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Trade,Tariffs and Total Factor Productivity: The Case of Spanish Firms

  • Juliette Milgram

    (Universidad de Granada)

  • Marion Dovis

    (Centre d'Economie et de Finances Internationales (France))

The aim of this paper is to examine the sensitivity of total factor productivity (TFP) to foreign competition in the case of a European country. Using the Olley and Pakes (1996) method, we calculate the TFP of Spanish manufacturing firms and study the impact of EU tariffs, foreign competition and imports on TFP at the firm level. Applying the System-GMM method, we find that TFP is negatively impacted by European tariffs, whereas the competition, in the form of increased presence of foreign products in the domestic market and firms' imports, leads to improvements of the TFP. Moreover, these two effects are complementary. We also find evidence of important asymmetries among firms depending on their involvement in foreign markets. El objetivo de este artículo es estudiar la sensibilidad de la productividad total de los factores (PTF) a la competencia extranjera en el caso de un país europeo. Calculamos la PTF de las empresas manufactureras españolas con el método de Olley y Pakes (1996) y estudiamos el impacto de los aranceles europeos, de la competencia extranjera y de las importaciones sobre la PTF de las empresas. Utilizando el método System-GMM, obtenemos que la PTF se ve negativamente afectada por los aranceles europeos, mientras la competencia, bajo la forma de una presencia mayor de productos extranjeros en el mercado domestico o en términos de importaciones de las empresas, contribuye a mejorar la PTF. Además, estos dos efectos son complementarios. Encontramos también pruebas de importantes asimetrías entre las empresas, dependiendo de su grado de implicación en los mercados internacionales.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2008-06.

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Length: 34 pages
Date of creation: May 2008
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2008-06
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