IDEAS home Printed from https://ideas.repec.org/p/ude/wpaper/0215.html
   My bibliography  Save this paper

The Effect of Trade Protection on Productivity in Uruguay

Author

Listed:
  • Carlos Casacuberta

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Dayna Zaclicever

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

We analyze the effect of trade protection on firm’s performance using a panel of firms from the Annual Manufacturing Surveys of Uruguay from 1988 to 2005. We estimate total factor productivity using Levinsohn and Petrin (2003) methodology and relate such measures to protection. Firm-specific protection is measured as the average tariff within the four-digit harmonized system classes containing the firm’s products (rather than the usual four-digit ISIC averages), tracking more closely the relevant markets, both for firm’s product and input baskets, and separate indices are calculated. We find a positive effect of reduction in output protection on total factor productivity, while the effect of lower input protection, when significant, is negative, which we find related to the overall change in effective protection. Reductions in bilateral tariffs with Uruguay’s large neighbors in the context of MERCOSUR are not found to have a significant productivity enhancing effect. The results are robust to alternative protection measures, specification and controls.

Suggested Citation

  • Carlos Casacuberta & Dayna Zaclicever, 2015. "The Effect of Trade Protection on Productivity in Uruguay," Documentos de Trabajo (working papers) 0215, Department of Economics - dECON.
  • Handle: RePEc:ude:wpaper:0215
    as

    Download full text from publisher

    File URL: http://cienciassociales.edu.uy/departamentodeeconomia/wp-content/uploads/sites/2/2015/04/0215.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitability enhancing reallocation: evidence from Colombia," Journal of Development Economics, Elsevier, vol. 75(2), pages 333-371, December.
    3. 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.
    4. Maurice Kugler & John Haltiwanger & Adriana Kugler & Marcela Eslava, 2009. "Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia," 2009 Meeting Papers 615, Society for Economic Dynamics.
    5. 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.
    6. Carmine Ornaghi, 2006. "Assessing the effects of measurement errors on the estimation of production functions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 879-891.
    7. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
    8. Andrew B Bernard & J. Bradford Jensen, 2007. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 193-204, May.
    9. Gaston Carracelas & Carlos Casacuberta & Marcel Vaillant, 2009. "Productividad total de factores: Desempeño sectorial heterogéneo," Documentos de Trabajo (working papers) 2109, Department of Economics - dECON.
    10. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
    11. Carlos Casacuberta & Gabriela Fachola & Nestor Gandelman, 2004. "The impact of trade liberalization on employment, capital, and productivity dynamics: evidence from the uruguayan manufacturing sector," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 7(4), pages 225-248.
    12. Adriana Cassoni & Gaston J. Labadie & Gabriela Fachola, 2002. "The Economic Effects of Unions in Latin America: Their Impact on Wages and the Economic Performance of Firms in Uruguay," Research Department Publications 3159, Inter-American Development Bank, Research Department.
    13. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    14. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitabality enhancing reallocation: evidence from Colombia," Discussion Paper Series In Economics And Econometrics 0408, Economics Division, School of Social Sciences, University of Southampton.
    15. Carlos Casacuberta & Gabriela Fachola & Nestor Gandelman, 2004. "The Impact of Trade Liberalization on Employment, Capital, and Productivity Dynamics: Evidence from the Uruguayan Manufacturing Sector," Research Department Publications 3170, Inter-American Development Bank, Research Department.
    16. Marc-Andreas Muendler, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," CESifo Working Paper Series 1148, CESifo.
    17. Adriana Cassoni & Gaston J. Labadie & Gabriela Fachola, 2002. "The Economic Effects of Unions in Latin America: Their Impact on Wages and the Economic Performance of Firms in Uruguay," Research Department Publications 3159, Inter-American Development Bank, Research Department.
    18. 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.
    19. Corden, W. M., 1971. "The substitution problem in the theory of effective protection," Journal of International Economics, Elsevier, vol. 1(1), pages 37-57, February.
    Full references (including those not matched with items on IDEAS)

