwhelming share of industry-level aggregate total factor productivity growth is accounted for by a small number of plants, which were larger and more productive before the implementation of NAFTA and expanded and became more productive following the implementation of NAFTA. Plants that exported before NAFTA and exported continuously through to 2000, and new exporters, are more likely to be among the top-performing plants. The performance of plants with similar exporting experience displays, however, remarkable heterogeneity: a significant number of plants that never export have strong output and productivity performance, while many exporters display poor performance. Spending on research and development, and three variables describing plants' level of integration in the global markets - foreign direct investment, use of imported intermediary inputs, and investment in foreign capital goods - are positively correlated with output and productivity performance.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 20 (2011)
Issue (Month): 4 ()
Pages: 467-505

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Handle: RePEc:taf:jitecd:v:20:y:2011:i:4:p:467-505

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Web page: http://www.tandfonline.com/RJTE20

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Related research

Keywords: NAFTA; trade liberalization; total factor productivity; heterogeneity of plant-level performance;

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  1. Pavcnik, Nina, 2002. "Trade Liberalization, Exit, and Productivity Improvement: Evidence from Chilean Plants," Review of Economic Studies, Wiley Blackwell, vol. 69(1), pages 245-76, January.
  2. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  4. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jenson & Samuel Kortum, 2000. "Plants and Productivity in International Trade," NBER Working Papers 7688, National Bureau of Economic Research, Inc.
  5. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
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  7. Tybout, James R. & Westbrook, M. Daniel, 1995. "Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries," Journal of International Economics, Elsevier, vol. 39(1-2), pages 53-78, August.
  8. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  9. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  10. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July.
  11. Schiff, Maurice & Wang, Yanling, 2003. "Regional integration and technology diffusion : the case of the North America free trade agreement," Policy Research Working Paper Series 3132, The World Bank.
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  13. J. Ramsay, 1982. "When the data are functions," Psychometrika, Springer, vol. 47(4), pages 379-396, December.
  14. repec:rus:hseeco:122439 is not listed on IDEAS
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