Economic Performance under NAFTA : A Firm-Level Analysis of the Trade-Productivity Linkages

Did the North American Free Trade Agreement make Mexican firms more productive? If so, through which channels? This paper addresses these questions by deploying an innovative microeconometric approach that disentangles the various channels through which integration with the global markets (via international trade) can affect firm-level productivity. The results show that the North American Free Trade Agreement stimulated the productivity of Mexican plants via: (1) an increase in import competition and (2) a positive effect on access to imported intermediate inputs. However, the impact of trade reforms was not identical for all integrated firms, with fully integrated firms (i.e. firms simultaneously exporting and importing) benefiting more than other integrated firms. Contrary to previous results, once self-selection problems are solved, the analysis finds a rather weak relationship between exports and productivity growth.

Bibliographic Details

Main Authors:	De Hoyos, Rafael E., Iacovone, Leonardo
Language:	English
Published:	2011-05-01
Subjects:	ABSOLUTE VALUE, ACCESS TO FOREIGN MARKETS, ALLOCATIVE EFFICIENCY, ATTRITION, AVERAGE PRODUCTIVITY, AVERAGE TARIFF, BALANCE OF PAYMENTS, BALANCE OF PAYMENTS CRISIS, BASE YEAR, CAPITAL PER WORKER, COMPARATIVE ADVANTAGE, COMPETITIVE PRESSURES, COMPETITIVENESS, CONCEPTUAL FRAMEWORK, CRISES, DEVALUATION, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT STRATEGIES, DISCUSSION, DISCUSSIONS, DOMESTIC COMPETITION, DOMESTIC DEMAND, DOMESTIC MARKET, DRIVERS, ECONOMETRIC ANALYSIS, ECONOMIC CRISIS, ECONOMIC GROWTH, ECONOMIC IMPLICATIONS, ECONOMIC INTEGRATION, ECONOMIC PERFORMANCE, ECONOMIC THEORY, ECONOMIES OF SCALE, ENTREPRENEURS, EXCHANGE RATE MOVEMENTS, EXOGENOUS SHOCKS, EXPORT MARKETS, EXPORTERS, EXPORTS, EXTERNALITIES, FINAL GOODS, FIRM SIZE, FIRMS, FOREIGN COMPETITORS, FOREIGN DIRECT INVESTMENTS, FOREIGN INVESTMENT, FOREIGN MARKETS, FOREIGN OWNERSHIP, FOREIGN TRADE, FREE TRADE, GDP, GENERAL EQUILIBRIUM, GLOBAL ECONOMY, GLOBAL MARKETS, GROWTH MODELS, GROWTH RATE, IDEA, IDEAS, IMPACT OF TRADE, IMPACT OF TRADE LIBERALIZATION, IMPACT OF TRADE REFORMS, IMPORT COMPETITION, IMPORT TARIFF, IMPORT TARIFFS, INCREASING RETURNS, INDEX NUMBERS, INDUSTRIAL PRODUCTION, INEFFICIENCY, INNOVATION, INTERMEDIATE GOODS, INTERMEDIATE INPUTS, INTERNATIONAL AGREEMENTS, INTERNATIONAL MARKETS, INTERNATIONAL TRADE, INTUITION, INVENTORIES, KNOWLEDGE SPILLOVERS, LABOR PRODUCTIVITY, LABOUR, LABOUR PRODUCTIVITY, LEARNING, MACROECONOMIC SHOCKS, MANUFACTURERS, MANUFACTURING ESTABLISHMENT, MANUFACTURING PRODUCTIVITY, MARKET ACCESS, MARKET SHARES, MARKET SIZE, MARKET STRUCTURE, MULTILATERAL TRADE, MULTILATERAL TRADE LIBERALIZATION, OPENNESS, POSITIVE EFFECTS, PROCESS OF TRADE INTEGRATION, PROCESS OF TRADE LIBERALIZATION, PRODUCTIVITY, PRODUCTIVITY GROWTH, REAL EXCHANGE RATE, REAL INCOME, REDUCTION IN TARIFFS, REGIONAL INTEGRATION, REGIONAL TRADE, REGIONAL TRADE ARRANGEMENTS, SCALE EFFECTS, SMALL FIRMS, SPECIALIZATION, STOCK PRICES, SUNK COSTS, TARIFF RATES, TARIFF REDUCTION, TARIFF REDUCTIONS, TELECOMMUNICATIONS, TRADE AGREEMENT, TRADE BARRIERS, TRADE EXPANSION, TRADE LIBERALIZATION, TRADE LIBERALIZATION PERIOD, TRADE MODELS, TRADE PARTNERS, TRADE POLICY, TRADE REFORM, TRADE REFORMS, TRADE THEORIES, TRADE VOLUMES, UNDERLYING ASSUMPTIONS, VALUE ADDED, WAGE INEQUALITY, WAGES,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110517160032 https://hdl.handle.net/10986/3424
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