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The NAFTA Tide: Lifting the Larger and Better Boats

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Author Info
Angel Calderon-Madrid () (El Colegio de México)
Alexandru Voicu () (CUNY, College of Staten Island and IZA)

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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 productivity growth in the period following the implementation of the North American Trade Agreement (NAFTA). In all industries, an overwhelming share of aggregate 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 export continuously through 2000 and some of the new exporters are more likely to be among the top-performing plants. Exporting activity and performance of plants with similar exporting experience, however, display remarkable heterogeneity. This heterogeneity implies that trade liberalization provided growth opportunity to larger and more productive plants irrespective of their export status and provides an explanation for the lackluster average productivity performance of exporting plants.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3207.

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Length: 50 pages
Date of creation: Dec 2007
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Handle: RePEc:iza:izadps:dp3207

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Related research
Keywords: NAFTA; trade liberalization; productivity; heterogeneity of plant-level performance;

Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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References listed on IDEAS
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    Other versions:
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  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)
    Other versions:
  9. 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)
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  12. 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. [Downloadable!] (restricted)
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  14. repec:rus:hseeco:122439 is not listed on IDEAS
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