NAFTA and Manufacturing Productivity in Mexico
Using a panel of Mexican manufacturing plants over the period 1993-1999, I estimate total factor productivity (TFP) at the plant level and study its evolution in the face of trade and investment liberalization under the North American Free Trade Agreement. I implement the Olley-Pakes (1996) algorithm on the data to correct for simultaneity and sample selection problems a¤ecting OLS estimates. I then relate the evolution of TFP over the period to tariff levels in Mexico and the United States, import penetration, exporting activities, imported inputs use and foreign capital participation. I ...nd that increased import competition and access to the U.S. market have had a positive impact on TFP. Foreign capital also has had a positive impact on TFP, but intra-industry spillovers are negative. Last, there is no clear evidence regarding the impact from the use of imported inputs or from exporting operations.
Volume (Year): Volume 4 Number 1 (2003)
Issue (Month): Fall 2003 (August)
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