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Market access and the evolution of within plant productivity in Chile

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Author Info
Maria Bas
Ivan Ledezma

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Abstract

This paper studies the impact of trade reforms on the evolution of plant's productivity. We use plant level panel data of Chilean’s manufacturing for the period 1979-2000. The main contribution of the paper is to construct detailed measures of trade liberalization disentangling the impact of export and import oriented policies. Firstly, we estimate the production functions to obtain factor contributions and to compute plant's TFP controlling for firm heterogeneous productivity which is unobservable and evolves over the time. Secondly, we construct a measure of market access as an outcome of trade policies by estimating the difficulties to trade (border effects) between Chile and its main trading partners at the industry level and across time using a gravity model. Finally, we estimate the impact of trade reform on plant's productivity using the border effects estimated in the previous step. We find evidence of a positive impact of export oriented policies on productivity of traded sectors relative to non traded. On the other hand, relative to the latter, the reduction of import barriers has a positive impact on productivity in export oriented sectors, but it hurts local firms in import competing ones probably due to the existence of increasing returns.

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Paper provided by PSE (Ecole normale supérieure) in its series PSE Working Papers with number 2007-09.

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Date of creation: 2007
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Handle: RePEc:pse:psecon:2007-09

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  1. Roberto Alvarez & Ricardo López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1384-1400, November. [Downloadable!] (restricted)
  2. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2003. "Falling Trade Costs, Heterogeneous Firms and Industry Dynamics," CEP Discussion Papers dp0585, Centre for Economic Performance, LSE. [Downloadable!]
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  3. 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!]
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  4. Devarajan, Shantayanan & Rodrik, Dani, 1989. "Trade Liberalization in Developing Countries: Do Imperfect Competition and Scale Economies Matter?," American Economic Review, American Economic Association, vol. 79(2), pages 283-87, May. [Downloadable!] (restricted)
  5. Andrew B Bernard & J Bradford Jensen, 2001. "Who Dies? International Trade, Market Structure, and Industrial Restructuring," Working Papers 01-04, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  6. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers 1719, Harvard - Institute of Economic Research.
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  7. Richard Baldwin, 1989. "Sunk-Cost Hysteresis," NBER Working Papers 2911, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March. [Downloadable!]
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  9. Carolyn L. Evans, 2003. "The Economic Significance of National Border Effects," American Economic Review, American Economic Association, vol. 93(4), pages 1291-1312, September. [Downloadable!]
  10. Lionel Fontagné & Thierry Mayer & Soledad Zignago, 2005. "Trade in the Triad: how easy is the access to large markets?," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1401-1430, November. [Downloadable!] (restricted)
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  11. 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)
  12. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 317-341, 04. [Downloadable!] (restricted)
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  13. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall. [Downloadable!] (restricted)
  15. Raphael Bergoeing & Andrés Hernando & Andrea Repetto, 2006. "Market Reforms and Efficiency Gains in Chile," Working Papers Central Bank of Chile 372, Central Bank of Chile. [Downloadable!]
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