IDEAS home Printed from https://ideas.repec.org/p/stc/stcp5e/2008052e.html
   My bibliography  Save this paper

Geographic Market Access and the Effects of Trade on Length of Production Run, Product Diversity and Plant Scale of Canadian Manufacturing Plants, 1974 to 1999

Author

Listed:
  • Baldwin, John R. Brown, W. Mark Gu, Wulong

Abstract

Over the past three decades, tariff barriers have fallen significantly, leading to an increasing integration of Canadian manufactures into world markets and especially the U.S. market. Much attention has been paid to the effects of this shift at the national scale, while little attention has been given to whether these effects vary across regions. In a country that spans a continent, there is ample reason to believe that the effects of trade will vary across regions. In particular, location has a significant effect on the size of markets available to firms, and this may impact the extent to which firms reorganize their production in response to falling trade barriers. Utilizing a longitudinal microdata file of manufacturing plants (1974 to 1999), this study tests the effect of higher levels of trade across regions on the organization of production within plants. The study finds that higher levels of export intensity (exports as a share of output) across regions are positively associated with longer production runs, larger plants and product specialization within plants. These effects are strongest in Ontario and Quebec, provinces that are best situated with respect to the U.S. market.

Suggested Citation

  • Baldwin, John R. Brown, W. Mark Gu, Wulong, 2008. "Geographic Market Access and the Effects of Trade on Length of Production Run, Product Diversity and Plant Scale of Canadian Manufacturing Plants, 1974 to 1999," Economic Analysis (EA) Research Paper Series 2008052e, Statistics Canada, Analytical Studies Branch.
    • Handle: RePEc:stc:stcp5e:2008052e
    as

