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The NAFTA Tide: Lifting the Larger and Better Boats

  • 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
Date of revision:
Handle: RePEc:iza:izadps:dp3207
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  1. 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.
  2. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. 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.
  4. 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.
  5. Andrew B Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and productivity in international trade," Working Papers 00-08, Center for Economic Studies, U.S. Census Bureau.
  6. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003. "Export versus FDI," Harvard Institute of Economic Research Working Papers 1998, Harvard - Institute of Economic Research.
  7. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
  8. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  9. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  10. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  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. J. Ramsay, 1982. "When the data are functions," Psychometrika, Springer, vol. 47(4), pages 379-396, December.
  13. repec:rus:hseeco:122439 is not listed on IDEAS
  14. repec:rus:hseeco:123684 is not listed on IDEAS
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