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Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments

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Author Info
Alfons Palangkaraya
Jongsay Yong

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Abstract

Using Australian manufacturing establishment data from 1993-94 and 1996-97, we study three possible sources of productivity gains from trade liberalisation: the exit of inefficient establishments, economies of scale from output expansion, and reduction in employment. We find weak evidence that establishments in industries with greater reductions in effective rate of assistance are more likely to exit, strong evidence that they reduce employment, and no evidence for economies of scale through output expansion. Thus the productivity gains appear to come more from the pro-competitive effects which forces establishments to reduce their slackness rather than from the exit of less efficient establishments.

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File URL: http://www.degit.ifw-kiel.de/papers/degit_12/C012_026.pdf
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Publisher Info
Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c012_026.

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Length: 28 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:deg:conpap:c012_026

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Related research
Keywords: Productivity; Trade Liberalisation; Australia; Manufacturing; Establishment; Exit; Employment;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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  1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March. [Downloadable!] (restricted)
  2. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and Productivity in International Trade," Boston University - Institute for Economic Development 105, Boston University, Institute for Economic Development. [Downloadable!]
    Other versions:
  3. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November. [Downloadable!] (restricted)
    Other versions:
  4. Dani Rodrik, 1988. "Imperfect Competition, Scale Economies, and Trade Policy in Developing Countries," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 109-144 National Bureau of Economic Research, Inc. [Downloadable!]
  5. Renuka Mahadevan, 2002. "Trade liberalization and productivity growth in Australian manufacturing industries," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(2), pages 170-185, June. [Downloadable!] (restricted)
  6. Jen Baggs, 2005. "Firm survival and exit in response to trade liberalization," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1364-1383, November. [Downloadable!] (restricted)
  7. Schor, Adriana, 2004. "Heterogeneous productivity response to tariff reduction. Evidence from Brazilian manufacturing firms," Journal of Development Economics, Elsevier, vol. 75(2), pages 373-396, December. [Downloadable!] (restricted)
  8. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Adriana Schor, 2004. "Heterogeneous Productivity Response to Tariff Reduction: Evidence from Brazilian Manufacturing Firms," NBER Working Papers 10544, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Edward Oczkowski & Kishor Sharma, 2001. "Imperfect Competition, Returns To Scale And Productivity Growth In Australian Manufacturing: A Smooth Transition Approach To Trade Liberalisation," International Economic Journal, Korean International Economic Association, vol. 15(2), pages 99-113, June. [Downloadable!] (restricted)
  11. Ana Fernandes, 2002. "Trade Policy, Trade Volumes and Plant-Level Productivity in Colombian Manufacturing Industries," Working Papers 847, Economic Growth Center, Yale University. [Downloadable!]
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  12. Gaston, Noel, 1998. "The Impact of International Trade and Protection on Australian Manufacturing Employment," Australian Economic Papers, Blackwell Publishing, vol. 37(2), pages 119-36, June. [Downloadable!] (restricted)
  13. Nina Pavcnik, 2000. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," NBER Working Papers 7852, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November. [Downloadable!] (restricted)
  15. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April. [Downloadable!] (restricted)
  16. Cox, David & Harris, Richard, 1985. "Trade Liberalization and Industrial Organization: Some Estimates for Canada," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 115-45, February. [Downloadable!] (restricted)
  17. Chand, Satish, 1999. "Trade Liberalization and Productivity Growth: Time-Series Evidence from Australian Manufacturing," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 28-36, March.
  18. Choi, E Kwan & Harrigan, James, 2004. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  19. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter. [Downloadable!] (restricted)
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  20. Harry Bloch & James Ted McDonald, 2000. "Import Competition and Labour Productivity," Melbourne Institute Working Paper Series wp2000n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  21. Andrew B. Bernard & J. Bradford Jensen, 2002. "The Deaths of Manufacturing Plants," NBER Working Papers 9026, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  22. repec:rus:hseeco:122439 is not listed on IDEAS
  23. Ghemawat, Pankaj & Nalebuff, Barry, 1990. "The Devolution of Declining Industries," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 167-86, February. [Downloadable!] (restricted)
  24. Gibson, John K & Harris, Richard I D, 1996. "Trade Liberalisation and Plant Exit in New Zealand Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 521-29, August. [Downloadable!] (restricted)
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