    Download full text from publisher

    File URL: http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11F0027M2008052&lang=eng
    Download Restriction: no
    File URL: http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11F0027M2008052&lang=eng
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ignatius J. Horstmann & James R. Markusen, 2021. "Endogenous market structures in international trade (natura facit saltum)," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 2, pages 25-45, World Scientific Publishing Co. Pte. Ltd..
    2. Harris, Richard, 1984. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," American Economic Review, American Economic Association, vol. 74(5), pages 1016-1032, December.
    3. Jeffrey I. Bernstein & Richard G. Harris & Andrew Sharpe, 2002. "The Widening Canada-US Productivity Gap in Manufaturing," International Productivity Monitor, Centre for the Study of Living Standards, vol. 5, pages 3-22, Fall.
    4. Ottaviano, Gianmarco & Thisse, Jacques-François, 1999. "Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity," CEPR Discussion Papers 2151, C.E.P.R. Discussion Papers.
    5. W. Mark Brown & William P. Anderson, 2002. "articles: Spatial markets and the potential for economic integration between Canadian and U.S. regions," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(1), pages 99-120.
    6. Timothy Dunne & J. Bradford Jensen & Mark J. Roberts, 2009. "Producer Dynamics: New Evidence from Micro Data," NBER Books, National Bureau of Economic Research, Inc, number dunn05-1, May.
    7. Daniel Trefler, 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement," American Economic Review, American Economic Association, vol. 94(4), pages 870-895, September.
    8. Baldwin, John R. & Raffiquzzaman, Mohammed, 1995. "Restructuring in the Canadian Manufacturing Sector from 1970 to 1990: Industry and Regional Dimensions of Job Turnover," Analytical Studies Branch Research Paper Series 1995078e, Statistics Canada, Analytical Studies Branch.
    9. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    10. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April.
    11. John R. Baldwin & Richard E. Caves & Wulong Gu, 2005. "Responses to Trade Liberalization: Changes in Product Diversification in Foreign- and Domestic-Controlled Plants," Chapters, in: Lorraine Eden & Wendy Dobson (ed.), Governance, Multinationals and Growth, chapter 10, Edward Elgar Publishing.
    12. Gu, Wulong Sawchuk, Gary, 2006. "How Are Canadian Regions Adjusting to a Larger and More Integrated North American Market?," Economic Analysis (EA) Research Paper Series 2006039e, Statistics Canada, Analytical Studies Branch.
    13. Brown, W. Mark, 2007. "The Ebb and Flow of Comparative Advantage: Trade and the Industrial Specialization of Canadian Manufacturing Regions, 1974 to 1999," Economic Analysis (EA) Research Paper Series 2007044e, Statistics Canada, Analytical Studies Branch.
    14. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    15. John Baldwin & Wulong Gu, 2009. "The Impact of Trade on Plant Scale, Production-Run Length and Diversification," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 557-592, National Bureau of Economic Research, Inc.
    16. John R. Baldwin & Richard E. Caves & Wulong Gu, 2005. "Responses to Trade Liberalization: Changes in Product Diversification in Foreign- and Domestic-Controlled Plants," Chapters, in: Lorraine Eden & Wendy Dobson (ed.), Governance, Multinationals and Growth, chapter 10, Edward Elgar Publishing.
    17. Lorraine Eden & Wendy Dobson (ed.), 2005. "Governance, Multinationals and Growth," Books, Edward Elgar Publishing, number 3503.
    18. Beckstead, Desmond & Caves, Richard & Baldwin, John R., 2002. "Changes in the Diversification of Canadian Manufacturing Firms and Plants (1973-1997): A Move to Specialization," Analytical Studies Branch Research Paper Series 2002179e, Statistics Canada, Analytical Studies Branch.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sébastien Breau & David L. Rigby, 2010. "International trade and wage inequality in Canada," Journal of Economic Geography, Oxford University Press, vol. 10(1), pages 55-86, January.
    2. Sébastien Breau, 2010. "Low-Income-Country Import Competition and the Structure of Earnings Inequality in Canada, 1996–2001," Environment and Planning A, , vol. 42(8), pages 1964-1986, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marc J. Melitz & Daniel Trefler, 2012. "Gains from Trade When Firms Matter," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 91-118, Spring.
    2. John Baldwin & Wulong Gu, 2009. "The Impact of Trade on Plant Scale, Production-Run Length and Diversification," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 557-592, National Bureau of Economic Research, Inc.
    3. Baldwin, John R. Lileeva, Alla, 2008. "Adapting to Import Competition: Effects of Low-wage Trade on Commodity Mix in Canadian Manufacturing Plants," Economic Analysis (EA) Research Paper Series 2008054e, Statistics Canada, Analytical Studies Branch.
    4. Lileeva, Alla, 2008. "Trade Liberalization and Productivity Dynamics: Evidence from Canada," Economic Analysis (EA) Research Paper Series 2008051e, Statistics Canada, Analytical Studies Branch.
    5. Alla Lileeva, 2008. "Trade liberalization and productivity dynamics: evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 360-390, May.
    6. Gu, Wulong Sawchuk, Gary, 2006. "How Are Canadian Regions Adjusting to a Larger and More Integrated North American Market?," Economic Analysis (EA) Research Paper Series 2006039e, Statistics Canada, Analytical Studies Branch.
    7. Baldwin, John R. Lileeva, Alla, 2008. "Adaptation à la concurrence des importations : effets du commerce avec les pays à bas salaires sur le portefeuille de produits des établissements manufacturiers canadiens," Série de documents de recherche sur l'analyse économique (AE) 2008054f, Statistics Canada, Direction des études analytiques.
    8. John R. Baldwin & Richard E. Caves & Wulong Gu, 2005. "Responses to Trade Liberalization: Changes in Product Diversification in Foreign- and Domestic-Controlled Plants," Chapters, in: Lorraine Eden & Wendy Dobson (ed.), Governance, Multinationals and Growth, chapter 10, Edward Elgar Publishing.
    9. Robert C. Feenstra, 2010. "Measuring the gains from trade under monopolistic competition," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(1), pages 1-28, February.
    10. Gu, Wulong Sawchuk, Gary, 2006. "Comment les régions du Canada s'adaptent-elles à un marché nord-américain plus grand et plus intégré?," Série de documents de recherche sur l'analyse économique (AE) 2006039f, Statistics Canada, Direction des études analytiques.
    11. Baldwin, John R. Gu, Wulong, 2006. "Les répercussions du commerce sur la taille des usines, la durée des cycles de production et la diversification," Série de documents de recherche sur l'analyse économique (AE) 2006038f, Statistics Canada, Direction des études analytiques.
    12. John Baldwin & Beiling Yan, 2011. "The death of Canadian manufacturing plants: heterogeneous responses to changes in tariffs and real exchange rates," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(1), pages 131-167, April.
    13. Lopresti, John, 2016. "Multiproduct firms and product scope adjustment in trade," Journal of International Economics, Elsevier, vol. 100(C), pages 160-173.
    14. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1271-1318.
    15. Kristian Behrens & Giordano Mion & Yasusada Murata & Jens Südekum, 2014. "Trade, Wages, And Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1305-1348, November.
    16. Robert C. Feenstra & David E. Weinstein, 2017. "Globalization, Markups, and US Welfare," Journal of Political Economy, University of Chicago Press, vol. 125(4), pages 1040-1074.
    17. Gu, Wulong Sawchuk, Gary Whewell, Lori, 2003. "The Effect of Tariff Reductions on Firm Size and Firm Turnover in Canadian Manufacturing," Economic Analysis (EA) Research Paper Series 2003014e, Statistics Canada, Analytical Studies Branch.
    18. Loren Brandt & Johannes Van Biesebroeck & Luhang Wang & Yifan Zhang, 2017. "WTO Accession and Performance of Chinese Manufacturing Firms," American Economic Review, American Economic Association, vol. 107(9), pages 2784-2820, September.
    19. Maria D. Tito & Ruoying Wang, 2021. "Misallocation in Open Economy," Finance and Economics Discussion Series 2021-007, Board of Governors of the Federal Reserve System (U.S.).
    20. Gu, Wulong Sawchuk, Gary Whewell, Lori, 2003. "Effet de la réduction des tarifs sur la taille et sur le roulement des entreprises dans le secteur canadien de la fabrication," Série de documents de recherche sur l'analyse économique (AE) 2003014f, Statistics Canada, Direction des études analytiques.

    More about this item

    Keywords

    International trade; Manufacturing; Business performance and ownership; Business adaptation and adjustment;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:stc:stcp5e:2008052e. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Brown (email available below). General contact details of provider: https://edirc.repec.org/data/stagvca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.