    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. Linarello, Andrea, 2018. "Direct and indirect effects of trade liberalization: Evidence from Chile," Journal of Development Economics, Elsevier, vol. 134(C), pages 160-175.
    2. Andrea Linarello, 2014. "Trade liberalization and domestic suppliers: evidence from Chile," Temi di discussione (Economic working papers) 994, Bank of Italy, Economic Research and International Relations Area.
    3. Carlos Casacuberta & Néstor Gandelman, 2015. "Productivity, Exit, and Crisis in the Manufacturing and Service Sectors," The Developing Economies, Institute of Developing Economies, vol. 53(1), pages 27-43, March.
    4. Carol Newman & John Rand & Finn Tarp, 2016. "Imports, supply chains, and firm productivity," WIDER Working Paper Series wp-2016-90, World Institute for Development Economic Research (UNU-WIDER).
    5. Pierce, Justin R., 2011. "Plant-level responses to antidumping duties: Evidence from U.S. manufacturers," Journal of International Economics, Elsevier, vol. 85(2), pages 222-233.
    6. Nataraj, Shanthi, 2011. "The impact of trade liberalization on productivity: Evidence from India's formal and informal manufacturing sectors," Journal of International Economics, Elsevier, vol. 85(2), pages 292-301.
    7. Carol Newman & John Rand & Finn Tarp, 2016. "Imports, supply chains, and firm productivity," Working Paper Series UNU-WIDER Working Paper w, World Institute for Development Economic Research (UNU-WIDER).
    8. 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.
    9. Bräuer, Richard & Mertens, Matthias & Slavtchev, Viktor, 2019. "Import competition and firm productivity: Evidence from German manufacturing," IWH Discussion Papers 20/2019, Halle Institute for Economic Research (IWH).
    10. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    11. Carol Newman & John Rand & Finn Tarp, 2016. "Imports, supply chains, and firm productivity," WIDER Working Paper Series 090, World Institute for Development Economic Research (UNU-WIDER).
    12. Tsionas, Mike G. & Polemis, Michael L., 2019. "On the estimation of total factor productivity: A novel Bayesian non-parametric approach," European Journal of Operational Research, Elsevier, vol. 277(3), pages 886-902.
    13. Dobbelaere, Sabien & Kiyota, Kozo & Mairesse, Jacques, 2015. "Product and labor market imperfections and scale economies: Micro-evidence on France, Japan and the Netherlands," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 290-322.
    14. Javorcik, Beata S. & Li, Yue, 2013. "Do the biggest aisles serve a brighter future? Global retail chains and their implications for Romania," Journal of International Economics, Elsevier, vol. 90(2), pages 348-363.
    15. Kasahara, Hiroyuki & Liang, Yawen & Rodrigue, Joel, 2016. "Does importing intermediates increase the demand for skilled workers? Plant-level evidence from Indonesia," Journal of International Economics, Elsevier, vol. 102(C), pages 242-261.
    16. Baybars Karacaovali, 2011. "Productivity Matters For Trade Policy: Theory And Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 33-62, February.
    17. Jaramillo, Fernando & Giraldo, Iader & Echavarría, Juan José, 2019. "Protección y productividad en la industria colombiana, 1993-2011," Working papers 12, Red Investigadores de Economía.
    18. Maria Bas & Caroline Paunov, 2019. "What gains and distributional implications result from trade liberalization," Documents de travail du Centre d'Economie de la Sorbonne 19003, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    19. Kasahara, Hiroyuki & Lapham, Beverly, 2013. "Productivity and the decision to import and export: Theory and evidence," Journal of International Economics, Elsevier, vol. 89(2), pages 297-316.
    20. Kuzyaeva Anastasia & Didenko Alexander, 2014. "Productivity spillovers in the Russian Federation: the case of the chemical market," Review of Business and Economics Studies, CyberLeninka;Федеральное государственное образовательное бюджетное учреждение высшего профессионального образования «Финансовый университет при Правительстве Российской Федерации» (Финансовый университет), issue 3, pages 55-74.

    More about this item

    Keywords

    Total factor productivity; Trade protection.;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    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:ude:wpaper:0215. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/derauuy.html .

    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: Romina Quagliotti (email available below). General contact details of provider: https://edirc.repec.org/data/derauuy.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.