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Trade Liberalization and Productivity Growth in Latin American Manufacturing, 1970-98

  • Eva Paus
  • Nola Reinhardt
  • Michael Robinson

We examine the relationship between trade liberalization and manufacturing labor productivity growth for 27 industries in seven Latin American countries from 1970 to 1998. Our trade variables are export and import growth and a commercial reform index, which capture the various channels through which productivity and trade liberalization may be related. Using the Arellano-Bond GMM estimator, we find a significant positive correlation between all three variables and productivity growth. US productivity growth and distance behind best-practice technology are also significantly correlated with productivity growth. These results have to be understood in the context of sweeping economic reforms and continuing economic difficulties in the countries under investigation.

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Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 6 (2003)
Issue (Month): 1 ()
Pages: 1-15

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Handle: RePEc:taf:jpolrf:v:6:y:2003:i:1:p:1-15
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  1. James Tybout, 1998. "Manufacturing Firms In Developing Countries: How Well Do They Do, And Why?," Development and Comp Systems 9805004, EconWPA.
  2. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
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  9. Reinhardt, Nola & Peres, Wilson, 2000. "Latin America's New Economic Model: Micro Responses and Economic Restructuring," World Development, Elsevier, vol. 28(9), pages 1543-1566, September.
  10. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 245-276.
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  14. Tybout, James & de Melo, Jaime & Corbo, Vittorio, 1990. "The effects of trade reforms on scale and technical efficiency : new evidence from Chile," Policy Research Working Paper Series 481, The World Bank.
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  16. Tybout, James R. & Westbrook, M. Daniel, 1995. "Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries," Journal of International Economics, Elsevier, vol. 39(1-2), pages 53-78, August.
  17. Chuang, Yih-Chyi, 1998. "Learning by Doing, the Technology Gap, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 697-721, August.
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