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Trade Liberalization, Firm Performance and Labor Market Outcomes in the Developing World What Can We Learn From Micro-Level Data?

  • Paolo Epifani

    ()

We review the micro-level evidence on the effects of trade and investment liberalization in the developing world. The main findings can be summarized as follows. 1) There is evidence of trade-induced productivity gains; 2) These gains mainly stem from the intra-industry real-location of resources among firms with different productivity levels and: 3) they are larger in import competing sectors; 4) There is no evidence of significant scale efficiency gains. Indeed, unilateral trade liberalization is often associated with a reduced scale efficiency; 5) There is evidence of a pro-competitive effect of trade liberalization; 6) There is no evidence either of learning-by-exporting effects or of beneficial spillover effects from foreign owned to local firms; 7) There is evidence of skill upgrading induced either by technology imports, or by trade-induced reallocations of market shares in favor of plants with higher skill-intensity; 8) There is no evidence of trade-induced increases in labor demand elasticities; 9) There is no evidence of substantial employment contraction in import competing sectors.

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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 138.

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Length: 55 pages
Date of creation: Nov 2002
Date of revision: Feb 2003
Handle: RePEc:cri:cespri:wp138
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