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The NAFTA Tide: Lifting the Larger and Better Boats

Listed author(s):
  • Calderón-Madrid, Angel

    ()

    (El Colegio de México)

  • Voicu, Alexandru

    ()

    (CUNY - College of Staten Island)

We use panel data on Mexican manufacturing plants to study the connection between plants’ responses to changes in the economic environment and their contributions to aggregate productivity growth in the period following the implementation of the North American Trade Agreement (NAFTA). In all industries, an overwhelming share of aggregate productivity growth is accounted for by a small number of plants which were larger and more productive before the implementation of NAFTA and expanded and became more productive following the implementation of NAFTA. Plants that exported before NAFTA and export continuously through 2000 and some of the new exporters are more likely to be among the top-performing plants. Exporting activity and performance of plants with similar exporting experience, however, display remarkable heterogeneity. This heterogeneity implies that trade liberalization provided growth opportunity to larger and more productive plants irrespective of their export status and provides an explanation for the lackluster average productivity performance of exporting plants.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3207.

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Length: 50 pages
Date of creation: Dec 2007
Handle: RePEc:iza:izadps:dp3207
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References listed on IDEAS
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  1. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July.
  3. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
  4. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc.
  5. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003. "Export versus FDI," NBER Working Papers 9439, National Bureau of Economic Research, Inc.
  6. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  7. Schiff,Maurice & Wang, Yanling, 2003. "Regional integration and technology diffusion : the case of the North America free trade agreement," Policy Research Working Paper Series 3132, The World Bank.
  8. Nina Pavcnik, 2000. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," NBER Working Papers 7852, National Bureau of Economic Research, Inc.
  9. repec:rus:hseeco:122439 is not listed on IDEAS
  10. Daniel Lederman & William F. Maloney & Luis Servén, 2004. "Lessons from NAFTA for Latin America and the Caribbean," World Bank Publications, The World Bank, number 14457.
  11. 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.
  12. repec:rus:hseeco:123684 is not listed on IDEAS
  13. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  14. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  15. J. Ramsay, 1982. "When the data are functions," Psychometrika, Springer;The Psychometric Society, vol. 47(4), pages 379-396, December.
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