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Exit in Developing Countries: Economic Reforms and Plant Heterogeneity

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  • Roberto à lvarez
  • Sebastián Vergara

Abstract

Several studies have found that plant turnover contributes to productivity growth. This evidence seems to be consistent with the idea that by reducing protection granted to inefficient firms, economic liberalization would generate productivity gains associated with resource reallocation from less productive to more productive firms. However, little empirical work has been done directly linking economic liberalization and plant exit. This article uses Chilean reforms to shed light on their effects on plant exit. Our econometric analysis shows that larger and more productive plants are less likely to exit. After controlling for these characteristics, we also find that exit is more likely in export-oriented industries. Moreover, we find a differential impact of economic liberalization and exchange rate fluctuations. Changes in these variables have a more significant impact on less productive and smaller plants. By industry, we find that more affected plants are those in export-oriented sectors. (c) 2010 by The University of Chicago. All rights reserved.

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  • Roberto à lvarez & Sebastián Vergara, 2010. "Exit in Developing Countries: Economic Reforms and Plant Heterogeneity," Economic Development and Cultural Change, University of Chicago Press, vol. 58(3), pages 537-561, April.
  • Handle: RePEc:ucp:ecdecc:v:58:y:2010:i:3:p:537-561
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    Cited by:

    1. Rigby, David L. & Kemeny, Thomas & Cooke, Abigail, 2017. "Plant exit and U.S. imports from low-wage countries," International Economics, Elsevier, pages 27-40.
    2. Calá, Carla Daniela, 2015. "Firm dynamics in developing countries: a single policy for all regions?," Nülan. Deposited Documents 2650, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    3. Bergoeing, Raphael & Micco, Alejandro & Repetto, Andrea, 2011. "Dissecting the Chilean export boom," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    4. Aldaba, Rafaelita M., 2012. "Surviving Trade Liberalization in Philippine Manufacturing," Discussion Papers DP 2012-10, Philippine Institute for Development Studies.
    5. Calá, Carla Daniela, 2014. "Regional issues on firm entry and exit in argentina: core and peripheral regions," Nülan. Deposited Documents 2023, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    6. Ana M. Fernandes & Caroline Paunov, 2015. "The Risks of Innovation: Are Innovating Firms Less Likely to Die?," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 638-653, July.
    7. Calá, Carla Daniela & Manjón-Antolín, Miguel & Arauzo-Carod, Josep-Maria, 2017. "Regional determinants of exit across firms' size: evidence from a developing country," Nülan. Deposited Documents 2548, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    8. Calá, Carla Daniela & Manjón-Antolín, Miguel & Arauzo-Carod, Josep-Maria, 2014. "The determinants of exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 1976, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    9. Carla Calá & Josep-Maria Arauzo-Carod & Miguel Manjón-Antolín, 2015. "The determinants of exit in a developing country: core and peripheral regions," The Annals of Regional Science, Springer;Western Regional Science Association, pages 927-944.
    10. Calá, Carla Daniela, 2015. "Regional issues on firm entry and exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 2649, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.

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