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Trade liberalization, selection, and technology adoption with vertical linkages

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  • Antonio Navas
  • Antonella Nocco

Abstract

This paper analyses the role played by vertical linkages on the effects of trade liberalization on technology upgrading, average productivity, and welfare in a model of trade with heterogeneous firms. We find that the strength of vertical linkages shapes the effects that trade liberalization produces on firms’ survival and technology upgrading decisions, having an impact on the average productivity of the economy, and ultimately, on welfare. Our calibration results show that vertical linkages, technology upgrading, and their interaction magnify the effects of trade liberalization on average productivity and welfare.

Suggested Citation

  • Antonio Navas & Antonella Nocco, 2021. "Trade liberalization, selection, and technology adoption with vertical linkages," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 979-1012, September.
    • Handle: RePEc:bla:reviec:v:29:y:2021:i:4:p:979-1012
    DOI: 10.1111/roie.12529
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