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000028444 084__ $$aD24
000028444 084__ $$aC14
000028444 084__ $$aO54
000028444 245__ $$aTrade Policy, Trade Volumes and Plant-Level Productivity in Colombian Manufacturing Industries
000028444 260__ $$c2002
000028444 269__ $$a2002
000028444 300__ $$a85
000028444 336__ $$aWorking or Discussion Paper
000028444 446__ $$aEnglish
000028444 490__ $$aCenter Discussion Paper No. 847
000028444 520__ $$aThis paper offers new insights on a central question in trade and development economics: does increased exposure to foreign competition generate gains in plant productivity? We find that it does. We examine Colombian trade policy from 1977 to 1991, a period during which trade liberalization alternates with increased trade protection in varied ways across industries, to investigate the link between trade policy and plant productivity. Using a rich panel of manufacturing plants, we obtain production function estimates separately across industries that are consistent in face of the simultaneity between input demands and productivity. These estimates are used to derive plant-level time-varying productivity measures for which a systematic component related to trade policy is identified. We find a strong negative impact of nominal tariffs on plant productivity controlling for observed and unobserved plant characteristics and industry heterogeneity. The use of lagged tariffs and the evidence on the political economy of tariff determination in Colombia allow us to argue that the negative impact of tariffs is unlikely to reflect the endogeneity of protection. Plant exit plays a minor role in generating productivity gains in face of lower trade protection. Also, accounting for variation in the Colombian peso’s real exchange rate does not weaken the main findings. The negative impact of trade protection on productivity is stronger for large plants relative to small plants, as measured by employment and market shares. The negative impact of trade protection on productivity is stronger for plants in less competitive industries according to Herfindahl indexes and turnover rates. The main findings are robust to the use of effective rates of protection and import penetration ratios as measures of trade protection and openness. Finally, we also find evidence of a negative impact of trade protection on the rate of growth of plant productivity.
000028444 650__ $$aInternational Relations/Trade
000028444 6531_ $$asimultaneity and production functions
000028444 6531_ $$atrade policy
000028444 6531_ $$aproductivity
000028444 6531_ $$aColombian manufacturing
000028444 6531_ $$aendogeneity of protection
000028444 700__ $$aFernandes, Ana
000028444 8564_ $$s515307$$uhttp://ageconsearch.umn.edu/record/28444/files/dp020847.pdf
000028444 887__ $$ahttp://purl.umn.edu/28444
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  Previous issue date: 2002
000028444 982__ $$gYale University>Economic Growth Center>Center Discussion Papers
000028444 980__ $$a1858