Testing the linkages between trade and productivity growth
We examine the effect of trade on productivity growth using data from nine manufacturing industries across twelve OECD countries over the period 1978-1997. Since causality between productivity growth and trade share runs both ways, geographical characteristics of countries are used to instrument for average bilateral trade volumes over the 20-year period. In addition, to exploit the time-series nature of the data, we construct a panel data set and employ dynamic panel data techniques. After controlling for industry-specific heterogeneity, our results indicate that increased exposure to trade, in particular higher import volumes, exerts a positive influence on industriesâ€™ productivity growth. However, the effect is rather small.
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- S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.