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Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants

  • Bernard, Andrew B.
  • Jensen, J. Bradford
  • Schott, Peter K.

This paper examines the role of international trade in the reallocation of U.S. manufacturing within and across industries from 1977 to 1997. Motivated by the factor proportions framework, we introduce a new measure of industry exposure to international trade that focuses on where imports originate rather than on their overall level. We find that plant survival and growth are negatively associated with industry exposure to low-wage country imports. Within industries, we show that manufacturing activity is disproportionately reallocated towards capital-intensive plants. Finally, we provide the first evidence that firms adjust their product mix in response to trade pressures. Plants are more likely to switch industries when exposure to low-wage countries is high.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 68 (2006)
Issue (Month): 1 (January)
Pages: 219-237

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Handle: RePEc:eee:inecon:v:68:y:2006:i:1:p:219-237
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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  1. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2003. "Falling Trade Costs, Heterogeneous Firms, and Industry Dynamics," Yale School of Management Working Papers ysm357, Yale School of Management.
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