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Heterogeneous Effects of Chinese Import Competition on Chilean Manufacturing Plants

Author

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  • Andrés César
  • Guillermo Falcone

Abstract

We study the effect of a trade-induced competitive shock, defined as rising import competition from China, on Chilean manufacturing plants. For identification, we exploit the fact that in 1995–2006, Chinese import penetration increased sharply in Chile, but this expansion varied widely across manufacturing industries. We use Chinese export growth in high-income industry-country pairs as an instrument for Chinese import penetration. Our results suggest that plants in more exposed industries exhibit relative declines in revenue, employment, and physical capital and face a higher probability of exiting the panel than comparable plants in less exposed industries. All these effects are concentrated among establishments with low initial levels of productivity.

Suggested Citation

  • Andrés César & Guillermo Falcone, 2020. "Heterogeneous Effects of Chinese Import Competition on Chilean Manufacturing Plants," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-60.
    • Handle: RePEc:col:000425:019757
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    Cited by:

    1. César, Andrés & Falcone, Guillermo & Gasparini, Leonardo, 2021. "Costs and benefits of trade shocks: Evidence from Chilean local labor markets," Labour Economics, Elsevier, vol. 73(C).
    2. Endoh, Masahiro, 2024. "The effect of regional import shocks on job flows in Japanese manufacturing establishments," Journal of the Japanese and International Economies, Elsevier, vol. 74(C).

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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