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The Post-1990 Brazilian Trade Liberalisation and the Performance of Large Manufacturing Firms: Productivity, Market Share and Profits

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  • Hay, Donald A

Abstract

The paper analyses the effects of the 1990 Brazilian trade liberalisation on the total factor productivity, market share and profits of a sample of 318 large manufacturing firms. A panel data production function analysis for the period 1986-94 indicates very large total factor productivity gains in the period to 1994, which were accompanied by large falls in market shares and profits. The explanation advanced is that the shock of trade liberalisation to profits was so great that firms were stimulated to improve their efficiency dramatically.

Suggested Citation

  • Hay, Donald A, 2001. "The Post-1990 Brazilian Trade Liberalisation and the Performance of Large Manufacturing Firms: Productivity, Market Share and Profits," Economic Journal, Royal Economic Society, vol. 111(473), pages 620-641, July.
  • Handle: RePEc:ecj:econjl:v:111:y:2001:i:473:p:620-41
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    References listed on IDEAS

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    1. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    2. Tybout, James & de Melo, Jamie & Corbo, Vittorio, 1991. "The effects of trade reforms on scale and technical efficiency : New evidence from Chile," Journal of International Economics, Elsevier, vol. 31(3-4), pages 231-250, November.
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    Cited by:

    1. Figueiredo, Paulo N., 2008. "Industrial Policy Changes and Firm-Level Technological Capability Development: Evidence from Northern Brazil," World Development, Elsevier, vol. 36(1), pages 55-88, January.
    2. repec:dgr:rugggd:gd-112 is not listed on IDEAS
    3. Berhanu Abegaz & Arnab K. Basu, 2011. "The Elusive Productivity Effect of Trade Liberalization in the Manufacturing Industries of Emerging Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(1), pages 5-27, January.
    4. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2013. "Trade and Market Selection: Evidence from Manufacturing Plants in Colombia," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 135-158, January.
    5. Philippe Aghion & Robin Burgess & Stephen J. Redding & Fabrizio Zilibotti, 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," American Economic Review, American Economic Association, vol. 98(4), pages 1397-1412, September.
    6. Baptist, Simon & Teal, Francis, 2014. "Technology and Productivity in African Manufacturing Firms," World Development, Elsevier, vol. 64(C), pages 713-725.
    7. Sule Ozler & Kamil Yilmaz, 2009. "Productivity response to reduction in trade barriers: evidence from Turkish manufacturing plants," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 339-360, July.
    8. Shawn Klimek & James Schmitz & Timothy Dunne, 2010. "Does Foreign Competition Spur Productivity? Evidence From Post WWII U.S. Cement Manufacturing," 2010 Meeting Papers 805, Society for Economic Dynamics.
    9. Fleming, David A. & Abler, David G., 2013. "Does agricultural trade affect productivity? Evidence from Chilean farms," Food Policy, Elsevier, vol. 41(C), pages 11-17.
    10. Krishna, Pravin & Poole, Jennifer P. & Senses, Mine Zeynep, 2014. "Wage Effects of Trade Reform with Endogenous Worker Mobility," Journal of International Economics, Elsevier, vol. 93(2), pages 239-252.
    11. McIntyre, Frank & Pencavel, John, 2004. "The Effect of Macroeconomic Turbulence on Real Wage Levels and the Wage Structure: Brazil, 1981-1999," Economic Development and Cultural Change, University of Chicago Press, vol. 52(4), pages 681-717, July.
    12. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314 World Scientific Publishing Co. Pte. Ltd..
    13. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    14. Berhanu Abegaz & Arnab K. Basu, 2011. "The Elusive Productivity Effect of Trade Liberalization in the Manufacturing Industries of Emerging Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(1), pages 5-27, January.
    15. repec:ilo:ilowps:486388 is not listed on IDEAS
    16. Breinlich, Holger, 2015. "The Effect of Trade Liberalization on Firm-Level Profits: An Event-Study Approach," CEPR Discussion Papers 11011, C.E.P.R. Discussion Papers.
    17. Filho, Irineu de Carvalho & Chamon, Marcos, 2012. "The myth of post-reform income stagnation: Evidence from Brazil and Mexico," Journal of Development Economics, Elsevier, vol. 97(2), pages 368-386.
    18. Gaaitzen J. Vries, 2014. "Productivity in a Distorted Market: The Case of Brazil's Retail Sector," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 499-524, September.
    19. Wenjun Liu & Shoji Nishijima, 2013. "Productivity and openness: firm level evidence in Brazilian manufacturing industries," Economic Change and Restructuring, Springer, vol. 46(4), pages 363-384, November.
    20. Lisboa, Marcos B. & Menezes Filho, Naercio A. & Schor, Adriana, 2010. "The Effects of Trade Liberalization on Productivity Growth in Brazil: Competition or Technology?," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 64(3), September.
    21. Taymaz, Erol & Yilmaz, Kamil, 2006. "Productivity and Trade Orientation: Turkish Manufacturing Industry Before and After the Customs Union," MPRA Paper 58843, University Library of Munich, Germany, revised 2007.
    22. Timothy Dunne & Shawn Klimek & James Schmitz, Jr., 2010. "Competition and Productivity: Evidence from the Post WWII U.S. Cement Industry," Working Papers 10-29, Center for Economic Studies, U.S. Census Bureau.
    23. Bosch, Mariano & Goñi-Pacchioni, Edwin & Maloney, William, 2012. "Trade liberalization, labor reforms and formal–informal employment dynamics," Labour Economics, Elsevier, vol. 19(5), pages 653-667.
    24. Sato, Hitoshi., 2014. "How can ASEAN and Japan mutually benefit from ASEAN economic integration?," ILO Working Papers 994863883402676, International Labour Organization.
    25. Kotaro Ishi, 2010. "The Lao People’s Democratic Republic: Growth, Reform and Prospects," Chapters,in: Globalization and Development in the Mekong Economies, chapter 8 Edward Elgar Publishing.

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